The
UPA government’s commitment to increasing the share
of public spending on education to 6 per cent of GDP
has been expressed in the National Common Minimum
Programme. This is a very important commitment, especially
given the huge shortfalls in good quality education
to the population, and has clear implications for
future growth as well. It could be argued that, given
the current levels of public spending on education
(at 3.2 per cent of GDP) and the international average
of such spending (at 5 per cent of GDP), this is a
very high figure to aim at, with unnecessary ambition
at the current juncture given the known fiscal constraints
and low prevailing tax-GDP ratios. However, it can
be argues that given the inadequate state of education
in the country, it may even be necessary to aim at
a higher proportion than 6 per cent. In any case,
there are several reasons why this is both a necessary
and desirable goal for the medium term.
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Quite apart from its social and economic effects,
education must be seen as a basic human right, which
is recognised in the Universal Declaration on Human
Rights but which has still not been made available
to all citizens of India. In fact, the government
of India has still failed to meet the commitment
made in the Constitution at the time of constituting
the Republic more than five decades ago, of providing
universal primary education to all our children.
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Not only is an unacceptably large proportion of
our population still illiterate, but the gaps in
provision of education are huge at all levels. There
is major excess demand for quality public education,
ranging from pre-school and elementary schooling
to higher education, technical training and professional
courses.
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It
is well known and now widely accepted that investment
in education is critically important for the future
economic growth and social cohesiveness of society.
Many of the potential payoffs to society from various
types of public investment in education are not
immediately apparent but are nevertheless very important.
(For example, the much hyped software boom itself
reflects at least partly the earlier public investment
in IITs.) Further, there are huge advantages to
society in having the general level of education
in society improve, not only because the quality
of the workforce improves, but because various other
aspects such as health, nutrition and sanitation
are positively affected, and also because educated
citizens can be more effective participants in a
democratic civil society.
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It is obvious in theory and evident in practice
that this is one area in which relying on private
provision will lead to very substantial under-provision
and socially suboptimal outcomes, because the social
returns to education far outweigh the private returns.
Relying on private profitability to determine investment
in this area, even in higher education, is socially
inefficient and does not ensure future knowledge
needs, which must necessarily be determined not
just according to current market considerations
but through some sort of plan-based assessment of
the likely future requirements of society. In any
case, profit-based provision of education typically
excludes a major part of the population and does
not ensure either merit or adequate representation
by gender, class or social group, making in undemocratic
in content. This is not to deny the usefulness of
private investment, but simply to state that this
cannot replace public expenditure in this area.
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While
public spending of education typically tends to
increase with per capita GDP, this is not the inevitable
pattern and can be influenced by public policy attitudes.
In fact several developing countries that have made
very substantial public investment in education,
have subsequently reaped the benefits in terms of
faster and more broad-based growth. Thus, in some
countries of East Asia, public spending on education
had increased to as much as 8-10 per cent of GDP
during the 1980s and first half of the 1990s, allowing
these countries not only to improve the quality
of their workforce dramatically, but also subsequently
to take advantage of this to promote economic activities
that involve moving up the international value chain.
Current levels of public
education spending
Although education is a concurrent subject in the
Constitution, at present the bulk of public education
spending is undertaken by the State Governments. Within
this, most is on revenue expenditure, of which the
largest single item is salary payments. Table 1 indicates
the level of total public spending on education by
Centre and States in 2004-05. This is dominated by
spending of the Education Departments at Centre and
State level, but also includes expenditure on education
made by 30 other government departments.
Table
1 >>
The
very low extent of capital spending is worth noting,
especially given the very large infrastructure gaps
in the country. There are still large numbers of villages
and urban settlements without government schools in
the approachable vicinity, as noted below. There is
also substantial overcrowding in existing schools.
Around 18 per cent of rural primary schools still
do not have any building, and another 20 per cent
function out of only one room, which would clearly
affect both the quality and effectiveness of teaching
in such schools. The inadequacy of other basic infrastructure
(separate toilets for girls and boys, clean drinking
water supply, electrical fittings and fans, etc.)
not to mention advanced teaching aids including computers,
is also well-established not only for many primary
schools but also for a substantial proportion of secondary
schools and institutions of higher learning. Clearly,
in the initial phases of increased public spending
on education, there is therefore a strong case for
increased capital expenditure particularly to meet
these very obvious requirements.
Chart
1 >>
As Chart 1 indicates, the bulk of public spending
is directed to elementary education, the revenue expenditure
on which accounts for more than 40 per cent of all
public spending on education. However, even in this
area, the current availability is far below need,
and there are important issues of poor quality some
of which also stem simply from inadequacy of resources.
However, it should be noted that this distribution
of public spending is unlike many middle-income developing
countries which place a larger proportion of public
resources on higher and technical education. In the
urge to ensure universal and compulsory primary education
(which is an essential goal) the importance of increasing
public investment in technical and higher education
must not be ignored.
Implications
of increasing public spending to desired ratio of
GDP
The stated goal of the Government would imply a near
doubling of the current education expenditure as a
share of GDP. Obviously. this cannot occur within
one year, as there is also the question of absorptive
capacity. If we suppose that the share increases gradually
(as defined below) rather than immediately, and that
nominal GDP (at market prices) increases at 12 per
cent per annum as the Planning Commission has projected,
then we get the following total amounts. Obviously
the bulk of these resources (around 80 per cent as
is currently the case) must be devolved to States.
Table
2 >>
Currently, capital expenditure is only 0.87 per cent
of total public spending on education. However, the
gaps in physical infrastructure which can only be
met with increased capital spending are very large.
Therefore in the initial phases of the expansion,
a greater proportion of resources must be devoted
to capital expenditure, which could then taper off
(still to a higher proportion than currently) over
time.
The
share of this expenditure to be allocated to different
heads must be based on various criteria, which include:
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the immediate need to fulfil certain constitutional
and legal norms and obligations, including for child
care (Supreme Court ICDS judgements), universal
access to education (Right to Schooling legislation)
and school meals provision (Supreme Court judgements),
etc.
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the assessment of physical requirement for education
infrastructure based on existing gaps, such as ensuring
pre-primary and primary schools in every village,
access to secondary schools within 5 km of habitation,
etc.
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the
projection of changing demographic structure and
the consequent increase in age-cohorts requiring
schooling at various levels.
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the need to ensure adequate access to higher education
to reach at least the minimum norm of 8 per cent
of population of relevant age group (15-24 years),
and preferably the international norm of 15 per
cent (the current ratio in India is 3 per cent).
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the perceived social requirement for various types
of technical and professional skills in the country
in future.
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the need to ensure at least some world class institutions
of higher education and learning with international
quality of physical and intellectual resources.
Legal
obligations of the Government
The most pressing immediate legal obligation
relates to providing mid-day meals in primary schools.
The cost of this at existing rates, for 2006-07 has
been estimated at Rs. 3452 crore. However, this is based
on the existing number of schools and does not take
into account either the need to increase the number
of schools and school-going children so as to provide
education for all, or the need to repay arrears to FCI
for past food disbursement. Therefore the actual number
may be closer to Rs. 5000 crore required per annum at
current prices.
The need to ensure universal schooling facilities at
least at elementary level, followed by eventual fulfilment
of the norm of 9 years schooling as envisaged in the
Right to Education Bill, will require very large increases
in physical infrastructure are described below. In addition
there will be need for substantial increase in teaching
staff and making available pedagogic material, newly
developed and in translation. Currently only 56 per
cent of children in the age group 5-9 years are attending
school, according to the Census. Ensuring that all such
children are in school will require a near doubling
of existing teaching staff. Since in any case existing
schools are understaffed and teacher-student ratios
are very low, an actual doubling of teaching staff may
be required to meet the national norm of 1 teacher per
40 students that GoI has declared to UNESCO. In addition,
in several states, there is a dual system of elementary
education, with ''parallel schools'' operating under
Sarva Shiksha Abhiyan and similar schemes, under which
teachers are not paid salaries but ''honorariums'' at
much lower rates. Bringing the remuneration for such
teachers into line with other teachers will require
further allocation for salaries. Assuming that salary
costs are currently around 80 per cent of revenue expenditure
of the education departments, this will imply a doubling
(in constant price terms) within 5 years.
This means that revenue expenditure will have to increase
by at least the amounts described in Table 3 in order
to meet the legal obligations of the Central Government.
(Since 0-4 years and 5-9 years both amount to 11.3 per
cent of population according to Census 2001, there is
no estimated increase in the number of elementary school
age children over the XIth Plan period.) This means
that around 80 per cent of the projected increase in
revenue expenditure will have to cater to meeting the
legal requirements of the Government regarding primary
schooling, leaving only 20 per cent of the increase
for secondary, higher and technical education.
It should be noted that other concurrent costs of teaching
have not been included in this, such as teaching material,
running expenses of schools, etc., and that this would
imply a substantially larger amount of revenue expenditure.
Further, there would be additional costs in terms of
teacher training etc., which are required to ensure
quality education. This suggests that even raising total
public expenditure on education to 6 per cent of GDP
over the XIth Plan would still leave some gaps in provision
of universal schooling and in quality of education (which
is certainly affected by resources even if resources
are not the only factor).
Table
3 >>
Some estimates of physical need for education
infrastructure
If
we assume that the entire population of children between
the ages 5 to 14 years should be in school by the end
of the XIth Plan, this creates a minimum need for physical
infrastructure. Accordingly the financial requirement
is estimated in Table 4.
Table 4
>>
It is apparent that just meeting this basic requirement
would cover nearly half of the projected increase in
capital expenditure over the XIth Plan period.. There
is the further issue that many rural schools are situated
in distant places which reduce the access of rural children.
According to the NSS 58th Round, around 20 per cent
of villages do not have pre-primary facilities even
within 2 km of the village, and 12 per cent do not have
primary schools within 2 km. This is an especially important
issue for girl children, which makes the physical requirement
for more school even greater.
All
this has still left out the issue of physical requirement
for secondary education and for institutions of higher
learning, which will be even larger than currently because
of the change in demographic structure. This will imply
additional capital and revenue expenditure to the tune
of at least 2 per cent of GDP over the XIth Plan period,
despite the fact that most of the projected amount can
easily be swallowed up by the requirements of elementary
education.
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