To give a boost to primary education in the country and in conformity with the Common Minimum Programme of the UPA, Finance Minister P Chidambaram on Thursday proposed to levy a cess of two per cent on income tax, corporation tax, excise and customs duties and service tax.

The new cess will yield about Rs 4,000-5,000 crore (Rs 40-50 billion) per annum and the entire amount will be earmarked for education including provision of nutritious cooked mid-day meal.

The education cess will be a 2 per cent surcharge on the total payable tax, and not 2 per cent of total income.

Chidambaram also proposed to launch a programme in central sector to upgrade 500 ITIs over the next five years at the rate of 100 institutes a year.

He said the schemes imparted by the ITIs must keep pace with the technological demands of industry and to produce world class technicians.

Under the programme, appropriate infrastructure and equipment will be provided, the syllabi will be upgraded and new trades will be introduced.

The minister called for the creation of a public-private partnership model for designing and implementing the scheme.

He said the selection of ITIs will be done in consultation with the state governments.

Chidambaram also announced that commercial banks have agreed to wave the collateral for educational loans up to Rs 7.5 lakh (Rs 750,000) if a satisfactory guarantee is provided on behalf of the student.

This is to ensure that no student admitted to any professional course in IITs and IIMs and medical colleges is deprived of the opportunity to study because of lack of funds.