Authors: Riddhika Bohra, Dhanishtha Meena  ABSTRACT  This study evaluates the Indian school education system by analyzing the persistent execution gap between allocated Budget Estimates (BE) and Actual Expenditures (AE) using official Ministry of Education data from FY 2016–17 to FY 2020–21, the study tracks quantitative budget-expenditure gaps across Central, State/UT, and school levels. It complements this with a multi-source diagnostic analysis across five thematic case studies. Despite national policy targets to spend 6% of GDP on public education, persistent fund under-utilization severely weakens school infrastructure, teacher capacity, and student retention across the country.  Keywords: Budget-Expenditure Gap, Indian School Education, Samagra Shiksha Abhiyan, Fiscal Federalism, Fund Utilization. 1. INTRODUCTION 1.1. Background of Study  Education was assigned to the State List at the time of Independence, which meant state governments carried the primary responsibility for running schools, while the central government’s role remained largely advisory. The first few Five-Year Plans focused on industry and infrastructure, so education was not a fiscal priority in this period; public spending stayed close to 3.5% of GDP (PRS Legislative Research, 2022) for decades. This shifted after the Kothari Commission (1964-66) recommended raising education spending to 6% of GDP, a target later formalized in the National Policy on Education, 1968. That target remains unmet over fifty years later. This historical context establishes the foundation of this study: a persistent gap between policy commitments and actual funding, which predates the contemporary data analyzed herein.  The year 1991 serves as a significant dividing line in this history. India’s economic liberalisation coincided with a broader shift toward administrative decentralisation, raising critical questions in policy debates about whether education’s share of a rapidly growing economy was keeping pace. Empirical research on this period remains divided. A panel study of Indian states from 2002 to 2020 indicates that fiscal decentralisation reforms had a broadly positive effect on education and health service delivery, although outcomes depended heavily on local institutional quality and accountability (Singh, Bhattacharjee, & Nandy, 2024). Conversely, researchers examining school-level decentralisation present less optimistic findings. One recent study tracing the effects of the 73rd and 74th Constitutional Amendments on school management found mixed, and in some cases negative, effects on student achievement (Kameshwara, Shields, & Sandoval-Hernandez, 2023). Concurrently, the central government began playing a larger role through centrally sponsored schemes that required states to co-finance programmes; this shift highlights how education’s placement on the Concurrent List directly contributes to contemporary budget-expenditure mismatches.  Two indicators are utilized in this study to track this gap, chosen to capture different dimensions of the issue. Education expenditure as a share of GDP—which rose only slightly from about 3.8% in 2013-14 to 4.64% in 2020-21 (PRS Legislative Research, 2022), remaining well short of the 6% goal—measures whether education is being prioritised relative to the size of the economy over time. The second indicator, the variance between Budget Estimates (BE) and Actual Expenditure in a given year, captures implementation-level rather than policy-level shortfalls by measuring whether allocated funds are successfully deployed. Together, these two measures distinguish the issue of whether India allocates sufficient funds for education from the issue of whether it effectively spends those allocations. Furthermore, this execution gap varies significantly across the different stages of school education. Elementary education has generally received the strongest policy attention, supported by the legal mandate of the Right to Education Act, 2009. In contrast, secondary education faces greater challenges; enrollment ratios decline noticeably at this stage, and several centrally sponsored schemes designed to support it have repeatedly underspent their allocations (PRS Legislative Research, 2025). Higher secondary education exhibits even more severe disparities, marked by sharp enrollment declines and comparatively little budgetary focus. This historical pattern is corroborated by earlier state-level budget analyses, which demonstrate that elementary education is consistently prioritized over secondary education across most states (CBGA-CRY, 2016, 2018, as cited in Kundu & Rastogi, 2020). Given the distinct fiscal challenges at each stage, this study analyses elementary, secondary, and higher secondary education as separate analytical categories rather than a uniform system.  1.2. Statement of Problem  Despite constitutional provisions and recurring national policy targets aiming to devote 6% of GDP to public education, India’s public educational spending remains persistently low, hovering well below this threshold. However, the key challenge facing the Indian school education system is not merely the initial quantum of funds announced in annual budgets, but the systematic and recurring divergence between what is allocated (Budget Estimates) and what is actually spent on the ground (Actual Expenditure). This expenditure shortfall manifests across all administrative levels, driven by multi-layered bureaucratic red tape, delayed fund flows leading to a “year-end expenditure rush” and rigid matching-grant requirements between the Centre and States. Furthermore, public expenditure is severely skewed toward fixed revenue expenses such as teacher salaries, effectively crowding out essential capital investments in school infrastructure. Because this execution gap varies significantly across school tiers (elementary versus secondary) and regional economic boundaries, there is a critical need to evaluate how these fiscal mismatches occur and identify the structural, operational, and institutional factors causing allocated funds to lapse.  1.3. Research Questions  What are the trends of gap in education expenditure in the Indian school education system?  What do the trends of gap in education expenditure look like for three levels in Indian Schools?  What are the factors driving differences between actual and budgeted education expenditure?  1.4. Aim of Study  The primary aim of this study is to evaluate the Indian school education system through a comprehensive analysis of the gap between allocated budget estimates and actual expenditures. Specifically, the research seeks to analyze the longitudinal trends in education expenditure gaps at the macroeconomic level across Central, State, and combined governmental tiers. Furthermore, it aims to examine how these budgetary mismatches manifest across the distinct stages of school education—specifically comparing elementary and secondary levels. Ultimately, the study intends to conduct diagnostic qualitative and case-study evaluations to identify the systemic, operational, and institutional factors driving the divergence between budgeted and actual education spending.  1.5. Objectives of Study  To analyze the trend of gap