Higher education is the integral part of social infrastructure which determines the destiny of any nation. Public policy on education is one of the most significant areas of contemporary development strategy and in a developing country like India, investment on education assumes most important place in such a policy. The higher education sector in India has witnessed a paradigm shift in recent years, in order to shape the future social and economic progress it is necessary to expand, restructure and raising the quality of education in the country. Development of human resources is one of the main purposes of Higher Education, which will play a critical role in preparing the workforce to be constructively utilized. Therefore, India needs to show more concern over higher education in terms of quantity and quality. In this background, the paper presents a birds eye view of the public expenditure by the centre and the state on higher education along with sector wise allocation in the country. An attempt has been made to analyze the growth and trends in public investment with the help of statistical tools like correlation and regression analysis.