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The Political Economy of Education in India

  • Jandhyala B. G. Tilak
Chapter

Abstract

The chapter presents a critical review of educational developments in India in the overall framework of educational policies, plans and programmes and discusses rather somewhat inexplicable divergences between policies, plans and their translation into action. As an illustration, a few major financial policies in education are discussed. Concentration on financial aspects does not mean that problems of Indian education lie squarely in finances and can be satisfactorily resolved, if financial solvency is attained. But “educational finance is probably the most controversial issue in the economics of education.” After presenting a critical review of the achievements and failures of the education system in India, it analyses a few financial dimensions relating to Indian education. In the context of growing financial squeezes, one may hope that private sector may play an important role in easing the financial problems in education particularly in a mixed economy like India. Besides analysing the nature and contribution of private sector to educational development in the country, it outlines a pragmatic policy in financing education that may enhance the contribution of private sector to public schooling on the one hand, and on the other hand may make the system less regressive.

Keywords

Educational explosion Allocation of resources Inequalities Private schools Private sector Inter-sectoral allocation Intra-sectoral allocation Fees Discriminatory pricing 

Walking through the jungle, a lion spied a mouse sitting sadly by a bush, and he asked the mouse what was wrong. “I am so small,” the mouse replied, “and all the other animals look down upon me.” “Then,” said the lion, “I can help you. Just stop being a mouse and be a lion instead.” The mouse was very grateful. “I shall certainly do what you suggest,” he said, “but how do I stop being a mouse?” “That,” said the lion, as he walked imperiously a way, “is for you to decide. I only formulate the policy.” 1

2.1 Introduction

Exactly 18 years after the first national policy on education (Government of India 1968), which was in turn promulgated 18 years after the inception of planning in the country and the adoption of the Constitution of the independent state, India adopted a new national policy on education in 1986 (Government of India 1986). One really wonders whether education is such a short-term activity that it needs a new policy every 18 years.

If one were to identify the single most important long-term sector of human development, it figures out to be education. A cycle of educational process itself is of about 18 years, and if one were to include early childhood education and life-long education, the span of the cycle is much longer, if not limitless; and the effects of an educational cycle can be felt over generations. Adopting a new policy on education every 18 years essentially ignores a priori the very long term character of education. However, in reality, there is no serious conflict in India, as (a) the latest statement of policy largely reiterates earlier statements, 2 (b) little action followed the earlier statement of policy, 3 and (c) as a result of (b) the diagnosis of the problems remains largely the same over the years, and if at all there is any change, it is towards the negative side, increasing the need for quicker action, and hence, it is only the time dimension that becomes important.

In India, there is need for a perspective (long-term) plan for education. Until now no such plan is attempted, 4 because if a plan is made, after all the money is also to be provided for it. A country which has accepted the principle of planned development continues, even after four decades of planning, to have no perspective plan for education as it is still treated as a “marginal issue” (Naik 1979). The absence of a long-term plan in education is perhaps one of the main sources of the ills of the system. This is also reflected in the new 1986 Policy. Rather the most important omission in this policy is the lack of a long-term socio-economic perspective of the country. Statements of policy on massive vocationalisation, large-scale ‘mechanisation’ of the whole educational system, setting up of rural universities, etc., exhibit no clear correspondence with educated unemployment, the skill requirements of the economy, the potential of self employment sector, the rigidities in the wage structure, the differences in wages between the rural and the urban, the public and the private, and the organised and the unorganised sectors, the dangers of crossing tolerable limits of dependence on other countries for computers, etc. The inter-dependence nature of education and other development sectors on each other on the one hand, and the diverse contribution of education to various sectors over a long period, on the other, necessitate formulation of a policy on education in a framework of inter-sectoral planning. Policy formulation requires clear prioritisation involving hard decisions regarding crucial choices.

The present paper proposes to critically review the educational developments in India in the overall framework of educational policies, plans and programmes, and discusses rather somewhat inexplicable divergences between policies, plans and their translation into action. As an illustration, a few major financial policies in education are discussed. A comprehensive discussion on policies and plans in education in India is beyond the scope of the present paper. The paper is highly selective and discusses only a few issues. Concentration on financial aspects does not mean that problems of Indian education lie squarely in finances and can be satisfactorily resolved, if financial solvency is attained. But “educational finances is probably the most controversial issue in the economics of education” (Cohn 1979, p. 257).

The body of the paper is organised as follows: After presenting a critical review of the achievements and failures of the education system in India in the following section (Sect. 2.2), Sect. 2.3 analyses a few financial dimensions relating to Indian education. In the context of growing financial squeezes, one may hope that private sector may play an important role in easing the financial problems in education particularly in a mixed economy like India. Section 2.4 analyzes the nature and contribution of private sector to educational development in the country. Section 2.5 discusses the need for a pragmatic policy in financing education. It discusses a proposal relating to discriminatory fee structure that may enhance the contribution of private sector to public schooling on the one hand, and on the other may make the system less regressive. The paper concludes with a brief summary and a few concluding observations.

2.2 An Overview of Educational Development in India: The Colonial Heritage and the Postcolonial Developments

2.2.1 ‘An Educational Explosion’

The role of education in development has been recognised ever since the days of Plato. Education, Plato believed, is in dispensable to the economic health of a good society, for education makes citizens ‘reasonable men’. Since education has high economic value. Plato argued that a considerable part of the community’s wealth must be invested in education. Major contribution to the discussion on the relationship between education and economic growth was made first by Adam Smith, followed by a long honourable tradition of classical and neoclassical economists until Alfred Marshall in the twentieth century who emphasised that “the most valuable of all capital is that invested in human beings”. However, “inline with the biased post war approach it was largely for gotten” (Myrdal 1968, p. 167), and no systematic study on the contribution of education to economic growth could be found in the literature, until The odore Schultz’s Presidential Address to the American Economic Association in 1960 (Schultz 1961), which created what is later aptly described as “human investment revolutloa la economic thought” (Bowman 1966). 5 Schultz’s pioneering works that led to this revolutloa has clearly established that education is not merely a consumption activity, but for the most part an investment, that leads to the formation of human capital, comparable to physical capital, making significant contribution to economic growth, were followed by significant and rapid growth in research on the relationship between education and economic development.

Synchronising with the human investment revolution in economic thought, many countries around the world, and more particularly the newly independent developing countries expanded their educational systems and made heavy investments in education. The rates of growth of educational systems in many countries exceed the rates of economic growth. This is not surprising. As Schultz (1989, p. 219) stated, “during the process of economic modernisation the rate of increase in human capital is higher than that of reproducible physical capital.” India stands as an outstanding classic example of massive expansion of educational systems among the third world countries. In the post-independent India, particularly since the inception of the plan era, an educational explosion has taken place, which may be described as an “educational miracle”. The ‘miracle’ is particularly important when one examines in the context of the colonial legacy. Mass education, comprising universal primary and secondary education, was never a priority in the colonial educational policy, nor was of course higher education. The colonial rule transformed an ‘intermediate’ literate society into a predominantly illiterate society (Basu 1982; also Desai 1986). ‘The beautiful tree’ (Dharampal 1983) was uprooted.

When the planning process was initiated in independent India there was a huge legacy of colonial educational system. The needs and prejudices of the colonial powers determined the basic structure, the shape and the ethos of the Indian educational system. Educational policy in India was clearly subservient to imperial economic policy. The colonial dependent economic relationship between Britain and India shaped the Indian education to serve the needs of the colonial powers. The policy of making India a raw material appendage and a market for British manufactured goods ruined the indigenous educational system with its great chronological depth. The characteristics of colonial education can be briefly summarised as follows 6 :
  1. (a)

    Colonial education was not a modernised transformation of the traditional system of education. As colonial education was not a complement to indigenous educational practices, as rather it was planned as an alternative, the indigenous system was destroyed and in its place the colonial system was developed.

     
  2. (b)

    Education in colonial India was highly restricted, as an economy that was expected to serve as a raw material appendage to the colonial powers, would not need educated manpower. The socio-economic base of education in colonial India was extremely narrow. Education was limited to the upper and the upper middle classes of the urban society. The free enterprise policy of the 1880s also created a system that excluded the vast majority of the toiling people. Further, it concentrated in and around port cities, and “this enclavisation of education was an important element of the spatial system of under development” (Raza 1985, p. 3).

     
  3. (c)

    Education was not required to form an input in economic development. It was to produce not trained manpower, but clerks and ‘middle men’ or ‘graduated cogs and wheels’ for the British administration. Education was meant only for colonial government employment.

     
  4. (d)

    The multilevel education system was highly pyramidical with very acute angles at the base. Primary and mass education did not receive any serious attention. It was only higher education that was found to be important, as the British believed in the ‘downward filtration theory’. But even at this level, it was literary higher education that was emphasised, and that was also confined to a short period, as the colonial powers felt threatened that higher education was breeding a ground for nationalist movement as in the United States. 7

     
  5. (e)

    Educational system in the colonial India was intended to weaken the forces of national movement.

     

India started almost from scratch, and has made significant progress during the post-independence period. When the plan era commenced in the country in 1950–51, 19.2 million children were enrolled in primary schools, 4.4 million in secondary schools and 360 thousand in universities and colleges of higher education. According to the latest available statistics, by 1986–87, the enrollment at primary level increased by more than five times, to 90.0 million, in secondary schools by 10 times to 44.3 million and in higher education by about 15 times, to more than 5.5 million. The number of educational institutions tripled during this period, increasing from about 250 thousand to about 750 thousand. Thus, the educational system got deepened and widened as well during the three and a half decades of planning in the country. Today, the number of pupils in India outnumbers the total population of England, France, Canada and Norway taken together. Every sixth student in the world enrolled at primary level, every seventh in the secondary level and every eighth in the tertiary level is an Indian. The enrollment at primary level is more than double the population of Spain and approximates three times the population of Canada. The enrollment at secondary level is roughly twice the population of Australia, and that at a higher level of education approximates the population of Denmark. In the country four out of every five in the age group 6–11, two out of every five in the age group 11–14 and one out of every five in the age group 14–17 are enrolled in schools. More than 4% of the population of the age group 17–23 are in universities and colleges. In all, the Indian educational system produces the third-largest professional class in the world, an asset that distinguishes India from the developing and some developed countries. The educational network is one of the largest in the world.

Such an educational explosion has been inevitable for at least three reasons (Tilak 1980a):
  1. (a)

    Provision of educational facilities in the pre-independence period were very insignificant. Independence has created an unquenched thirst for knowledge, resulting in an abnormal rise in social demand for education.

     
  2. (b)

    Second, building up a new socio-economic system after the end of the colonial rule required large-scale manpower with varied skills, and so the government could not but expand educational structure vertically.

     
  3. (c)

    Lastly, the public policy towards equality in education-led to the expansion of education horizontally.

     
This massive expansion was of course made possible partly by a rapid increase in investment in education. At the beginning of the planer a 1.2% of gross national product (GNP) was invested in education, which increased to nearly 3.5% by 1987. These figures refer to only the public investment in education. If household investment in education, which is found to be quite important for the educational system to work, is also taken into account, the total investment made in education by the society constitutes about 10% of GNP. 8 Some of these details are given in Table 2.1.
Table 2.1

Progress of education in independent India

 

1950–51

1960–61

1970–71

1980–81

1986–87

Literacy

Literates (millions)

59.3

105.3

161.4

237.7

Literacy (%)

(16.6)

(24.0)

(29.5)

(36.2)

 

Illiterates (millions)

297.6

333.9

386.0

420.4

Illiteracy (%)

(83.4)

(76.1)

(70.7)

(65.2)

 

Enrollments (millions)

Primary (I–V)

19.2

35.0

57.0

72.7

90.0

(Age group: 6–11)

(42.6)

(62.4)

(76.4)

(83.1)

(96.0)

Middle (VI–VIII)

3.1

6.7

13.3

19.9

28.8

(Age group: 11–14)

(12.7)

(22.5)

(34.2)

(40.0)

(53.2)

Secondary (IX–XII)

1.5

3.5

7.2

11.3

18.0

(Age group: 14–17)

(5.3)

(11.4)

(14.5)

(28.2)

 

Higher (I degree +)

0.2

0.6

2.0

2.8

3.6

(Age group: 17–23)

(1.0)

(2.0)

(5.2)

(6.8)

 

Institutions

Primary (’000s)

209.7

330.4

408.4

485.5

549.2

Middle (’000s)

13.6

49.7

90.6

116.5

137.2

Secondary (’000s)

7.3

17.3

36.7

51.6

64.2

Colleges (’000s)

General

0.5

1.0

2.6

4.0

8.8

Professional

0.2

0.9

3.1

3.3

0.8

Universitiesa

28

44

93

123

130

Teachers (10 thousands)

Primary

53.8

74.2

106. 0

136.3

152.2

Middle

8.6

34.5

63. 8

83.1

89.6

Secondary

12. 7

29.6

62.9

90.1

119.9

Expenditure (Rs. 10 millions)

Plan

20

90

115

309

Non-plan

94

254

1003

3238

Total

114

344

1118

3547

10,041b

Total as % of GNP

1.2

2.5

3.1

2.8

3.2

Expenditure at 1950–51 prices

Per capita (Rs.)

3.2

6.8

9.8

10.2

17.6

Per pupil (Rs.)

35.6

46.3

67.3

65.8

95.2

aincludes deemed universities

bBudgeted Expenditure

– Not available

Notes Literacy refers to Census years, 1951, 1961, 1971 and 1981

Expenditure relating 1980–81 and 1985–86 refer to only government budget expenditure

Figures in () are percent to the relevant age group population

Source Based on Education in India (New Delhi: Government of India, Ministry of Education, various years); Selected Educational Statistics 1986–87 (New Delhi: Government of India, Ministry of Human Resource Development, 1987); A Hand book of Educational and Allied Statistics (New Delhi: Government of India, Ministry of Human Resource Development, 1987); and Seventh Five Year Plan 1985–90, Vol. II (New Delhi: Government of India, Planning Commission, 1985), p. 265

All this massive expansion of education has a significant contribution to economic growth. In one of the earliest attempts (Dholakia 1974) to estimate the contribution of education to increase in the productivity, quality of the labour force and to economic growth, the relative contribution of education to increase in productivity per person was estimated to be as high as 14.01% during 1948–49 to 1968–69; and 0.36% of improvement in the quality of labour force was attributable to education. The relative contribution of education to the rate of economic growth was 6.79% during the same period. In fact, it increased significantly from 5% during 1949–61 to 10.06% during 1961–69. According to later works, these estimates were found to be underestimates. The contribution of education to economic growth in India was asserted to be as high as 34.4% (Psacharopoulos 1973). 9 It has been noted very clearly that investment in education in India is not at all “uneconomic” (Heyneman 1980). The economic returns to education in India are found to be reasonably high; they are comparable to rates of return to investment in the physical capital on the one hand, and to rates of return to education in other developing and developed countries of the world, and that they are moreover found to be increasing. For example, compared to the social rate of return of 20 and 17% in 1961 to primary and secondary education respectively (Blaug et al. 1969), the estimated returns in 1978 were 23 and 18% (Tilak 1987a), as given in Table 2.2.
Table 2.2

Returns to education in India

A. Internal rates of return to education (%)

Year

Private

Social

Sample reference

Source

Primary

Secondary

Higher

Primary

Secondary

Higher

1960–61

23

12

11

17

11

9

Urban India

Nalla-Goundan (1967)

1960–61

25

19

19

20

17

15

Urban India males

Blaug et al. (1969)

1978

33

23

12

23

18

11

West Godavari Dist.

Tilak (1987a)

B. Coefficient of schooling in the semi-log earnings function with years of schooling (S) and experience (EX) \( {\textit{In}}\,{\text{Y}} = \alpha + \beta_{ 1} \,\text{S} + \beta_{ 2} \,\text{EX} + \beta_{ 3} \text{EX}^{ 2} \)

Year

\( \beta_{ 1} \)

Other variables included

Sample reference

Source

1968–72

6.7

Cropped area, HYV, cultivators, agricultural labourers, tractors

Punjab and Haryana agricultural wages

Chaudhri (1979)

1978

7.4

None

West Godavari

Tilak (1979)

1980

9.7

None

Udaipur city

Dutta (1985)

Note See Tilak (1987a) for an elaborate discussion on these estimates

Estimates of rates of return based on the earnings function also indicate substantial and increasing returns to education, 10 as if there exists, paradoxically along with educated unemployment, large unmet demand for educated labour with demand for educated labour force increasing more rapidly than the supply. The effect of education on agricultural development was also found to be quite high. Among several scholars, 11 Sidhu (1974) 12 found that an increase of one year in the level of schooling of the population would result in 1.49% increase in the farm output. On the whole, the contribution of education to economic growth in India has been significant. What economists can measure, they measure; the rest is qualification. While it could not be so precisely quantified, the contribution of education to social development was also found to be significant, i.e., in reducing birth rate, infant mortality rate and poverty and in improving life expectancy, levels of living, and income distribution.

2.2.2 The Conspicuous Failures

Paradoxically along with the remarkable educational expansion, one finds a pathetic educational scene. A general feeling is that “education in India is in perils.” At the very beginning of the 1970s, when the predictions of Philip Coombs (1968) regarding the world educational crisis were yet to be taken seriously, Amartya Sen (1970) warned about the “crisis in Indian education.” The “continuing educational crisis” (Naik 1982) has several dimensions. As the recent national policy on education (Government of India 1986, p. 2) stated, “problems of access, quality, quantity, utility and financial out lay, accumulated over the years, have now assumed such massive proportions that must be tackled with the utmost urgency.”

India inherited a top heavy-bottom weak, elite, literary, unproductive and irrelevant educational system from the British rule. It was so strongly well entrenched by the time India got independence that these characteristics continue to dominate educational scene even today in independent India. In fact, what has happened in the post-independence period is “merely an expansion of the earlier system with few marginal changes in content and technique” (Naik 1965, p. 13). Even the outer structure of the school system has been preserved. During the post-independence period, as Desai (1987) rightly argued, “indigenous pressures, socio-political and economic, have perpetuated and strengthened this colonial model of educational system.” While this reflects the deep roots the colonial policies had taken in the system, this also reflects on the state policies of independent India. After all, education has been under the control of the Indian rulers not just for last 40 years after independence, but since 1921. In sum, despite quantitative achievements, the system is characterised by severe failures on several fronts.

Of all, the “most conspicuous failure of the Indian educational system” has been the failure with respect to universalisation of elementary education, a goal set by the Constitution, to be achieved within a 10-year frame after the Constitution was framed, which still eludes. The goal has been repeatedly postponed from plan to plan. While the Seventh five-year plan aimed at its fulfilment by 1990, the 1986 Policy, that was prepared only a year later, postponed it further to 1995, universalisation of primary education by 1990, and elementary education by 1995.

The present official enrollment figures, if adjusted for over and under age-children, show that only about half the eligible children are presently in the primary and middle schools. There are a today a larger number of children outside schools than there were in 1911. The number of children not attending schools was 46.6 million in the age group 6–14 in 1978, compared to 44.1 million in 1911 and 41.9 million in 1961. The capacity of the system to retain the children is found to be extremely poor. On average out of every 100 enrolled in Grade I, only 23 children reach Grade VIII. “The rest make do with a smattering of literacy or add to the mass of illiterates in the country” (Government of India 1985, p. 35). Rates of drop-out are generally higher for girls, for rural children and for children of backward castes than for other children in the society. The highly impoverished educational structures are partly responsible for this phenomenon. According to the Fourth All-India Educational Survey (NCERT 1982), more than half the primary schools in the country do not have proper or pucca buildings, about one-third have no furniture—benches, ‘chairs, or even mats, about 40% have no blackboards, 50% have no material for games and sports, 70% have no library books for children and 85% do not have lavatories. A third of the schools are single teacher schools. The conditions of middle schools are not much different. Some colleges are also in a similar state. It is no wonder that such schools can hardly retain a significant proportion of the entrants. With such alarming rates of drop-outs, many observers believe that universalisation of five years of primary education for the children of the age group 6–11, not to speak of elementary education of eight years for the children of the age group 6–14, cannot be achieved even by the turn of the century. 13 Accordingly, some began arguing for restricting the universalisation of elementary education to 4–5 years (e.g., Kurrien 1983; Bordia 1985), and/or universalising elementary education through non-formal education, which is considered to be a second-rate one in respect of quality as well as quantity, with smaller resources per student and with less attention paid by the educational planners, policymakers, administrators, teachers and the people at large. Further, non-formal education which was originally conceived as a supplementary system is now being planned as a part of the main strategy of universalization. The 1986 Policy (Government of India 1986, p. 12) clearly states:

It shall be ensured that all children who attain the age of about 11 years by 1990 will have five years of schooling or its equivalent through the non-formal stream. Likewise by 1995, all children will be provided free and compulsory education up to 14 years of age. (emphasis added)

This, what may be termed as the policy of ‘minimizing the minimum needs’ has already spread to the programmes of literacy. Even by defining literacy as the most basic skill of writing and reading one’s own name, India remains predominantly illiterate with the number of illiterates increasing over the years. In fact, adult literacy has been “criminally neglected” by the planners in India (Naik 1965, p. 23). The result is obvious: the number of illiterates in 1981 was about double the number the country had at the beginning of the century. The country today is not only more illiterate than what she was at the tine of independence, the number of illiterates increasing by about 50% from about 300 millions in 1951 to 437 millions in 1981, but also the rate of growth of illiterates has been higher during the post-independence period than in the comparable period before independence, the respective figures being 1.25% (1951–81) and 0.85% (1921–51). Further, half the illiterates in the world live in India.

Beginning with a policy objective of universal literacy, independent India has been gradually scaling down the objective to adult (15 + age group) literacy and further to ‘young’ adult (15–35 age group) literacy. Yet the problem of adult illiteracy has been haunting the Indian educational planners. The Sixth five-year plan aimed at 100% literacy in the age group 15–35 by 1990. At the beginning of the Seventh Plan, it was estimated that the country was having at least 88 million young adult illiterates (Adiseshiah 1985, p. 87).

2.2.3 Expansion of Higher Education

These under-achievements, if not total failures, in mass education are in contrast to what may be called excessive achievements in higher education. As can be noted from Table 2.1, while enrollments in elementary education grew at a snail’s pace by about 4.5 times during 1950–51 to 1986–87, enrollments in higher education increased by 20-fold. While one may argue that this is partly an outcome of the relatively small base of higher education at the time of independence, this nevertheless reflects a bias in the public policy in favour of expansion of higher education. 14 This expansion of higher education does not have any clear public rationale. Universities and colleges were opened without any genuine economic and educational considerations. As Altbach (1982, p. 211) observed, “Indian higher education has grown by accretion in the past quarter-century, and there has been little clear planning based on either the needs of the broader society as defined by the government in the various Five Year Plans or the wishes of the academic community”. All this has resulted in a glut in the labour market contributing to problems of educated unemployment, which has been endemic in India for quite some time. The statistics based on the live registers of employment exchange 15 presented in Table 2.3 show that the number of the unemployed who have been educated to matriculation and above, increased by about 100 times from 0.16 million in 1953 to 16.5 million in 1986, the latest year for which these data are available. During this period, the share of the matriculates in the total decreased from 77 to 57%, that of the undergraduates was more than doubled, increasing from 10 to 25%, and that: of the graduates and above also increased but marginally from 13 to 17%. All this suggests the increasing mismatch between manpower requirements of the economy and the output of the higher educational system in the country. Strong positive correlation has been reported between the growth in higher education and growth in unemployment of the educated, suggesting not only that growth in higher education has contributed to building the numbers of the unemployed, as the highly publicly subsidised higher education serves the ‘baby-sitting role’ as well. 16 This excessive growth in higher education has also contributed to some extent to the ‘brain drain’, which is estimated at between 5500 and 6500 scientific, technical and professional manpower annually (Sukhatme and Mahadevan 1988). Finally, the rapid growth in number of students attending the colleges and universities has contributed to the deterioration of the quality and standards in higher education.
Table 2.3

Unemployment of the educated in India (figures in thousands)

Year

Matriculates

Under graduates

Graduates and above

Total

1953

125

17

21

163

1956

187

31

27

244

1961

463

71

56

590

1966

619

204

494

917

1971

1296

605

393

2294

1976

2828

1255

1120

5103

1981

5088

2325

1685

9018

1986

9446

4145

2861

16,452

Source 1953–61: Factbook on Manpower (New Delhi: Institute of Applied Manpower Research, 1963); 1971–76: Employment Reviews (New Delhi: Ministry of Labour, Directorate General of Employment and Training, various years); and 1981–86: Statistical Outline of India 1988–89 (Bombay: Tata Services Limited, 1988)

2.2.4 Growing Inequalities

The Indian educational system has been plagued with growing inequalities. Despite remarkable progress in the quantitative expansion of education and also in narrowing of the gaps between the different socio-economic strata, inequalities in the educational system are still quite sharp (see Subbarao 1987). Even after nearly four decades of development planning many weaker sections of the society are left untouched by the vast educational network, as education, particularly higher education still remains elitist in nature, being accessible mainly to the offsprings of the middle and upper classes. Differences in the rates of literacy and in the enrollment ratios between the rural and the urban population, between the men and the women, and between the backward castes and the non-backward castes are quite high. Further, inequalities in educational development between states in India are also marked. For instance, while as per the gross enrollment figures, primary education is universal among the boys in the country as a whole, hardly one out of every four girls of the scheduled tribes of the relevant age group in Rajasthan is enrolled in school. Similarly, the rate of literacy varies violently between 90% among urban males of Kottayam District (100% for the whole population in the Kottayam town) in Kerala and less than 1% among rural scheduled caste women in Barmer District of Rajasthan. In higher education too the inequalities between states, and by gender, caste, etc., are also very high. Hardly 6–7% of the enrollment in higher education belongs to scheduled castes. Women hardly constitute one-fourth of all the students in colleges and universities, and in some regions, the corresponding figure is less than 10%, and in general, states like Orissa, and Rajasthan lag far behind other states in the number of colleges and enrollments (Raza et al. 1984). All this is despite the explicit assertions in the plans for equality of opportunities, and for balanced regional development in education.

Presenting an overview of the achievements made during the post-independence period, Naik (Citizens for Democracy 1978, pp. 13–14) summed up the situation:

It would … be incorrect to describe the existing educational system as an instrument for educating the people … it is more appropriately designed for not educating them. In fact, the primary objective of the system is not to spread education among the people, but to function as an efficient and merciless a mechanism to select individuals, who should continue to remain in the privileged sector or enter it afresh … The main achievement of the system is to condemn the bulk of the children of the common people to be drop-outs and failures and to confine them to a life of drudgery and poverty which has hardly any parallel in the contemporary world or even in our own history.

Policy makers and planners are not unaware of the diseases of the system. The Indian educational system has had the privilege of having been scrutinised by a series of commissions and committees starting from the late nineteenth century. 17 In addition, it has also had two ‘national’ policies on education after independence. The report of the Education Commission (1966) is a detailed and comprehensive report on the entire spectrum of education during the post-independence era, the problems it faced, the reforms necessary to establish a genuinely “national system of education” that serves the interests of the common people, the priority of action and steps to be taken to carry out the recommendations. The Commission took into consideration all the previous thinking and experimentation and after analysing critically the then existing situation, observed: “Indian education needs a drastic reconstruction, almost a revolution” (Education Commission 1966, p. 488). The Commission prepared a blueprint of educational development in India for a 20-year period (1966–86). The voluminous report of the Commission is one of the few documents on education that has been discussed and debated in a good number of meetings, committees and conferences. But practically nothing was done. As a final action on the Report, the National Policy on Education 1968 was adopted. 18 The recommendations of not only the Kothari Commission but also those of every commission appointed by the Government of India, are as much relevant today as at the time when the reports were prepared. 19 Transformation of education has been long overdue.

All this should not mean that the planners in India are unaware of the importance of education. From the very first five-year plan onwards, education has been an integral part of economic planning. Plan after plan sang hymns in praise of education. For example, the Second five-year plan stated,

Economic development naturally makes growing demands on human resources and in a democratic set-up it calls for values and attitudes in the building up of which the quality of education is an important element. (p. 500)

The Third five-year plan stated more emphatically the versatile contribution of education to social and economic development:

Education is the most important single factor in achieving rapid economic development and technological progress and in creating a social order founded on the values of freedom, social justice and equal opportunity. Programmes of education lie at the bases of the effort to forge the bonds of common citizenship, to harness the energies of the people and to develop the natural and human resources of every part of the country … in all branches of national life education becomes the focal point of planned development. (p. 573)

Every five-year plan stressed universalisation of elementary education, adult literacy, development of vocational education, equality and quality in education. Yet, both the quantitative and qualitative achievements have been short of the targets. As Laska (1968, p. 113) observed, “India has not been able to implement a relatively optimal educational plan, in spite of the fact that the responsible educational authorities seem to have been aware of the nation’s basic quantitative educational requirements.” It is beyond the comprehension of the present paper to critically discuss all the policy questions that range across wide variety of issues, including language policy, curriculum development, teacher training, single teacher schools, examinations, financing education, centre–state relations, decentralised planning, etc. The remainder of the paper discusses a few significant financial issues in education, as an illustration, to highlight rather inexplicable divergences between policies and plan objectives and their translation into action.

2.3 Political Economy of Investment in Education

2.3.1 Allocation of Resources to Education

Inadequate investment in education is believed to be inter alia one of the most important factors for all the maladies of the educational scene in India. Recognising the contribution of education to economic development (Education Commission 1966), and keeping in line with the human investment revolution in economic thought, the Government of India for the first time accepted the concept of ‘investment’ in education in its 1968 Policy and quantitatively fixed a target of 6% of national income to be invested on education from the public exchequer as early as possible. But despite recognising the contribution of education to economic growth and development, the pattern of allocation of resources to education is still far from satisfactory. After 20 years, the proportion of GNP invested in education has not been raised even to 4%. This proportion is not only less than the average proportion of GNP invested in education in the developed countries and the world total, but also less than the average in many other developing regions of the world, including Africa, as can be noted in Table 2.4, and it is barely sufficient to provide any meaningful education to a fraction of the current student population in the country. 20 Now it is promised that “it will be ensured that from the Eighth Five Year Plan onwards … it will uniformly exceed to 6% of the National income” (Government of India 1986, p. 29).
Table 2.4

Growth in public expenditure on education in the world

 

As percentage of gross national product

Per inhabitant at current prices (US $)

1965

1986

1965

1986

Africa

3.4

5.9

5

36

Americas

5.1

6.1

95

475

North America

5.4

6.5

187

1113

Latin America

3.1

3.5

14

60

Asia

3.5

4.6

7

56

Europe

4.3a

5.4b

61

365b

Oceania

3.7

5.6

63

456

Developing countries

3.0

4.0

5

27

Developed countries

5.1

5.8

87

595

Total

4.9

5.5

38

165

aExcluding USSR

bIncluding USSR

Source UNESCO Statistical Yearbook 1978–79 (Paris: UNESCO, 1979); and UNESCO Statistical Yearbook 1988 (Paris: UNESCO, 1988)

The fraction of the national income that a country invests in education is not necessarily a function of the wealth or poverty of the nation. The social and political pressures considerably influence the scale of expenditure on education. Accordingly, some poor countries invest in education more than some rich countries. Within India, for example, Kerala is a classic example in this case. No strong correlation could be found between state domestic product (SDP) per capita and the proportion of SDP invested in education in various states in the country (Tilak 1988a). As Coombs (1985, p. 164) argued, “with other things being equal, some societies, including some of the poorest, will undoubtedly invest considerably more of their scarce resources in education than other societies.”

It is indeed more distressing to note that expenditure on education is still treated as consumption expenditure, included a long with expenditure on recreation, etc., in the Indian national income accounts, and as a social service expenditure, if not as a social burden, even though the planners are aware that “education is a unique investment in the present and the future” (Government of India 1986, p. 3) and that it presents “a crucial area of investment for national development and survival” (Government of India 1986, p. 29). But in practice, resources are allocated to education on ‘residual’ or on adhoc basis. No economic investment allocation criteria are seen to be taken into account in the mechanism of allocation of resources to education and their subsequent cuts at various stages of planning (Tilak 1983).

When the needs of the educational system have been increasing, the priority accorded to education in the country has been coming down. The share of the educational sector in the total plan expenditure has been consistently declining—7.86% in the First five-year plan, 5.83% in the Second Plan, 6.87% In the Third Plan, 4.9% in the Fourth Plan, 3.2% in the Fifth Plan and 2.7% in the Sixth Plan. The Seventh Plan, however, proposed an outlay of 3.6%. Thus not only has the relative importance given to education in the plan expenditure gradually declined, but also the relative share of education in any five-year plan has been one of the lowest, as shown in Table 2.5. All the major sectors have each received more than five times the allocation made to the educational sector. It is quite shocking that even in absolute terms, there was a marked decline in the plan expenditure on education in constant prices from the Third Plan to the Fourth and to the Fifth Plans. 21 In the annual budget of the government which is “a relatively more reliable gauge of what is really happening .. (and which] provides direct evidence of the relative priority given to education” (Coombs 1985, p. 142), there is a steep decline in the share of education from a level of 14.1% in 1970–71 to 10.8% in 1985–86. 22 But the government is aware that “the deleterious consequences of non-investment or inadequate investment in education are indeed very serious” (Government of India 1986, p. 28).
Table 2.5

Sectoral outlays in five year plans in India (%)

 

First plan

Second plan

Third plan

Plan holiday

Fourth plan

Fifth plan

Sixth plan

Seventh plana

Agriculture and allied

14.8

11.8

12.7

16.7

14.7

12.3

13.7

12.7

Irrigation and flood control

22.0

9.3

7.8

7.1

8.6

9.8

10.0

9.4

Power/energy

7.7

9.5

14.6

18.3

18.6

18.8

28.3

30.5

Industry and minerals

4.9

24.1

22.9

24.7

19.7

24.3

15.8

12.5

Transport and communications

26.4

27.0

24.6

18.4

19.5

17.4

16.1

16.4

Social Sectors of which

24.1

18.3

17.4

14.7

18.9

17.3

16.2

18.6

Education

7.9

5.8

6.9

4.6

4.9

3.3

2.7

3.5

Health

5.0

4.9

2.9

3.2

3.9

3.2

3.1

3.7

Total (Rs. 100 millions)

100 (196)

100 (467)

100 (858)

100 (663)

100 (1578)

100 (3943)

100 (10,965)

100 (18,000)

aProposed outlay; others are actual

Source Chakravarty, Sukhamoy, Development Planning: The Indian Experience (Oxford: Clarendon Press), pp. 108–9; Educational and Allied Statistics (New Delhi: Government of India, Ministry of Human Resource Development, 1987); and The Economic Times’ Statistical Survey of the Indian Economy 1984 (Bombay: Economic Times, 1984)

2.3.2 Intra-sectoral Allocation of Resources

An equally important question relates to the relative priorities within education. The pattern of intra-sectoral allocation, i.e., allocation of resources across different levels of education as presented in Table 2.6, shows a lopsided emphasis on different layers of education. A clear-cut, but not meaningful shift in the priorities is quite obvious. In the First five-year plan 56% of the total plan resources for education were allocated to elementary education, the highest share it has ever received, 13% to secondary and 9% to higher education. The share of elementary education came down drastically in the subsequent plans—to 35% in the Second Plan, 34% in the Third Plan and to 30% in the Fourth Plan. Then it increased to 35% in the Fifth Plan and again declined to 31% in the Sixth Plan; and then tends to decline to a very low level of 29% in the Seventh Plan, a plan that aimed at universalization of elementary education by the end of the plan, i.e., 1990. Adult education, another area of mass education has received scant attention in the plan period. It received 3% of the educational outlay in the First Plan, and it has been less than or around 1% thereafter. The highest share it has ever received until now was a bare 3.5% of the total outlay on education in the Sixth Plan. 23 Similarly, non-formal education, another branch of mass education has never been paid any serious attention in the allocation of plan resources. At the same time the share for higher education has increased from 9% in the First Plan to 25% in the Fourth Plan, and then marginally declined to 22% in the Fifth Plan and to 19% in the Sixth Plan. The Seventh Plan proposed an outlay of 12%. All this is in contrast to the explicit statements of policy and plan objectives that stressed repeatedly the importance of universal elementary education, and adult literacy, and also the need to ‘consolidate’ higher education.
Table 2.6

Allocation of plan outlays for education in five year plans, by levels (%)

Educational level

Expenditure

Outlay

First plan

Second plan

Third plan

Plan Holiday

Fourth plan

Fifth plan

Sixth plan

Seventh plan

Elementarya

56

(85)

35

(95)

34

(201)

24

(75)

30

(239)

35

(317)

30

(870)

29

(1830)

Adult

3

(5)

2

(4)

(2)

(0.2)

1

(6)

2

(32)

4

(110)

6

(360)

Secondary

13

(20)

19

(51)

18

(103)

16

(53)

18

(140)

17

(156)

25

(743)

16

(1000)

University

9

(14)

18

(48)

15

(87)

24

(77)

25

(195)

22

(205)

18

(537)

12

(750)

Art and culture

b

1

(3)

1

(7)

1

(4)

2

(12)

3

(28)

4

(119)

b

Other generalc

7

(11)

9

(23)

11

(64)

10

(33)

11

(88)

7

(58)

12

(347)

28

(1761)

Sub-total

87

(133)

82

(224)

79

(464)

75

(241)

87

(680)

88

(805)

89

(2616)

89

(5701)

Technical

13

(20)

18

(49)

21

(125)

25

(81)

13

(106)

12

(107)

11

(329)

11

(682)

Total

100

(153)

100

(273)

100

(589)

100

(307)

100

(774)

100

(912)

100

(2943)

100

(6383)

Percent of total plan outlay for education

7.86

5.83

6.87

4.60

4.90

3.27

2.70

3.55

Note ‘Plan Holiday’ refers to the period of ‘plan inter-regnum’. See the Text; Totals for the Sixth Plan figures may not add up, as some are actuals and some are outlays; and Figures in parentheses are Rs. in 10 million

aIncludes pre-school education

bIncluded in ‘Other General’

cIncludes teacher education, vocational and special education (youth services) etc.

Source A Handbook of Education and Allied Statistics (New Delhi: Ministry of Human Resource Development, 1987); Five Year Plans (New Delhi: Government of India, Planning Commission, various years); Economic Survey 1985–86 (New Delhi: Government of India, 1986); Annual Reports (New Delhi: Government of India, Planning Commission, various years); and Annual Reports (New Delhi: Government of India, Ministry of Education/Human Resource Development, various years)

There have been three phases in the pattern of allocation of resources to education. The first phase covers the First Plan period (1951–56) that witnessed high priority being given for mass education, elementary and adult education together receiving about three-fifths of the resources for education; the second phase covers the Second, and the Third plans and the plan inter-regnum (1966–69) 24 that marked a drastic decline in the importance accorded to mass education, and doubling or trebling of resources for higher education; and the third phase corresponds to the period after the Third Plan (after 1969) that experienced a slight reversal of trends in the intra-sectoral allocation of resources for education. 25 It may be argued that had the pattern of allocation of resources in educational sector adopted in the First Plan continued, universalisation of elementary education would have been an easy task, if not already accomplished by now (Tilak and Varghese 1983). It is not only the plan resources, but also the total expenditure on education, that includes the ‘non-plan’ expenditure which forms a substantial part in the budget on education, that shows relatively higher rates of growth for expenditure on higher education compared to that on school education, as can be seen in Table 2.7. In real terms, 26 the expenditure on higher education increased by 10 times during 1950–51 and 1979–80, while that on primary education increased by hardly five times. The share of primary education in the total expenditure declined significantly from 40% in 1950–51 to 26% in 1979–80, while that of every other level, excepting secondary vocational level, increased during this period.
Table 2.7

Allocation of total expenditure on education, by level of schools

 

50–51

55–56

60–61

65–66

70–71

75–76

80–81a

Growth rate (%)

At current prices (Rs. in millions)

Direct Expenditure

Primary

366

540

630

1213

2365

4463

8156

10.9

Middle

77

154

429

810

1709

3410

5511

15.3

Secondary

        

General

231

376

689

1504

2700

4636

10,140

12.6

Professional

60

81

146

105

128

206

b

b

Higher

184

293

565

1241

2709

5410

10,236

14.4

Total

1153

1897

3444

5859

11,183

21,047

36,021

12.1

At constant (1950–51) Prices (Rs. in millions)

Primary

366

607

580

774

1147

1317

1613

5.0

Middle

77

173

396

517

829

1007

1090

9.2

Secondary

        

General

231

422

635

960

1309

1368

2006

6.6

Professional

60

91

134

67

62

61

b

b

Higher

184

329

521

792

1313

1597

2042

8.3

Total

1153

2131

3176

3741

5422

6213

7125

6.2

Distribution (percent)

Change

Primary

40

37

25

26

25

25

24

−16

Middle

8

11

17

13

18

19

16

8

Secondary

        

General

25

26

27

32

28

25

30

−2

Professional

7

6

6

2

1

1

b

Higher

20

20

22

27

28

30

30

10

Total c

100

100

100

100

100

100

100

 

Note Primary includes Pre-Primary; Secondary Professional includes professional, technical, vocational and special types; and Totals include, unless otherwise mentioned, ‘indirect’/nonrecurring expenditure, not divisible by levels of education

aRecurring or Nonrecurring expenditure

b Included in ‘General’

cDirect or Recurring expenditure only

Source ‘At Current Prices’: Education in India (New Delhi: Government of India, Ministry of Education/Human Resource Development, various years) for earlier years, and for 1980–81 Statistical Abstract India 1986 (New Delhi: Government of India, Central Statistical Organisation, 1987); Others: Estimated by the present author

2.3.3 The Bias in Favour of Higher Education

In a country where two-thirds of the population are illiterate, universalisation of elementary education still eludes, unemployment of the higher educated increases, primary education brings in better economic returns than higher education, and above all where public financing of higher education is regressive in nature and effect, the benefits of higher education accruing primarily to the upper classes, and those from primary education to the masses, the intra-sectoral priorities are quite important in educational planning in a welfare state whose one of the main objectives is equity. Should higher education be expanded, particularly, if it is at the expense of lower levels of education? Considerations for efficiency and equity lead us to question whether it is desirable to expand investment in higher education faster than in primary education? While intuitive answers are simple and straightforward, the actual process is complicated by the dominance of political forces, which largely favour expansion of higher education. What are the political economy factors that lead to the undesirable patterns of allocation of resources?

“Any developing country that continues to give priority to higher education has far less chance of achieving universal primary education by the end of this century than if it puts a cap on higher education expenditures” (Coombs 1985, p. 160).

The Indian planners are not ignorant of this simple truth. The dangers of a policy of an artificially induced expansion of higher education became obvious within a few years. The non-optimality arising out of a disproportionate expansion of higher education is clearly felt. The accelerated growth of higher education has out-run the growing capacity of the economy to employ the manpower efficiently; and it is also has out-run the capacity to allocate the scarce resources adequately for higher education and optimally for the whole educational system. Realising this as early as in the Fourth five-year plan it was proposed that the expansion of university-level education in arts and commerce be slowed down. Such intentions continued to be stressed in the subsequent plans: the emphasis on higher education in the Fifth Plan was on consolidation and improvement of standards; and the Sixth Plan took note of the “undesirable growth of facilities for general higher education, specially at under-graduate stages in arts, commerce and humanities, and the consequent increase in incidence of unemployment among the educated” (Government of India 1980, p. 353). 27 But few significant practicable policies were proposed to accomplish this. On the other hand, the allocation to higher education has continued to be high, and the higher educational sector continued to expand unabated. In short, the pattern of allocation of resources seems to be guided by no objective criteria. Policy makers seem to admit this, when it was stated,

There is no point in discussing universalisation of elementary education, vocationalisation of education, removal of illiteracy, qualitative improvement of school and higher, particularly technical education, or of establishment of institutions of excellence unless a system is evolved for allocation of funds on the basis of an objective determination of norms. (Government of India 1985, p. 81, emphasis added)

How can one explain the growing bias in public policy in favour of higher education and against mass education, while all the three familiar criteria of educational planning, viz., the criterion of rate of return, the manpower planning approach and the principle of social demand suggest the opposite (see Tilak 1980b)? This also stands in contrast with the empirical situation characterised by (a) the existence of increasing evidence of the contribution of mass education to socio-economic development, 28 (b) the higher incidence of unemployment among the higher educated than among the lower educated (Tilak 1992), and (c) the need for fulfilment of the Constitutional Directive, goals of the five-year plans and social objectives such as eradication of adult illiteracy?

This bias in favour of higher education and against mass education is neither a sudden phenomenon, nor is it unique to Indian education. It indeed represents a colonial heritage in many developing economies. The colonial era ended by leaving the masses of people mostly untouched by any formal education. The ignorance of the masses of the country owes its origin largely to the colonial policies. The colonial governments by neglecting mass education, and supporting higher education, helped “to preserve and make more insuperable the barrier between an entrenched upper class and the masses of people” (Myrdal 1970, p. 172, emphasis original). Both the colonial and independent governments are influenced by similar class structure and represent the class interests of the elite high-income groups, and accordingly favor expansion of higher education, as t he benefits from higher education tend to go to the elite groups and the benefits from primary education to the masses (Bowles 1972). Only the upper middle and upper class families have the means to send their children to colleges and universities. For example, 80% of the student s in higher education belong to the highest 30% of the society in India (UGC 1978, p. 2). 29 In the independent India, the vested interests of the ruling elite, along with social demand, produced an unbridled expansion of higher education. The social demand for higher education comes from the people not necessarily based upon any individual or national economic considerations; it is based more upon social and cultural considerations including social prestige value of education or irrelevant and irrational economic considerations like dowry. Further, the social demand is not truly social, it is ‘induced’ and supply-determined (Tilak 1986, p. 212). “The effective demand for education,” as Myrdal (1970, p. 174) also rightly notes, “comes from the ‘educated’ and articulate upper class.” Not to have responded to such ‘social’ demand was neither in the interests of the ruling class, nor was it feasible practically, as it might undermine their very survival.

Higher education can be advantageously used in political competition for power by these governments, besides preserving, if not accentuating, the unequal distribution of resources through the regressive effects of public financing of higher education (see Tilak 1989a). Higher education forms an excellent vehicle for the government to transfer the resources from the poor to the rich without obvious dissatisfaction, as in principle higher education is open to all classes, and therefore conceals its inegalitarian effect (Bhagwati 1973, p. 24).

The dominating upper classes are already through primary and secondary schools and hence they feel no need for further expansion or improvement in the quality of school education. They, in fact, feel “a vested interest in maintaining the cleft between the ‘educated’ and the masses” (Myrdal 1970, p. 191). Further, widespread literacy and mass education are feared as causes for raising the consciousness of the poor and their organisation that may eventually not only effect the distribution of income and resources in the country, but may also destabilise the upper class capitalist government as the experience of Kerala shows (see e.g., Zagoria 1972). Hence “the governing elites refrained from pushing policies that would rapidly raise the consciousness and power of the vast masses of rural and unorganized poor” (Desai 1987).

Basically, the interest of the political forces in education is related “to the prospect of politicisation, that is the conversion of material, human, and symbolic educational resources into political forces that can be used in political competition for power” (Rudolph and Rudolph 1972, p. 30). Within education, it is more often higher education that is seen as a ‘source of political allies’ in a class-characterised society like India, compared to primary and secondary education. That nearly 95% of the private colleges in states like Maharashtra are “owned” by politicians 30 suggests the extent of the political gains of higher education, at the time when the Government of India (e.g., 1985, p. 113) expresses its desire to “depoliticize” education.

The democratic government in independent India cannot be totally blind to the social realities. The conflict between the vested interests of the ruling elite on the one hand, and the social realities on the other led to the emergence of a dual system of education, a tiny sector providing expensive quality education for the privileged few through the private schools known sarcastically as ‘public’ schools, and private colleges, and cheap education of poor quality for the masses in the public sector. This debate on private versus public education is taken up in the following section.

2.4 The Private Sector in Education

In a mixed economy where the private sector has contributed significantly to industrial and agricultural development, the role of the private sector in the field of education needs a detailed analysis, particularly during phases of economic shortages, if not crises, when the government ability to invest further is nearing saturation, but when still both quantitative and qualitative development of education is essential. In this context, two aspects are important: the role of the private sector in the financing of education, and the role of the private sector in the administration, planning and management of education. A general view is that the private sector did not contribute significantly in either of these aspects. What is the scope for enhancing the private sector’s role in education in India? Does it come into conflict with equity aspects?

To start with, private sector in education is totally different from private sector in the economy in general. Most private schools and colleges in India, as in many countries (see James 1986), receive as much as 95% or even higher proportion of their expenses from the state exchequer. 31 Private education or private schools mean necessarily privately managed system, and not necessarily privately funded system of education. Even with respect to management and decision making, the private schools could be ‘controlled’ by public authorities. The controls extend to use of funds, fee levels, staffing patterns, salary scales, etc. More than three-fourths of the total of a bout 5000 colleges in 1981 are such privately managed colleges. There are about a dozen ‘autonomous’ colleges, which are not subject to control by the government with respect to syllabi, examinations, etc., but they also receive substantial funds from the government (UNESCO-ROEAP 1984, p. 100). A few missionary colleges that were opened with philanthropic motives also receive substantial government aided are also subject to controls. Probably except a few such colleges, most private colleges which have been founded in the recent past are operated as commercial enterprises. They need to survive for a few years before they can qualify for government financial aid, and both during initial and later periods, they make profits by underpaying teachers and other staff, charging various types of non-tuition fees, and through other malpractices.

While a vast majority of the private schools and colleges in India are funded by the public exchequer and hence are called “aided private institutions”, there are a few private schools, called “public schools”, that do not receive any state subsidy and are least regulated by public authorities; but they constitute an infinitesimally small proportion of the total number of schools in the country. In 1978, private unaided primary schools constituted 1.6% of the total number of primary schools in the country, and in the secondary (including higher secondary) sector 3.5% as shown in Table 2.8. The relative production efficiency of these schools (Hanushek 1986) needs to be examined. But in general, one finds no superiority of private schools over public schools in this regard.
Table 2.8

Government and private schools in India 1978

 

Primary

Secondary/Higher secondary

Government schools

55.9

39.2

Private schools

  

Aided

42.5

57.3

Unaided

1.6

3.5

Total

100.0

(475.3)

100.0

(47.1)

Note Figures in () are number of schools in thousands

Source Based on NCERT (1982)

The share of the private finances in total educational finances in India is very limited. Ignoring the unaided private institutions for a moment, the contribution of private sector to educational finances in the form of gift, donations, endowments etc., was a petty 3% of the total educational finances. This figure used to be around 12% at the time of inception of planning in the country.

It is not possible to state exactly how much of the financial support for private colleges and schools in India comes from private sector, as no country-wide data on private unaided schools are available. Given that such schools are very few in number, their share in the total educational finances cannot be significant. The scanty evidence available indicates that private schools and colleges have grown largely in response to the prospects of making ‘quick profits’ (Nair and Ajit 1984, p. 1847), and/or for political power, and are detrimental to all but few (Kothari 1986). “Motives of profit, influence, and political power conspired,” as Rudolph and Rudolph (1987, p. 296) observed in a recent study, “to accelerate founding’s as local politicians created colleges to secure the reliable political machine a loyal staff and students could provide.”

As Foster (1982, p. 5) noted, few educational issues can be discussed in post-colonial societies like India that were not foreshadowed in some way in the colonial past.

Education in private schools in India is no exception. Modern private schools and the payment of fee in these schools in India owe their origin to the Wood’s Dispatch of 1854, which made elaborate provisions for grants-in-aid to private schools. Under the provisions of the Dispatch, educational institutions were allowed to be run privately for profit. By the provision for grants-in-aid for the private schools, the colonial government was not only able to reduce financial burden on the public treasury, but also could introduce elitist character into the educational system providing education of the kind the upper classes desired for their offsprings, without a large expenditure by the government. Through this the government was also able to stop financial assistance to all indigenous schools so that eventually they disappeared and the British could have a better control on the educational system 32 The modern system in the independent India in effect is unfortunately a continuation of the same system of grants-in-aid, and it has the same ill effects. The Indian public (unaided private) secondary schools are indeed comparable with the British public schools. As Kumar (1987, pp. 28–29) observes, the Indian public schools “draw their distinctiveness from the spirit of British public schools, which they imitate and whose historical origins they share. Like their British counter parts, Indian public schools breathe the spirit of a bygone era of history and continue to uphold an unmistakable aura of Imperial days.” The Indian public schools suffer from the same diseases of the British ones, which were impoverished by the feebleness of the social spirit of the same country and were “victims of its precipitous class divisions, its dreary cult of gentility, its inability to conceive of education as the symbol and spirit of a spiritual unity transcending differences of birth and wealth” (Tawney 1964, p. 55). The private institutions, more particularly the unaided private schools and colleges, practice exclusiveness through charging high tuition fee, and alarmingly large “capitation fees” or “donations” and through selection of children on the basis of intellectual aptitude. The tuition fees in the private institutions are so high that few lower and middle class households can afford even to apply for admission in these schools. For example, in Bombay compared to tuition-free education in government schools, private schools (excepting a few private schools that have been established as charities) charge tuition fee ranging from Rs. 4–5 a month to upwards of Rs. 200 a month (Chitnis and Suvannathat 1984, p. 191). 33 Many “public” schools quite deliberately exclude lower socio-economic strata, taking economic status of parent as a criterion (Singh 1972; Bhatia and Seth 1975).

Second, the process of meritocratic selection of children started at the age of three and a half to six is highly divisive from social and economic point of view. “Merit” is judged in terms of etiquette of the elite society and certain types of skills which may not be necessary for formal education, but which are possessed only by high-income families. Thus, “select ion by merit becomes indistinct from selection according to socio-economic background” (Kumar 1987, p. 30). 34

In higher education, growth of private engineering and medical colleges has been a recent phenomenon. As a market response to the unmet private demand of the upper classes for higher education, there has been proliferation of such colleges. There are about 161 private engineering colleges in the country which charge either capitation fees or a considerably higher tuition fees than the colleges run by the government (Shatrugna 1988, p. 2624). These colleges receive little public support, but charge ‘hefty’ donations and capitation fees from the students. Engineering colleges in Maharashtra in 1989, for example, charge donations anywhere between Rs. 50,000 and Rs. 90,000. These are in addition to tuition and other normal fees charged over Rs. 8000 per annum compared to Rs. 500 in government colleges. 35 Private colleges for general education, such as the ‘parallel colleges’ in Kerala, have also been operating on more or less the same lines. The tuition fees in these colleges are 2–3 times higher than in government colleges (Nair and Ajit 1984).

There are strong disequalising forces inherent in the private educational system. A World Bank study (Psacharopoulos and Woodhall 1985, p. 144) rightly fears that private schools may “turn out to be socially and economically divisive in the future.” In case of India, Dasgupta (1979) has already found that there were disequalising forces inherent in private education system, and that the government school system was not adequate to counteract these forces; as a result the whole educational system was found to be a disequaliser accentuating income inequalities. No evidence is available to show that the external efficiency of these schools and colleges is higher than that of the government system of education. The private costs of education in private schools is so high that the advantage, if any, in the earnings associated with private schooling cannot be significantly higher than the earnings associated with government schooling, and as a result, the rate of return to private education could be quite less compared to education in state-run schools. 36

Given all this it seems to be right to argue that the benefits of education in private schools accrue largely to the elites, as private sector attracts mainly the elites, as they provide expensive and presumably quality education, while the benefits of education in public schools, in general, go to the masses, as the public schools are compelled generally to choose quantity in the quantity–quality trade-off and accordingly to provide inexpensive education.

To sum up, private schools and colleges, aided as well as unaided, in India do not fulfil either the efficiency criterion or the equity principle, nor dot they contribute significantly to educational finances in the country. Yet, they grow in number, particularly in cosmopolitan urban areas to satisfy the needs of the “gullible parents” (Government of India 1985, p. 80), and some state governments support their expansion, so long as they serve their vested interests. With them, “the system of inter locking interests of capital, educated elites, bureaucrats and politicians is thus mutually supportive and complete” (Kothari 1986, p. 596). Private unaided engineering and medical colleges are allowed by the governments in Karnataka, Tamil Nadu and Maharashtra, and recently in Gujarat and Andhra Pradesh. While earlier policies 37 would seem to be against the growth of such private schools, the 1986 Policy is conspicuously silent on this, even though the government’s Policy Perspective that preceded the Policy statement, took note of it, when it stated: “A large number of technical colleges have come up which charge sizeable capitation fee for admissions. There is a strong feeling that their activities should be curbed because they are providing access to education on the basis of economic status of the guardians and not on the basis of merit” (Government of India 1985, p. 98). Why are the policies of the government not in consonance with its own diagnostic perceptions. Kothari (1986, p. 594) rightly stated, “there has come into existence a class of rich and well-to-do people consisting of politicians, top bureaucrats, business executives, small and big industrialists, traders, businessmen, technocrats, professionals in independent private practice and large landholders which is able to pay capitation fee and high recurring fees. It is pressure from these people, which has resulted in the relaxation of the government policy.”

Interestingly, the government not only allows the growth of such private colleges, but also for example, in the state of Andhra Pradesh, the government itself is contemplating the creation of such institutions ostensibly to provide high quality expensive professional education to all. Like in the ‘public’ schools, selection of the students into the proposed professional institute would be based on the aptitude test, and the student number would be restricted to 300. It would refuse capitation fee or donations, but would charge a tuition fee of Rs. 15,000 per annum for engineering and management courses, and Rs. 20,000 for medical courses (Government of Andhra Pradesh 1987). 38

One cannot see any clear difference between private colleges and this government institute, and may logically fear that like the elite ‘public’ schools, such government institutes would promote elitistic character and contribute towards worsening social equities in the society. In the school sector, the Navodava schools proposed in the Policy may also contribute towards perpetuating the dual school system, unless the proposal is exceptionally sincerely implemented. In course of time, the merit ordered criterion for admissions into these private or government run expensive institutions would be replaced by ability-ordered criterion, and the high fees, not to speak of capitation fees, would effectively debar the students from middle class and even upper middle-class families, not to mention of the lower income families. “The objective of equal opportunities for education would be jeopardised in a big way. The overall effect would be to convert education into a force for reinforcing the existing stratification of the society” (Kothari 1986, p. 596).

2.5 Towards a Pragmatic Approach to Financing of Education

Until now it has been noted that the story of Indian education is full with quantitative miracles as well as with conspicuous failures, some of which may be attributed to differences between state policies and actions. It is widely felt that the paucity of resources is one of the most important reasons for the failures. It is generally argued that in a mixed economy like India the private sector should be encouraged to take increasingly more significant role in financing education. 39 The limited experience indicates that the Indian private sector is not yet ready to meaningfully shoulder the financial responsibilities of education. The ‘public’ schools make money by charging exorbitant tuition fee from the students and by not necessarily investing the whole revenue in education. The aided private schools on the other hand, somewhat regulated by the government control, also make profits by charging high fees on the one hand, and on the other hand through malpractices in the payment of salaries of teachers and other staff, and in their recruitment like in the “public” schools. 40 They make profit at the expense of the public exchequer. Hence there is no convincing case for public financing of private institutions, that only yield quick profits to the private entrepreneurs, in this social merit good.

But the near saturation levels of the public ability to finance education require a pragmatic policy that increases the private sector finances for education. Hence what may be suggested is not privatisation of the educational system, but increasing the private share in financing government school system.

Private finances for education are of two kinds: (a) donations, endowments etc., and (b) the fee, together now contribute about 12% (donations and endowments 3% and fee 9%) of the total educational finances in India (see Table 2.9). In higher education three-fourths of the expenditures are met by the government—52% by the state governments, and 22% by the central government, including transfers through the University Grants Commission, and less than 20% of the total expenditure comes from private sources: 13% in the form of fees, and 7% in the form of donations, endowments and others, as given in Table 2.10 (see also Tilak 1989b). There exists some scope to raise resources by encouraging individuals and organisations to make large endowments and donations to the educational sector through tax incentives and other measures, and also to develop a credit market for the educational system to provide education loans to the students. Nevertheless, the net effect of such voluntary efforts may be limited. 41 On the other hand, one may concentrate on reforming the fee structure.
Table 2.9

Private and public finances to education in India (%)

 

1950–51

1960–61

1970–71

1980–81

Government sector

    

Central and State

Governments

57.1

68.0

75.6

80.0

Local Governments

(Zilla Parishads, Municipalities, Panchayats etc.)

10.9

6.5

5.7

8.6

Private sector

Fees

20.4

11. 2

12.8

8.8

Endowments, Donations, etc.

11.6

8.3

5.9

2.6

Total

100.0

(1140)

100.0

(3444)

100.0

(11,183)

100.0

(35,469)

Note () Rs. in million

Source Education In India (various Years); and Statistical Abstract India 1986

Table 2.10

Finances for higher education, by sources 1979–80 (%)

 

Government

University

Fees

Endowments

Others

Total

Central

UGCa

State

Local

Recurring

Universities

7.1

20.1

42.5

0.1

3.1

15.1

0.6

11.4

100 (2273)

Research

Institutions

84.7

0.2

4.1

0.1

b

3.7

0.1

7.1

100 (476)

Colleges

5.6

3.4

64.1

0.9

5.7

15.5

0.7

4.1

100 (5451)

Total

10.6

7.8

54.7

0.6

4.6

14.7

0.6

6.3

100 (8200)

Non-recurring

Universities

21.2

30.3

35.9

0.2

2.5

c

10.0

100 (547)

Research

Institutions

93.1

0.4

2.4

b

b

c

4.1

100 (127)

Colleges

15.1

9.3

43.0

1.1

4.9

c

26.5

100 (525)

Total

26.1

18.0

35.5

0.6

3.3

c

16.6

100 (1199)

Total

Universities

9.8

22.0

41.2

0.1

2.9

12.2

0.5

1.1

100 (2819)

Research

Institutions

86.5

0.2

3.7

0.1

b

2.9

0.1

6.4

100 (602)

Colleges

6.4

3.9

62.3

0.9

5.6

14.1

0.6

6.1

100 (5976)

Total

12.6

9.1

52.2

0.6

4.5

12.8

0.5

7.6

100 (9398)

aUniversity Grants Commission

bNil or negligible

cIncluded in ‘Others’; – Not relevant

Note Figures in () are Rs. in Millions

Source Based on Education in India 1979–80, Vol. II (New Delhi: Government of India, Ministry of Human Resource Development, 1987)

2.5.1 Fees in Indian Education

The trends in the total fee contributions 42 to educational finances in India are quite disturbing, some of which can be briefly noted as follows:
  1. (a)

    During the pre-independence period, fees used to form a significant proportion of finances for higher education. Fees amounted to about 30% during 1896–1947. In 1896–97 universities used to be supported to the extent of 92% by fees. Even at the time of independence, in 1946–47, fees in colleges and universities used to form about 45% of total expenditure (Azad 1984, pp. 35–38; see also Misra 1962). They declined to 13% in 1979–80.

     
  2. (b)

    Since independence, even though the total fee income for the entire educational system increased by more than 13 times during 1950–51 to 1980–81, there was a steady decline in the relative contribution from 27% in 1950–51 (30% in 1881) to 17.2% in 1960–61; they declined further to 9% in 1980–81. If these figures are adjusted for the direct subsidies to the students in the form of scholarships, the net income from fees constituted still less, 6.4%, in 1979–80.

     
  3. (c)

    If adjusted for price increase during the same period, the total fee income increased by two and a half times, the index increasing from 100 in 1950–51 to 264.4 in 1980–81.

     
  4. (d)
    On average, in real terms, the fee per student in Indian education in 1980–81 was nearly half of what it was in 1950–51, even though at current prices it increased by three times, as the figures in Table 2.11 show. The fees declined at every level, and subsidies increased. For example, a university student in 1980–81 paid as fee one-fourth of what he used to pay in 1970–71.
    Table 2.11

    Fees in Indian education

     

    Fee income

    Fee

    Net fee

    Current prices

    Constant prices

    Current prices

    Constant prices

    As percent of instructional cost

    (Total Rs. Millions)

    (Rs. Per Pupil)

    1950–51

    233.3

    233.3

    9.11

    9.11

    27.1

    20.4

    1960–61

    590.3

    541.4

    12.31

    11.29

    17.2

    11.3

    1970–71

    1432.4

    673.8

    17.38

    8.18

    12.8

    8.2

    1977–78

    2410.8

    671.7

    23.76

    6.62

    9.8

    7.1

    1978–79

    2505.3

    667.4

    24.32

    6.47

    9.2

    1979–80

    2727.7

    598.5

    24.43

    5.36

    8.9

    6.4

    1980–81

    3116.4

    616.5

    27.91

    5.52

    9.1

    Note Net fee is defined as fee minus scholarships. See the text

    – Not available

    Source Based on Tilak, J.B.G., and Varghese, N.V., “Discriminatory Pricing in Education”, Occasional Paper No. 8 (New Delhi: National Institute of Educational Planning and Administration, 1985); Education in India 1979–80 Vol. II (New Delhi: Government of India, Ministry of Human Resource Development, 1987); and Statistical Abstract India 1986 (New Delhi: Government of India, Central Statistical Organisation, 1987)

     
  5. (e)
    The fee structure in quite uneven across different levels of education. On average a student in higher education, and more particularly in higher professional education pays fees, which in relation to direct/recurring expenditure per student, are much smaller than what are paid by students in secondary schools. Even in absolute terms, the fees per student in professional education are about 20% less than the fees in general higher education (see Table 2.12). 43
    Table 2.12

    Cost and fees in Indian education, by levels

     

    Costa per pupil (Rs.)

    Total fee income (Rs. in millions)

    Fee per pupil (Rs.)

    Fee/Cost per pupil (%)

    1970–71

    Primary

    57.00

    47.1

    1.14

    2.01

    Middle

    84.85

    68.2

    3.39

    3.99

    Secondary

    168.56

    500.0

    31.21

    18.52

    Colleges

        

    General

    421.54

    368.4

    164.91

    39.12

    Professional

    1180.83

    101.0

    132.03

    11.18

    Universities

    2942.67

    155.2

    857.46

    29.07

    1979–80 (at current prices)

    Primary

    142.20

    98.0

    1.95

    1.37

    Middle

    189.60

    245.0

    8.79

    4.63

    Secondary

    366.32

    987.0

    41.87

    11.43

    All Higher

    1482.83

    1230.9

    229.50

    15.48

    Jr Colleges

    325.50

    27.0

    61.46

    18.88

    Collegesb

    1142.80

    842.0

    181.97

    15.92

    Universitiesc

    7464.10

    344.1

    1240.77

    16.62

    1979–80 (at 1970–71 prices)

    Primary

    65.35

    45.0

    0.89

    0.63

    Middle

    87.13

    112.6

    4.04

    2.13

    Secondary

    168.35

    453.6

    19.24

    5.25

    All Higher

    681.45

    565.7

    105.47

    7.11

    Jr Colleges

    149.59

    12.4

    28.24

    8.68

    Collegesb

    525.18

    386.9

    83.62

    7.32

    Universitiesc

    3430.19

    158.1

    570.21

    7.64

    Note As the classification was changed in 1976–77, exact comparable levels cannot provided in higher education

    aRecurring or Direct expenditure only

    bI Degree and above

    cIncludes other institutions for higher learning

    Source 1970–71: Tilak, J.B.G., and Varghese, N. V., “Discriminatory Pricing in Education”, Occasional Paper No. 8 (New Delhi: National Institute of Educational Planning and Administration, 1985); and 1979–80: Based on Education in India 1979–80 (New Delhi: Government of India, Ministry of Education, 1987)

     
  6. (f)

    As a proportion of direct expenditure per student, university education, which is generally postgraduate general or professional, is cheaper for the student than college (general) education, or even junior college education, which is presently treated as higher secondary level.

     
  7. (g)

    The decline in the relative contribution of fees to total educational finances over the years has been most pronounced in the university sector. It declined from 45% at the time of independence to about 15% by the end of 1980s. 44

     

All this evidences show that education, particularly higher education is heavily subsidised by the government. Such huge public subsidisation causes several ‘perverse’ effects in the society, particularly on equity, as through higher education a transfer of resources takes place in the society from the lower income groups who pay the bulk of the taxes from which the resources for education are drawn, and who form a small fraction of students in higher education, to high-income groups who constitute the main consumers of higher education (see Tilak 1989a). In India, government expenditure which forms the main basis for financing education is financed from indirect taxation to the extent of 90%, paid mostly by the poor majority. High public subsidy also acts as a “disincentive for [the student for] for becoming self-reliant, kills personal initiative and conditions the students to a state of dependence” (Shatrugna 1988, p. 2624). Thus, there exists much scope for significantly reforming the structure of fees in higher education so that not only more resources are generated, but also that higher education becomes less regressive, and hence more equitable.

There are valid reasons for confining the fee reforms to higher education only. First, elementary education is anyhow expected to be totally free, as per the Constitutional Directive, and the Declarations of the United Nations and its bodies, and in secondary education the students already finance a reasonable proportion of their cost of instruction. Second, the students in higher education are relatively better off economically to start with, and through higher education they increase the probability of quick employment and better wages. Third, it is in higher education where the relative contribution of fees declined very steeply, in contrast to other levels of education. Fourth, it should be added that it is the subsidies in higher education that are in general found to be regressive having perverse effects on inequalities, transferring resources from the poor to the rich 45 (Psacharopoulos 1977). Fifth, it is higher education that has a lower economic rate of return to the society compared to elementary and secondary education, as already noted. Lastly, in general, the demand for higher education is relatively in elastic to fee structure, i.e., increases in fees do not lead to any significant fall in enrollments, as there is large unsatisfied private demand for higher education (Handa 1972), reflected partly by the growth of private colleges in India that charge high fees/donations.

2.5.2 Discriminatory Fees

The anomalies in the present pattern and structure of fees are apparent to the Government of India. The Policy Perspective stated that “the pricing of education at other [secondary and higher] levels will have to be reconsidered and quantum and share of subsidisation will have to be related either to merit or the dictates of social justice” (Government of India 1985, pp. 81–82). How is this objective to be translated into action? Generally, a steep increase in fees has been suggested for a long time by many (e.g., Blaug et al. 1969, p. 247; Government of India 1985, p. 50). But a uniform increase in fees for all students would be regressive. After all, fee is “the most regressive form of taxation … which falls more heavily on the poorer classes of society and … [is] an anti-egalitarian force” (Education Commission 1966, p. 111).

On the other hand, a structure of discriminatory fees 46 can be advantageously adopted to generate more resources and at the same time to ensure social justice. Depending upon (a) the income levels of the students’ families, and (b) cost of instruction, different fee rates should be charged for different students, the richest paying the maximum share of cost of instruction, and the poorest income groups paying no fee at all.

Along with this, to make higher educational system more equitable, a system of discriminatory incentives may also be adopted that favours lower income groups, while at the same time rewarding merit. The richest quartile of the students could be required to pay 75% of the cost of instruction, the second richest quartile 50%, the third richest quartile 25%, and the bottom quartile could be exempted from payment of any fees. Thus, the higher the income level of the students, the higher the rate of fees they should pay. Yet, since education is a public merit good, no student should pay the full cost of education. At the same time, poor students would receive the same education as the wealthier students in the same system but without paying any fees. Thus the proposal would generate more resources and at the same time, it would be progressive and equitable. It has been estimated in an empirical exercise (Tilak and Varghese 1985) that such a scheme would generate 2.8 times resources generated otherwise through fees in 1970–71 in professional higher education in India.

Discriminatory fees have certain advantages, in addition to generating additional resources. Being based on costs of education, if the cost of a particular type of education, say engineering education, are higher than that of general education, the proposal automatically guarantees higher level of fees in engineering education, and vice versa.

Similarly when costs of education increase, fees would increase correspondingly. Levels of fees may also vary among the different regions in the country in accordance with the regional variations in costs of education. More important, all students, whether they pay no fees or 75% of the cost of instruction, receive education of the same quality and quantity at the same place. It avoids creation of dual structures of education providing education of high quality for the rich and education of poor quality for the poor.

Simultaneously, half the scholarships could be awarded to the bottom poor half of the students based on the criteria of merit and means of the students, while the remaining 50% of the scholarships should be given purely on merit, irrespective of the fact whether the students belong to the lower or upper economic categories. Such a discriminatory incentive scheme would be both efficient and equitable, as all the meritorious students will be rewarded, at least 50% of the scholarships go to the poor, and higher the proportion of meritorious students in the lower economic classes, higher (than 50%) would be the scholarships to the lower strata. Thus discriminatory fee policy along with discriminatory incentive system could be highly progressive.

The proposal is not likely to have any significant impact on demand for higher education in India. As there is excess demand for higher education, even for expensive education, the suggested increase in fees would probably not result in any significant diminution in the enrollments. Further, since it is only the relatively wealthy who would be required to pay fees, the demand for education form lower income groups cannot be expected to fall, and if at all there is any negative effect, the discriminatory incentive scheme should be able to counterbalance it. Third, since for the wealthy higher education becomes expensive, the quality of education might be improved though better inputs. The baby-sitting role of higher education gets reduced, and only genuinely interested students seek admission into higher education, thereby improving internal efficiency of the system.

Having noted all this, it should be added that the suggested reform of discriminatory pricing and incentive mechanism can be only a partial solution to the problems of financing and equity in higher education in India.

2.6 Summary and Conclusions

This paper presented a quick review of the educational developments in India concentrating on the post-independence period. While the achievements of four decades of development planning are impressive, the failures are also shocking. While colonial policies were responsible for some aspects of the current educational scene, it may be stressed that the state policies of the independent country during the last 40 years also share the major blame. State actions are often found to be not in consonance with the state policies and plans. The divergences are some what inexplicable. In a number of cases in India conflicts between expressed goals and actually proposed programmes are noted. As Myrdal (1970, p. 204) stated, “the distortion of educational efforts from commonly expressed general goals has its basis almost everywhere in a social, economic, and political stratification, giving a small upper class a dominant position.” As an illustration, a few major financial policies in education are discussed in this paper.

The government realises that inadequacy of financial resources is generally felt to be one of the critical factors for the desperate state of affairs in education. Accordingly, in Sect. 2.3 the financial aspects are reviewed, briefly analysing the underlying forces that influence allocation of resources to education and between different levels within education. In the context of growing budget squeezes for education, one may feel that in a mixed economy like India the private sector may play an important role in easing the financial crisis in education. But the experiences show that the contribution of private sector to educational finances in India is extremely limited; and the role of the private sector in the overall educational development, including administration, management and financing aspects of education, is indeed not conducive for the development of the welfare state: it may be socially divisive and financially ineffective as argued in Sect. 2.4. It is felt that while the private sector in India in general, is not ready to shoulder the educational responsibilities of the nation, the contribution of private sector to financing public education can be improved. One proposal often suggested in this context refers to raising the fees. But a general rise in fee may have a highly inequitable effect. Hence, a pragmatic policy is suggested here that involves introduction of discriminatory fee and discriminatory incentive system based on the socio-economic background of the students, cost of instruction, and the pattern of rewarding education in the labour market, may not only generate additional resources for education but also promises to make higher education less inequitable and this proposal may be superior to several other alternatives available for generating additional resources for education. Fee is an important political question. Like most reforms the reform in fee of the kind suggested here too requires strong political will. At the same time, it may also be noted that the suggested reform in fee is not a panacea to all the major problem of Indian higher education. It is only a partial solution. It neither cures all the major problems in Indian education described in Sect. 2.2, nor even the few financial problems out lined in Sect. 2.3.

After all, it is true that the problems of education cannot be solved solely by throwing money. But without money, modern educational systems cannot work. While the educational system is starved of adequate financial resources, mobilisation of adequate finances will not solve all the problems; but the lack of resources do aggravate them. In short, finances are only a necessary, but not a sufficient condition for development. Neither the total resources available to education in India are adequate, nor are they spent efficiently on various levels. The costs of under-investment in education and of the misallocation of resources within education are indeed quite high. To conclude, most educational policies are political in nature. More political factors complicate the realization of these policies, often causing wide differences between state policies, plans and actions. Financial issues like allocation of public resources, and mobilisation of additional finances involve more active political actors with varied interests. Basically the absence of a long-term plan for education is perhaps one of the main sources of the fundamental problems of the system. The economy that aims at progress based on the principle of development planning cannot afford to have its huge educational system without a perspective plan. The need for long-term educational planning in the country is indeed quite significant. Unless pragmatism and sincerity dominate state actions, most educational goals, including basic needs in education, will remain unfulfilled.

Notes

  1. 1.

    From Palkhiwala (1984, p. 147, emphasis added).

     
  2. 2.

    For instance, one critic observed that there is “not a single new idea in the new policy” (Dinesh Mohan 1986, emphasis original).

     
  3. 3.

    See for an elaborate discussion Naik (1982).

     
  4. 4.

    The only such plan is the Post-war Educational Development in India (CABE: Central Advisory Board of Education 1944), known as the Sargent Plan, prepared before the independence.

     
  5. 5.

    See Blaug (1975) for a description of the views of classical economists on education.

     
  6. 6.

    See Gunnar Myrdal (1968), Kelly and Altbach (1978), and Naik and Nurullah (1945). See for a short discussion, also Misra (1962), Basu (1982), and Desai (1987).

     
  7. 7.

    For example, the British fears were well reflected in the famous statement made by Randle Jackson, a member of the Parliament: “We have lost America by our folly, in having allowed the establishment of schools and colleges, and it will not do good for us to repeat the same act of folly in regard to India. If the natives require anything in the way of education they must come to England for it.”

     
  8. 8.

    See Tilak (1988a) for more details. See also Kothari (1966), and Shah (1987).

     
  9. 9.

    In a recent growth accounting exercise, Mathur (1987) estimated the contribution of ‘technological change’ to economic growth in India to be quite significant.

     
  10. 10.

    Other important studies on earnings functions that include variables on education, are Shortlidge, Jr. (1976), Mann and Kapoor (1988).

     
  11. 11.

    See Tilak (1984) for a review of several studies on the effect of education on agricultural productivity in India.

     
  12. 12.

    As quoted by Jamison and Lau (1982).

     
  13. 13.

    For some futuristic scenarios, see Brahm Prakash et al. (1988).

     
  14. 14.

    This argument is discussed in more detail in the following Sects. 

     
  15. 15.

    The data based on the employment exchanges, are however not the best, as all the unemployed graduates do not necessarily register at the exchanges. But on the problem of the educated unemployment, these are the main source of data in India.

     
  16. 16.

    See Tilak (1992), Panchamukhi (1982), and Varghese (1986) for more details.

     
  17. 17.

    During the post-independence period, the Government of India has appointed and received detailed reports from three commissions on education: The University Education Commission (1948–49) headed by S. Radhakrishnan, the Secondary Education Commission (1952) under the chairmanship of S.L. Mudaliar, and the National Education Commission headed by D.S. Kothari. (These are exclusive of special commissions such as the recent two national commissions on teachers.) There were three other commissions appointed during the British rule, viz., the Indian Education Commission (1882), the Indian Universities Commission (1902), and the Calcutta University Commission (1917–19).

     
  18. 18.

    It was indeed a final action because the Policy statement generated little action, but aroused hopes that remained unfulfilled and led to frustration (Naik 1982).

     
  19. 19.

    For instance, Naik (1982) while evaluating the implementation of the recommendations of the Education Commission, could classify the recommendations into three groups: recommendations that attracted wide attention, those that attracted little attention, and those that were opposed and rejected or just ignored: but could not find any recommendations that were accepted as well as implemented.

     
  20. 20.

    See Tilak (1985) who highlighted the wide gap between the requirements of the system and the provision of resources in the Seventh Plan period.

     
  21. 21.

    It declined from Rs. 966 crores (a crore equals 10 millions) in the Third Plan to Rs. 764 crores in the Fourth Plan and further to Rs. 585 crores in the Fifth Plan. See Tilak (1987b).

     
  22. 22.

    This refers to revenue budget of the central and state budgets together.

     
  23. 23.

    This is partly due to the high priority accorded to adult education by the short-lived Janata Government in its aborted Sixth Plan (Government of India 1979b).

     
  24. 24.

    The plan inter-regnum is also known as ‘plan holiday’, the period when a holiday was declared for five-year plans, and annual plans were carried out in 1966–67, 1967–68, and 1968–69.

     
  25. 25.

    See Tilak and Varghese (1983) for more details.

     
  26. 26.

    Statistics on expenditure on education in India are hardly available in constant prices. It is attempted here by using the all-India wholesale price index (base: 1970–71). See also Tilak and Varghese (1983).

     
  27. 27.

    It is interesting to note that not only the Congress government, but also the Janata government recognised this. Indeed the Janata government’s draft Sixth five year plan was more categorical and clear. It not only stated that “In the Sixth Plan, no new universities should be set up; colleges should be established with great restraint and only after ensuring adequate resources in terms of teachers and finances and material” (Government of India 1979a, p. 416), but also indicated a drastic reversal of trends in the allocation of resources to mass education and higher education.

     
  28. 28.

    For example, the available research on rates of return to education clearly shows that the contribution of primary education is much higher than the contribution of secondary and higher education to economic growth, as already presented in Table 2.2. The effect of primary education on agricultural productivity is quite significant. See Tilak (1984). The impact of education on fertility, practices of methods of birth control, health and nutrition is increasingly felt. See Kothari and Panchamukhi (1980) for an extensive review of research on various economic aspects of education in India.

     
  29. 29.

    See also Bhagwati (1973), and Tilak and Varghese (1985) for some documentation on this aspect.

     
  30. 30.

    The Statesman (New Delhi, 10 July 1989), p. 4. While this figure refers to Maharashtra, it is likely to be true in most states as well. The following section discusses the growth of private institutions in India.

     
  31. 31.

    In the mid-1960s this figure was quoted as 93% (Naik 1967, p. 126).

     
  32. 32.

    As Carnoy (1974) noted, this provision in fact “was in part a reflection of capitalist ideology (British influence) that the state should not take the whole responsibility for education.”

     
  33. 33.

    See also Lindsey (1978), and Chitnis (1987).

     
  34. 34.

    Interestingly, that private education becomes a dividing force was responsible for the popular demand for nationalisation of the school sector in a number of European countries in the 19th century (Kostecki 1988, p. 8).

     
  35. 35.

    The Statesman (New Delhi, 10 July 1989), p. 4. See also Kothari (1986).

     
  36. 36.

    While evidence on India is not available on this aspect, the Kenyan evidence indicates that government schools yield returns 50% higher than private (harambee) schools. See Armitage and Sabot (1987, p. 601). Also see Psacharopoulos (1987a) for related interesting details on Colombia and Tanzania.

     
  37. 37.

    E.g., see the 1968 Policy (Government of India 1968), the Janata Government’s 1978 Draft Policy (Government of India 1978), and also the Education Commission (1966).

     
  38. 38.

    See Shatrugna (1988).

     
  39. 39.

    E.g., see World Bank (1986).

     
  40. 40.

    For the same reason, teachers in private schools and colleges demand nationalisation or government take-over of the private schools. See also Naik (1967, p. 126).

     
  41. 41.

    Even in developed countries like the United States, “the private credit market is bad” and education loans cannot effectively work trough private credit market (Tullock 1983, p. 144). Further, Tilak and Varghese (1985) argue that the scheme of loan scholarships would be highly regressive, as “the loan scholarships are given to the poorer students and only those very students will be required at later stages to meet the full costs of education in the form of repayment, while rich students who receive the highly subsidized education are exempted from it.”

     
  42. 42.

    The total revenues from fees consist of tuition fee, and other fees such as special fees, examination fees, laboratory fee, etc.

     
  43. 43.

    Evidence from a country-wide sample of universities (AIU 1978) also indicates that in 1974–75 students in professional universities pay fees which amount to 8% of the recurrent costs, while in general universities it was around 34%. Even in absolute terms, the total fee per student was Rs. 608 in professional universities, compared to Rs. 1032 in general universities. Besides the expenditure on scholarships is also higher in case of professional universities.

     
  44. 44.

    See also Tilak (1988b, p. 610).

     
  45. 45.

    It should be noted that government expenditure which forms the main basis for financing education in India is financed from indirect taxation to the extent of 90%, paid by the poor majority.

     
  46. 46.

    See Tilak and Varghese (1985) for an elaborate discussion on the rationale and the mechanism of discriminatory fee system in education.

     

Notes

Acknowledgements

Paper presented in the Seventh World Congress of Comparative Education Societies in the Panel on Assessing the Impacts of Educational Policies of Third World Nations at the University of Montreal, Montreal (July 1998), and also in the 1989 Research Symposium on East Asian Educational Reforms: East Asian Education in Transition (University of Virginia, Charlottesville, VA, (November 1989). Grateful acknowledgments are due to George Psacharopoulos, Theodore W. Schultz, Edward Shills, Philip G. Altbach, Peter Hackett, Uday Desai, Kazum Bacchus and N.V. Varghese for their intellectual help, encouragement, and comments on earlier drafts of the paper. The views expressed here are those of the author alone.

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Authors and Affiliations

  • Jandhyala B. G. Tilak
    • 1
  1. 1.New DelhiIndia

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