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If implemented effectively, PM Vidyalakshmi Yojana can help millions of aspiring students access higher education with positive socio-economic outcomes.
India’s huge youth population, one of the largest in the world, is often seen as a potential engine of economic growth. (Symbolic photo: News18)
India’s huge youth population, one of the largest in the world, is often seen as a potential engine of economic growth. However, demographers and economists often highlight that the country has struggled to maximize this gain. A primary obstacle remains the lack of accessible higher education and skill-based training, which is necessary for youth to secure employment or create entrepreneurial pathways. Research has repeatedly shown that higher education can stimulate economic growth, reduce poverty, and close socioeconomic gaps.
For India’s low-income population, it is one of the few reliable methods of upward mobility. Unfortunately, Indian youth face many challenges in pursuing higher education, including financial barriers, aging infrastructure, limited seats and accommodations, social barriers related to language, caste, and gender.
Yet, amidst all these challenges, financial constraints remain the single most significant factor preventing Indian youth from completing higher education in prestigious institutions. Evidence-based research shows that youth from high-wealth families are significantly more likely to attain higher education than those from poorer families. While a small section of underprivileged but bright students can realize their dreams by succeeding in the rigorous national scholarship schemes, the majority of students miss out on higher education due to their failure to secure scholarships.
They cannot afford higher education due to high tuition fees and maintenance costs. Although educational loans can be a viable solution, poor families often find it difficult to secure these loans due to stringent bank norms, complex application processes, high interest rates and limited awareness about the options available. According to the Ministry of Human Resource Development, currently, only 4 percent of India’s higher education student population benefits from education loans.
Amidst these challenges, the recent launch of PM Vidyalakshmi Yojana provides a promising solution to support meritorious students from economically disadvantaged backgrounds. The scheme sets up a mission-mode mechanism to facilitate and promote education loans to eligible students (regardless of financial background) seeking admission into the top 860 higher educational institutions in the country, with over Rs 22 lakh per annum every year. Students join in. A unique feature of these education loans is that they are both collateral and guarantor-free.
This is important, as many students are unable to secure educational loans due to lack of assets or a financially strong guarantor. Additionally, the scheme has been designed to be accessible, transparent and student-friendly with a completely digital application process. For economically weaker sections (with annual family income up to Rs 8 lakh), the scheme provides 3 per cent interest subsidy on loans up to Rs 10 lakh.
The timing of this initiative is also important. As automation and artificial intelligence are transforming the job market, many unskilled and semi-skilled positions are at risk. Meanwhile, with smaller families becoming the norm, more parents wish to give their children a technical and advanced education. It is necessary to expand higher education without compromising on quality. If India aspires to become a powerful and welfare-oriented nation, it must equip itself with high quality human resources. The future development of the country depends on developing a highly skilled workforce, which can only be achieved through adequate investment in human capital.
Pradhan Mantri Vidya Lakshmi Yojana has the potential to promote educational inclusion across India, similar to the financial inclusion impact of Pradhan Mantri Jan Dhan Yojana. If implemented effectively, PM Vidyalakshmi Yojana can help millions of aspiring students access higher education with positive socio-economic outcomes. The scheme is set to give wings to deserving youth and empower them to move towards their dreams without financial constraints.
Nandita Saikia is Professor at the International Institute for Population Sciences, Mumbai. Website: www.nanditasaikia.com. The views expressed in the above excerpt are personal and solely those of the author. They do not necessarily reflect the views of News18.