Thrift in Education

• Education industry is well flourished in India at par with the global level. With more than 1.4 million schools which have over 227 million students enrolled and more than 36,000 higher education institutes, India has one of the largest higher education systems in the world. However, there is still a lot of potential for further development in the education system.

• There have been various efforts to transform the education sector in India since independence. To strengthened the education sector in India, an education policy was adopted in 1968 based on the recommendation of the Kothari Commission (1964-66), which made education an integral part of the national development efforts.

• However, with the prevailing education system, there arises a question that, “How much should India spend on Education, given the rising strata of education in the world in terms of quality education?” As per the recommendation of Kothari Commission, Indian public expenditure on education must be 6% of gross domestic product (GDP).

• Spending 6% of GDP for public expenditure on education has become a commonly accepted norm across the world, with credibility drawn from actual experience across many countries. This goal is only directional and normative, not a precise measure for what may really be required for educational well being of any nation.

• This goal was reaffirmed in the New Education Policy of 1986 and its revision in 1992, with a suggestion that every attempt must be made to go beyond 6%. Since then, each successive government on multiple occasions has reaffirmed this goal of spending 6% of GDP on education. For clarity, “spending” and “expenditure” includes both operating and investment spends.

• India has never reached even near the goal of spending 4.5-5% of GDP expenditure on education. The closest it has come was in 2001, when this number hit 4.4%. The number has been over 4% only in three years since the goal was set; it has hovered between 3.3% and 3.8% since the 1980s and currently it is 3.8%.

• As against 3.8% of India, the public expenditure on education in the OECD is 5.4% and in Brazil 5.8%. In reality this headline number vastly understates India’s shortfall.

1. India’s education system is on development path and a way short of our actual need, for example: secondary school, colleges and teachers. We have neglected many critical parts like teacher education, physical and social sciences, humanities and vocational education. 

2. To cope up with this situation we need more money than countries that are done with the build-up, but we are significantly short of them. This large cumulative investment gap stunts the system and its capacity structurally, i.e. this is a structural investment gap.

3.  We have the habit of cutting the corner of the cost and underfund almost everything by design like hiring teacher at much lower salaries with short term contracts compromising the quality of education. Almost every expenditure head is ludicrously underfunded, e.g. school budget for teaching-learning material, training for teachers and principals, expenditure for basic things such as electricity bill and maintenance, research in colleges and universities etc. 

4. One shocking number that is emblematic of this underfunding: each child is supposed to get a nutritious mid-day meal at school for Rs.3.4. And this number is hardly been revised in the face of soaring food inflation. This operational funding gap makes ineffective, whatever we have built structurally, and eventually erodes it.

5. Our education system must be designed to serve the age group of 6-21. This number is 29% for India, 18% for OECD, and 23% for Brazil. To maintain this proportion we need more money, even if other things were to be equal. 

• With the accumulated funding deficit over decades, the magical thinking (of many) that private funding can substitute being disabused by reality, the economy demanding dynamic and higher capacities of the workforce, soaring societal expectation from education, and the massive population of the young, it’s clear that we need sustained public spending much in excess of what we have done, probably way over 6% of GDP.

• Until India’s poor tax-to-GDP ratio (18% at present) improves substantially this is not going to happen and will further deteriorate the education (and Health). This is not a matter of finance but of substantial political will and action over time, not merely the professional and elected political class, but by public, by all of us.