Backgrder_Financing

First, one of the most reiterated promises refers to spending at least 6 per cent of GDP on education. The share of education in national income is the standard indicator of national efforts in the development of education in a society. This reflects the relative priority being accorded to education in the national economy. On the recommendation of the Education Commission (1966), the government of India quantitatively fixed a target of investing 6 per cent of national income on education by the public exchequer by 1986. The goal remains elusive nearly 20 years after the target date.

This proportion has increased from about 0.6 per cent in 1951-52 to about 4 per cent of GNP in 2001-02. It needs to be underlined that the current proportion is less than (a) the requirements of the system to provide universal elementary education of eight years for every child of the age-group 6-14, and consequent growth in secondary and higher education,... According to the Human Development Report 2004, India ranks 78th with respect to share of the public expenditure on education in GNP, among the 137 counties on which such data are available.

The Kothari Commission had suggested that a higher (more than 6 per cent) would need to be allocated to education during the later period (after 1986). The goal earlier set for accomplishment by the end of the 10th Five-Year Plan, is, according to the CMP, to “be done in a phased manner” and no clear date is fixed. An interesting point is that while in the recent years, attempts have been made by the government to interpret the goal to refer to total (public and private) expenditure, the CMP makes it clear that it will be ‘public spending’.

- Education in the UPA Government Common Minimum Programme, JANDHYALA B G TILAK, Economic & Political Weekly, 23/10/2004, [J.ELDOC.N00.231004EPW4717.pdf]

ALTHOUGH we have moved in the direction of progress, serious problems of substantial illiteracy, a large number of out-of-school children, continuing drop-outs and the lack of quality education continue to confront us. The volume of funding required for inter-functional activities such as additional rooms to meet with constantly increasing, for example in Karnataka, enrolment, adequate number of teachers, benches, laboratory and other requirements has not been feasible at the present rate of 4% of GNP. It is heartening that the Congress-led Union government has promised to allocate 6% of the GNP, which should mitigate the situation somewhat.

Also, state governments now have the additional obligation to serve cooked mid-day meals to school kids as directed by the Supreme Court. The problem can be demonstrated from Karnataka’s example. Although a substantial Rs 3090 crore was allotted to school education in 2004-05, most of it goes to non-plan expenditure leaving only Rs 155 crore (or 25%) for activities mentioned above. It is a frustrating shopping list and instead of attending to these, Dr Murli Manohar Joshi went on a saffronising tour of History text books.

It is a widely recognised dictum that a country that takes its commitment to edu-cation seriously must devote about 6 per cent of its Gross National Product (GNP) to the task. That has never been achieved in India. In the early 1950s, it was as low as 1.2 per cent, moving up slowly to 4 per cent only in the early 1990s. It came down again, but reached the highest level of 4.5 per cent in 1999-2000. It may be argued that a poor country cannot afford more. But Tilak, in his opening essay, points out that for the African continent as a whole, the corresponding figure was close to 6 per cent and even Sub-Saharan Africa, with some of the poorest countries in the world, showed a figure of 5.6 per cent. According to Human Development Report 2001, among the 143 countries listed, India ranked 104th with respect to the share of GNP spent on education.

DESPITE recognising education as a 'critical investment for national survival', the pattern of financing education in India during the 50 years of independence has not been satisfactory. The pattern of financing edu-cation in an economy can be judged in terms of adequacy, equity and efficiency. On all the three counts, India's performance has been mixed, featuring impressive achieve-ments on the one hand, and conspicuous failures on the other. On balance, the Indian education system is characterised with a severe degree of under investment. In absolute terms, the increase in expenditure on education in India during the 50 years of independence is very impressive: the educational expenditure increased in current prices from Rs 55 crore in 1947 to Rs 25,000 crore as per the latest available statistics - a phenomenal 450 times increase. But this impressive growth is belittled by (a) rapid growth in population, (b) phenomenal increase in student numbers, and above all, (c) escalation in prices. The real increase in expenditure per student has been rather very modest.

An analysis of intra-sectoral allocation of resources in India during the plan period shows a lopsided emphasis on not only
elementary education, but also on other layers of education. A frequent and inexplicable shift in priorities is quite obvious.

- Five Decades of Underinvestment in Education, Jandhyala B G Tilak, Economic & Political Weekly, 06/09/1997, [J.ELDOC.N00.06sep97EPW.pdf ]

THE BUDGET 2004-'05 P Chidambaram, India's Finance Minister presented in the Parliament on the 8th July is unique: it proposes to levy cess @2% across all taxes--direct and indirect, service. This was never done nor thought of in the past. For the first time any government attempted something as such. Three or four years back the Government of Punjab was in the news that education cess in sales of liquors was contemplated in the state. Nothing much is known thereafter. But the Government of India aims at moping up a sum of Rs 5000 crore for primary education exclusively for the poor.

...the 2 per cent education cess, imposed last year, is expected to generate Rs 2,200 crore during 2005-06. The government hopes to mop up over Rs 1,500 crore through the levy on all central taxes, which will be transferred to the Prathamik Shiksha Kosh to fund elementary education.

An allocation of Rs 25,000 crore has been made for the schemes identified under the NCMP. Accordingly, the allocation for social services during 2005-06 is estimated at Rs 53,384 crore, as against Rs 39,378 crore during 2004-05.

Next year, education would have a plan size of Rs 18,337 crore...an additional Rs 1,600 crore has been provided for under ICDS, while an additional 2,400 crore has been provided for the Sarva Shiksha Abhiyan.

- Priority funding for education, Business Standard, 04/03/2005 [C.ELDOC.N20.01mar05BSB1.html]

The very first union budget of the UPA levied an education cess of 2 per cent on all central taxes. This is a welcome measure. It is also forecast that this will yield a total revenue of Rs 5,000 crore per year. This may seem to be a substantial amount, and some felt that cess can replace the need for external aid for elementary education, as the cess revenues in a year will exceed the recently concluded aid agreement for US $ 1 billion additional aid for elementary education, consisting of loans from the World Bank and aid from the DFID, European Commission, etc, for a three-year period (2004-07).

In recent years, a proposal was made by the Swaminadhan Committee on technical education (1994) to levy an education cess on the corporate sector for financing technical education; but this has not received the attention of the government. The NDA manifesto had pro-posed a cess on ‘non-needy’ students, which may look like an additional fees.

Though this Rs 5,000 crore looks like a substantial amount, it must be noted that this might form only 10-12 per cent of the total government (union and states) expenditure on elementary education in the country (which is about Rs 40,000 crore), underscoring the point that still about 85-90 per cent of requirements for elementary education have to be met out of the general revenues of the government. Only a few years ago, the Tapas Majumdar Committee has estimated that the country needs additionally Rs 1,37,000 crore once a 10-year period to provide elementary education to all as a fundamental right. It may have to be noted that though the estimate seems to be ‘astronomical’, it amounts to only Rs 13,700 crore a year, and about 0.7 per cent of GDP a year on the average. One of the important messages of the Tapas Majumdar Committee report was that equitable and quality universal elementary education was affordable.

- Education in the UPA Government Common Minimum Programme, JANDHYALA B G TILAK, Economic & Political Weekly, 23/10/2004, [J.ELDOC.N00.231004EPW4717.pdf ]

Do we need external funding? Can we not meet our financial needs domestically?

WHILE inaugurating the meeting of the high-level group on Education For All (EFA) on November 10, Prime Minister expressed Atal Bihari Vajpayee deep concern about the lack of funds for elementary education in India. Making a strong bid for additional external aid, he reminded bilateral and multilateral aid agencies, including the World Bank, that in the year 2000 they had made a pledge in Dakar, Senegal, that "no country seriously committed to basic education will be thwarted in the achievement of this goal by lack of resources." He lamented that "the Fast Track Initiative started by the international funding agencies in 2002 has so far been neither fast nor adequate." He seemed to be saying that India will be willing to educate her children only if external aid agencies shell out additional funds. Does this not imply that the recent constitutional amendment, making elementary education a fundamental right, is at the mercy of aid agencies? What implications does this `dependency syndrome' have for national sovereignty?

The Government of India constituted the Tapas Majumdar Committee in 1999 to estimate the funds required to ensure that elementary education of eight years is provided to all children.... The Committee estimated that an additional investment of Rs.1,37,600 crores would have to be made over a 10-year period to bring all out-of-school children into the school system (not parallel streams) and enable them to complete the elementary stage. This works out to an average investment of Rs.14,000 crores a year, which in 1999 amounted to a mere 0.78 per cent of the gross domestic product (GDP);However, the Financial Memorandum to the Constitution (93rd) Amendment Bill, 2001 states that a sum of Rs.98,000 crores will be required over a 10-year period to implement the fundamental right to education for children in the age group of six to 14 years. It works out to Rs.9,800 crores a year on an average (0.44 per cent of the GDP in 2002-03), about 30 per cent less than that estimated by the Tapas Majumdar Committee.

Is the government saying that it cannot allocate an additional sum of merely 44 paise out of Rs.100 from the national income to ensure that every child in India exercises his/her fundamental right? Even the lowered estimate of 44 paise out of Rs. 100 of the GDP was eventually not allocated.

What has been promised in the CMP is an increase in expenditure. But does more spending ensure better outcomes? The experience of the last 15 years suggests that it does not. Public systems for producing education services seem to be functioning so badly that one must be sceptical about the usefulness of sending more money down dysfunctional channels.

Focusing on the post-reform period, we see that in 1990-91, the primary school enrolment ratio—the number of children enrolled in primary school (Classes I-V) divided by the number of children of the appropriate age group (7-11)—was 100 per cent. In 2000-01, this number fell to 96 per cent! This was not a result of falling expenditure on education. A cumulative amount of Rs 4 lakh crore was spent on education during the decade, but the outcomes seem to have worsened.

Thorough thinking about India’s education problem inexorably leads to questions of institutional surgery, not additional spending. For example, issues like teacher absenteeism plague schools and cannot be addressed by more spending...

What are the options available? The Government could continue to spend at the current levels on education. However, it could focus on elementary education. Instead of spending half of its education expenses on undefined purposes, it could fulfil its promise of ‘‘providing access to quality basic education’’ to the children of India.

Further, we have a strange explanation that mass education depends upon the level of per capita income. We have already seen that with less spending of GNP on education, it is possible for even low-income and developing countries to experience spectacular increase in literacy rates.

When the Constitution was en-shrined. Article 45 specifically di-rected the state to endeavour to provide free education for all chil-dren up to the age of 14 by the year 1960. Unfortunately, Article 45 was in the directive principles of state policy section of our Constitution, which is non-justiciable in the courts of law. Therefore, over the last four decades, we were given reasons like resource crunch and lack of political will for non-achievement of UEE.

The oft-repeated resource crunch problem was demystified when the Union cabinet appointed a group of experts to estimate the financial re-quirement for UEE in India. In ab-solute terms, the figures quoted in this recent 1999 report may appear gigantic (Rs 1,36,822 crore to be precise for the age group six-14 )...However, when expressed as a per-centage of national income, the figures become achievable. For e.g., this figure means spending an average additional only 0.7 per cent of the GDP over the next 10 years. Financial resource (like legislation) is a necessary condition for UEE, not a sufficient one.

While successive governments at the centre and the state have cited resource crunch as a major deterrent in universalising edu-cation, there is ample proof to the contrary. In a 1999 report prepared by a group of experts, 60 per cent of whom were IAS officers, said Rs 1,36,822 crore would be needed over a period of 10 years to edu-cate children between 6-14 years of age. The amount seems astro-nomical, but in terms of the na-tional income, it represents an additional expenditure of only 0.7 per cent of the GDP over the next 10 years...

- School education: It's time govt foots the bill, PUJA BIRLA, Indian Express, 25/01/2001, [C.ELDOC.N21.25jan01ie1.pdf ]

GIVEN the poor literacy and school completion rates in India after more than 50 years of inde-pendence, the Common Mini-mum Programme (CMP) of Asia (see table) have achieved high literacy rates by spend-ing around 2% of GDP or less on education. Public spending per student should be a certain proportion of per capita GDP. This ratio in India equals that of the US at the new coalition government 20.8%. This is much higher promises to increase public than that in the UK (15.8%), spending on education from 4.1 % of GDP to 6%. However, many developing countries have achieved better results with far little spends. And there we have India's problem — wasteful spending. India spends 4.1% of its GDP on education but boastsof just 65% literacy. China, on the other hand, spends only 2.2 % of GDP on education, yet has 91 % literacy. Sri Lanka and Indonesia spend only 1.3%-of GDP on education, yet have literacy rates of 92.5% and 88% respectively.

The problem is not lack of mon-ey but lack of quality. Teachers in government schools earn twice or thrice the salary that teachers in private schools earn, yet are unmotivated, skip school, and teach very little.

- Money alone can't teach kids to read & write, Swaminathan S Anklesaria Aiyar, Economic Times, 01/06/2004, [C.ELDOC.N20.01jun04et1.pdf]

That India's performance here is not a reflection of resource cnstraint, but of priorities is brought out by Manabi Ma-jumdar's chapter on the issue of financing basic education. She cites a report: "If mil-itary spending levels are cut by 5 per cent a year over the next five years, it would release. . . over four times what is required for the goal of universal primary educa-tion within the next five years. Even just a freeze on military spending levels at cur-rent prices will release more than enough resources to attain the universal primary education target." Another recent study cited by her shows that if the economy grows at 5 per cent in real terms and if the tax revenue-Gross Domestic Product ratio is raised from the current level of 16 per cent to 18 per cent, it should be possible to find resources to realise the much postponed ob-jective of universal pri-mary education. If there is a will, there is a way, it is as simple as that.

Twisted priorities are symbolised by the multi-crore agreements signed recently for military equipment. The rusting Admiral Gorshakov aircraft-carrier and matching aircraft are being bought from Russia for an estimated Rs 7,000 crores; the Phalcon air de-fence system from Israel for Rs 5,000 crores and Hawk trainer jets from Britain for another Rs 6,600 crores. The cost is bound to escalate. It is the people for whose defence these pur-chases are justified who will bear the real cost. Their growth will continue to be stunted while they fall further and further behind people in other countries in the world. It is hard to calculate how many schools could be built and refurbished and teachers paid adequately if this as-tronomical amount could be diverted to education. Such an investment in our future would multiply many times over, and strengthen India's re-al defence which is the morale and strength of our people.

- Arms or Education? Twisted Priorities, AJIT BHATTACHARJEA, Grassroot Development, 01/04/2004, [J.ELDOC.N21.01apr04GRD1.pdf ]

It is, indeed, relevant in this context to look at what it would take in money terms to achieve the objective of eradicating illit-eracy and ensuring free and compulsory education to all citizens aged between six and 14. The 1997 Constitution Amend-ment Bill, in its Financial Memorandum, had estimated the total money required to achieve universal primary education to be Rs. 40,000 crore over a period of five years; an annual commitment of Rs. 8,000 crore.
This is about the same amount (according to conservative estimates) that will have to be spent — between Rs. 7,000 crore and Rs. 8,000 crore — every year on building and maintaining a nuclear arsenal of the size that the Government proposes to pos-sess. And this expenditure will be in addi-tion to the spending on conventional weapons. In other words, the financial 'burden' of ensuring primary education for all is only as much as that of building and maintain-ing weapons of mass destruction. It is an-other aspect of the irony that even those who decided to build these weapons insist that they do not intend to use them.

The lowered estimate of the fund requirement in the Constitutional Amendment Bill is a result of the dilution of many of the well-accepted norms relied upon by the Tapas Majumdar Committee. For instance, the teacher to pupil ratio of 1:30 was reduced to 1:40; the Operation Blackboard norm of three teachers and three classrooms for every primary school was reduced to two teachers and two classrooms; the cost of educating a disabled child in an inclusive classroom was reduced from Rs.3,000 for a child a year to Rs.1,200 a year. No pedagogic justification was provided for the dilution of such educationally sound norms but this has not stopped the Ministry from continuing its rhetoric on quality education at the EFA meeting.

The most critical dilution, however, was conceptual (and even moral and ethical), rather than quantitative. The government decided toreplace the regular formal schools with low-quality, low-budget parallel streams of primary education for the educationally deprived children, two-thirds of whom are girls. This policy stance is apparently the result of the structural adjustment programme of the International Monetary Fund (IMF)-World Bank, which imposes drastic cuts in expenditures on education, health and other social welfare sectors as a condition for the grant of additional loans or aid.

In the 1990-91 Budget, the burden of 'adjustment' fell upon rural development and social services. The '91-92 Budget con-tinued the cuts oh these two sectors but this "burden of the adjustment" virus caught hold of rural development and medical services too. The '92-93 Budget saw a sizeable increase in fund allocations for family welfare, women arid child development. But against all other components in this service, education had a nominal outlay. The IMF restrictions have affected expenditure on social services, poverty mitiga-tion and rural development programmes, which all affect the educational access.

The experience of South American and African countries already depicted how economic changes affect education at both levels — macro and micro. In India, no comprehensive study has been made regarding this issue. It seems that India is emerging identical to that what has been experienced in other developing countries which were forced to alter their social policy according to the impulse of the IMF and World Bank.
It is still early to draw any conclusion but the decline in social services in recent budgets indicate that the 'adjustment' is falling rigidly upon the poorer sections.

Critical of the Government for reducing the budget for education — the actual expenditure on education in 2000-01 was 2.43 per cent of the budget and the estimated expenditure for this year had been pegged at 2.38 per cent — the Parliamentary Forum for Education & Culture on Thursday listed several instances were actions did not match lip-service.

A particularly glaring example was in the area of madrasa education. While the Government had been advocating its modernisation, no allocation had been made in this year's budget. Similarly, despite the lip-service to women's education, the budget estimate of Rs. 10 crores last year — Women's Empowerment Year — was revised to Rs. 0.01 crore.

Insisting that "downwards revision'' of allocation and non-utilisation of reduced amounts for education had become abiding features of the Government's "budgetary performance'', the convenor of the forum, Eduardo Faleiro, cited the allocation for free education of girls as proof of the latter. The Rs. 1 crore allocated by for free education of girls, he said, remains unutilised three years since its announcement.

Based on data generated by the National Sample Survey Organisation on household expenditures on education this paper shows that households spend large sums of money on acquiring primary education. More specifically, it has been found that students pay tuition fee, examination fee and other fees even in government primary schools. The financial and material incentives provided by the government are found to be available only to a small fraction of students. There are large scale inter-state and inter-group (by gender and by region - rural and urban) variations with respect to several aspects relating to public provision of incentives and also to the levels of household expenditure on education.

- How Free is 'Free' Primary Education in India?, Jandhyala B G Tilak, Economic & Political Weekly, 10/02/1996, [J.ELDOC.N00.10feb96EPW.pdf]

The Sarva Shiksha Abhiyan (SSA), launched in the last financial year for the universalisation of elementary education, has till date been in-troduced in 214 districts in 26 States and the Union Territories. The Government has released Rs. 95 crores for preparatory work under the scheme which will cov-er all the 593 districts of the coun-try by March next year, official sources said here. The target is to bring all the children in the age-group of 6-14 to school/alterna-tive school by 2003, provide five years of primary education by 2007, and eight years of elemen-tary education by 2010. To be operationalised in a mis-sion mode, SSA will be imple-mented in partnership with States and local bodies with the thrust being on community involvement and ownership. All the existing Centrally-sponsored schemes in elementary education save the National Bal Bhavan and the Na-tional Council for Teacher Education — will converge with SSA after the current five year plan pe-riod. Expenditure will be shared be-tween the Centre and the States in the ratio of 85:15 during the 9th Plan, 75:25 in the 10th Plan, and 50:50 thereafter. While Rs. 500 crore has been set apart for the programme in the current year, it is estimated that an additional Rs. 60,000 crore will be required from the Centre and the States over the next decade for the universalisa-tion of elementary education through SSA.

With the Centre hopeful of universalising elementary education within a decade through the Sarva Shiksha Abhiyan and anticipating a consequent surge in demand for secondary education, the Human Resource De-velopment (HRD) Ministry has asked for four times the allocation of the Ninth Plan for this segment in the Tenth Plan. As per the plan projections for secondary education in the Tenth Five Year Plan, Rs. 10,205.02 crores would be required to provide quality edu-cation to students entering the secondary fold in the coming years. This is a four-fold increase over the total expenditure of Rs. 2,400.82 crores in-curred on secondary education in the Ninth Plan.

- Tenth Plan to focus on improving access to secondary schools, Hindu, 17/04/2002, [C.ELDOC.N22.17apr02h1.pdf ]

The Sarva Shiksha Abhiyan (SSA), launched in the last financial year for the universalisation of elementary education, has till date been in-troduced in 214 districts in 26 States and the Union Territories. The Government has released Rs. 95 crores for preparatory work under the scheme which will cov-er all the 593 districts of the coun-try by March next year, official sources said here. The target is to bring all the children in the age-group of 6-14 to school/alterna-tive school by 2003, provide five years of primary education by 2007, and eight years of elemen-tary education by 2010. To be operationalised in a mis-sion mode, SSA will be imple-mented in partnership with States and local bodies with the thrust being on community involvement and ownership. All the existing Centrally-sponsored schemes in elementary education — save the National Bal Bhavan and the Na-tional Council for Teacher Educa-tion — will converge with SSA after the current five year plan pe-riod. Expenditure will be shared be-tween the Centre and the States in the ratio of 85:15 during the 9th Plan, 75:25 in the 10th Plan, and 50:50 thereafter. While Rs. 500 crore has been set apart for the programme in the current year, it is estimated that an additional Rs. 60,000 crore will be required from the Centre and the States over the next decade for the universalisa-tion of elementary education through SSA.

With the Centre hopeful of universalising elementary education within a decade through the Sarva Shiksha Abhiyan and anticipating a consequent surge in demand for secondary education, the Human Resource De-velopment (HRD) Ministry has asked for four times the allocation of the Ninth Plan for this segment in the Tenth Plan. As per the plan projections for secondary edu-cation in the Tenth Five Year Plan, Rs. 10,205.02 crores would be required to provide quality edu-cation to students entering the secondary fold in the coming years. This is a four-fold increase over the total expenditure of Rs. 2,400.82 crores in-curred on secondary education in the Ninth Plan.

- Tenth Plan to focus on improving access to secondary schools, Hindu, 17/04/2002, [C.ELDOC.N22.17apr02h1.pdf ]
1. Different Approaches for Achieving EFA - Indian Experience, United Nations Educational, Scientific and Cultural Organisation, 01/01/2003, [R.N00.41 ]
Financing Education- pg 125-127

*2. Higher Education, The Hindu, 06/03/1998, [R.N23.10, 1].
- Unwarranted dichotomy in educational subsidies- pg 10-13 (scan)

Statistics
3. Ministry of Human Resource Development - Annual Report 2003-2004, Government of India, 01/01/2004, [R.N00.30],
- Financing of Education- pg 276-282 Pg 296-297

4. India Education Report, Govinda, R, Oxford University Press, 01/01/2002, [B.N21.G.1].
- Financing Elementary Education in India- J.B.G Tilak Ch 20 pg 267-293

5. Selected Educatonal Statistics 2002-2003 (As on 30th September, 2002), Government of India, 01/01/2004, [R.N00.32]

6. Education For All - India Marches Ahead, Government of India, 01/11/2004, [R.N00.35],
- Financing EFA Ch 8 pg 55-560

8. Sixth All India Educational Survey, Main Report, - Ch 12. Income, Expenditure and Fee Structure in Schools, MK Gupta, pg 175 NCERT, 1999

Policy
1. Kothari Commission, Anmol Publications Pvt. Ltd, B.N00.B16, 7. Financing Education - “Planning and Financing” Ch 17 pg 151-160

2. Policy and Performance in Indian Education (1947-74), Naik, J. P, Orient Longman, 01/01/1975, B.N20.N1

3. Education and Democracy in India, Ch 10. Financing Elementary Education in India, pg 179, Manohar, 2004, [B.N00.V1]

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