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EDUCATION POLICY: CHOICE AND COMPETITION Parth J Shah President Centre for Civil Society Myth 1: The poor need their children to earn/work Myth 2: People are ignorant of the benefits of education Myth 3: People do not have money or are unwilling to spend on education

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education policy choice and competition


Parth J Shah


Centre for Civil Society

challenging the conventional wisdom
Myth 1: The poor need their children to earn/work

Myth 2: People are ignorant of the benefits of education

Myth 3: People do not have money or are unwilling to spend on education

Myth 4: Government provided primary education is free

Challenging the Conventional Wisdom

Estimates of Child Labour

(All-India rural)

work patterns of out of school children probe states
Work Patterns of Out-of-School Children (PROBE States)



Proportion who performed wage labor on the day preceding the survey



Average time of work on the day preceding the survey*

4.2 hrs

(3.3 hrs)

5.1 hrs

(4.8 hrs)

Extra time of work, compared with children who are attending school

2.1 hrs

2.2 hrs

* Median in brackets

Source: PROBE survey (random sub-sample of 333 out-of-school children in the 6-12 age group)


The PROBE survey…

“Inactive teachers were found engaged in a variety of pastimes such as sipping tea,

reading comics or eating peanuts. Generally, teaching activity has been reduced to a minimum, in terms of both time and effort. And this pattern is not confined to a minority of irresponsible teachers – it has become a way of life in the profession.”


The PROBE survey…

… found that in only 53% of government schools any teaching going on at all. … plain negligence: … cases of teachers keeping a school closed for months at a time; a school where the head-teacher was drunk, a head-teacher who asks the children to do domestic chores, including looking after the baby; several cases of teachers sleeping at school; … a head-teacher who comes to school once a week.

ncaer nsso survey 1986 87
Total Household Expenditures on

Primary Education

Rs. 7388.5 million

NCAER & NSSO Survey, 1986-87

By Rural Areas

Rs. 4202.5 million

Total Government Expenditure on

Primary Education

Rs. 17,000 million

professor jbg tilak
“How Free is ‘Free’ Primary Education in India?”

Economic and Political Weekly, February 3 & 10, 1996

Households spend large sums of money on acquiring primary education; a sizable number of students do not receive primary education free, in contrast to the claims made by the government; a large number of students pay tuition fee, examination fee and other fees even in government primary schools in India.

Professor JBG Tilak
proposed solutions would they be effective
Solution 1: Make elementary education compulsory

Solution 2: Make education a Fundamental Right

Solution 3: Increase government spending on education to 6 percent of GDP

Proposed solutions: Would they be effective?
fundamental right against exploitation
Article 23: Prohibition of traffic in human beings and forced labour—Traffic in human beings and beggar and other similar forms of forced labour are prohibited.

Article 24: Prohibition of employment of children in factories—No child below the age of fourteen years shall be employed to work in any factory or mine or engaged in any other hazardous employment.

Fundamental Right against Exploitation

Expenditures and Quality?

There is little evidence of a positive relationship between per student expenditures and enrolments of the students from the bottom 40 percent of family income….

Deon Filmer and Lant Pritchett, “Educational Enrolment and Attainment in India: Household Wealth, Gender, Village and State Effects,” Journal of Educational Planning and Administration, April 1999, p. 159 (based on the data for 1992-93)


This lack of a general effect is not surprising, as there is a huge literature that supports the proposition that, while additional spending has the potential to raise school quality, there is no necessary connection between school quality and school spending…


Kingdon’s conclusion

“PUA schools are unambiguously and substantially more cost-effective and internally efficient than G and PA schools…”

the education system
The Education System


State A

State B

Elementary Education Compulsory



Share of Education in the State Budget



Fee-Free Primary Education



Free Textbooks and Stationary



Proportion of Income Spent on Primary Education by Households in the Lowest Income Quintile



distribution of state education spending




Proportion of Private (aided) Primary Schools



Free Primary Education in Government Schools



Free Primary Education in Private Schools



Grant of Scholarship



Transport Subsidy



Distribution of State Education Spending
kerala model of education
Kerala Model of Education

Competition for the Soul

(get more followers of a religion)



1. ……..

2. ………

3. …….


Reform 1:

Abolish the license-permit raj in education

  • Allow free entry and exit to both suppliers and demanders of education.
  • Permit for-profit education institutions.
  • Pass private university bill.
  • Encourage edupreneurs by loans, venture capital funds. Do not give subsidised land.

Delhi School Education Act, 1973

The school must obtain “Essential Certificate” by establishing that its existence serves the public interest. The Administrator decides by taking into account “the number and categories of recognised schools already functioning in that locality, and general desirability of the school with reference to the suitability and sufficiency of the existing schools in the locality and the probable effect on them.” (my emphasis)


Delhi School Education Act, 1973

Rule 8: Terms and Conditions of Service of Employees of Recognised Private Schools,

Clause 2: Subject to any rule that may be made in this behalf, no employee of a recognised private school shall be dismissed, removed or reduced in rank nor shall his service be otherwise terminated except with the prior approval of the Director.


Delhi School Education Act, 1973

Rule 139: Admission on transfer


No student who had previously attended any recognised school shall be admitted to any aided school unless he produces a transfer or school leaving certificate from the school which was last attended by him.


Private Schools for the Poor

Federation of Private Schools Management,Hyderabad

  • 500 schools
  • 40% recognised, 60% unrecognised
  • School fees from Rs 50 to Rs 150 per month
  • Scholarships for poorest: 15-20% of seats

… Private Schools for the Poor?

  • Uphill struggle against govt regulation
    • Where can pupils take examinations?
      • Land requirements
        • Endowment (Rs. 50,000)
        • Teacher training requirements
          • etc.
          • etc.

Edison versus Government schools % of school budget

Government schools

Edison Schools

Devolved to school













Reform 2:

Government institutions: Autonomy and accountability.

  • Grant autonomy to existing schools and colleges without reducing financial support.
  • Link government grants with performance for all education institution.
  • Convert departments of education from producers to financiers and supervisors.
  • Transfer management to local governments, communities, and NGO’s

Reform 3:

Syllabi, Exams,and Certification: Depoliticise and Decentralise

  • Urban and rural students have different educational needs; local schools should decide syllabus and medium of instruction.
  • Teachers and schools should do evaluations. Common exams, on the line of SAT, can be done at the end of schooling.
  • Help establish independent certification, accreditation, and examination agencies. Competition among evaluating agencies is good as it is in among suppliers of education.

Reform 4:

Empower students and parents. Money should follow students, not schools.

  • Scholarships
  • Vouchers
  • Loans
  • Remove the license-permit raj (private schools for the poor)
  • Allow openly for-profit institutions
  • Let schools decide the syllabus and conduct examinations
  • Introduce the voucher scheme (link government grants with performance)
  • Establish independent certification agencies

Potato Chip Theory of Regulation

One restriction (regulation) creates situation that demands further restrictions, which in turn requires more restrictions.

Once a bag of potato chips is opened, it’s hard to stop at one or a few chips.


Private voucher scheme USA

Private voucher scheme USA

  • Children’s Scholarship Fund (CSF)
  • $100 million foundation, underwritten by Ted Forstmann and John Walton.
  • Awarded 40,000 four-year partial scholarships to low income students to attend private schools
  • CSF received 1,250,000 applications–30 times number of scholarships available–from low income families, all prepared to pay $1,000 per year.

Edison School

  • Invests $1 million in each school
  • Pays teachers more
  • Share options for all staff, from janitors to principals
  • 84% of classes have statistically significant gains
  • High parental satisfaction – 85% of parents highly satisfied
  • Average waiting list of 140 students – nearly 10,000 nation-wide

USA vouchers

  • Florida A+ Plan (1999)
  • “A school accountability plan with teeth”.
  • Schools are graded A-F based on standardised test scores
  • Students in schools graded F for 2 out of 4 years are given $4,000 vouchers to attend private schools
  • 1999–134 families offered scholarships
  • 2000–as many as 50 schools would ‘qualify’–but this led to improvements
  • Superintendent of one Tampa district said that all top administrators would take 5% pay cut if any school was given an F



Two models: a global phenomenon

Contracting out: public-private partnerships (PPP)

Extending access to private education, especially for the disadvantaged

  • Contracting out of state schools
  • Contracting out of curriculum areas/teaching,etc.
  • Vouchers
  • Tax credits
  • The state-funded private school
  • Growth of private education for low income families
marks by school management chennai 1994 95 higher secondary level
Marks by School Management, Chennai(1994-95, Higher Secondary Level)

Source: P. Duraisamy and T. P. Subramanian (1999, p. 43)


Chapter VI: Grant-in-Aid

  • Categories of aid
  • 1. Aid shall be of two categories,
  • (a) maintenance grant; and
  • (b) building grant
  • 2. Maintenance grant shall be of two kinds,
    • (a) recurring maintenance grant; and
    • (b) non-recurring maintenance grant

Grant-in-Aid (continued)

The recurring maintenance grants are

  • staff grant;
  • provident fund grant;
  • pension and retirement benefit grant;
  • medical benefit grant;
  • benefits specified in Chapter X;
  • grants for the purpose of books and journals which are essential for the library; and
  • grants for the acquisition of essential equipments of the school.

Grant-in-Aid (continued)

Non-recurring maintenance grant shall be of the following categories,

  • (a)contingent grant;
  • (b)rent grant;
  • (c)depreciation grant for school;
  • (d)hostel grant and depreciation hostel grant;
  • (e)grant for equipment, furniture, games and sport materials and the like;
  • (f)biennial or triennial grants for the purchase of books for the library and for the setting up of a book bank.
average cost of sending a child to school rs year at constant 1996 7 prices
Average Cost of Sending a Child to School(Rs. / year at constant 1996-7 prices)

Primary Level

NSS estimate, 1986-7 *


PROBE estimate, 1996


Elementary Level

NCAER estimate, 1994


* Excluding clothing expenses

Source: NSSO, 1993; NCAER, 1996; PROBE survey


Average cost of sending a child to a government primary school:

Teachers’ Estimate


Total Expenditure Rs 318/year

Parents’ Estimate


PROBE survey (sub-sample of 831 children enrolled in government primary schools)