Role Of The State

Updated: Apr 16 2002, 05:30am hrs
At our Institute, we recently organised a seminar on the politics and economics of liberalisation. Since 1991, among the most commonly used cliche is: Across all varieties of the political spectrum, there is consensus on the need for reforms. Operationally, this is a meaningless statement unless one defines reforms and the modalities. So, at our seminar, we tried to pin down a minimum common set of reforms that various political parties agreed on. And we also rediscovered the obvious. The difference is not across political parties, since divergent views exist within the two major parties. In trying to identify this minimum set, inevitably, the discussion centred on the role of the State, subject to issues of a decentralised State versus a relatively centralised one.

Almost everyone agreed that the State has a role in providing primary education, health care, some physical infrastructure (especially rural) and governance (law and order, defence). I have deliberately used the word role. Because role can mean financing or actual delivery and the two are not identical. Most people believed that the State also has a delivery role in providing these services and a few disagreed. I cursed myself that we had not invited James Tooley to present a paper on primary education.

Data may be slightly dated. But we seem to have 610,763 primary schools and 185,506 upper primary schools. Ninety five per cent of the population has a primary school within one kilometer of residence and an upper primary school within three. Yet 40 million children are out of school and they are not necessarily out of school because they are working. Net enrollment rates are low in undivided Bihar, Jammu and Kashmir, Nagaland, Rajasthan, Uttar Pradesh and West Bengal. Drop out rates are high and many children dont complete the basic education cycle. Yes, whatever indicator one uses, the situation has improved in the 1990s and one can debate the reasons behind this improvement. But clearly, the goal of universal primary education by 2005 and universal elementary education by 2010 is not going to be easy and the gender bias doesnt make life easier. As I said, most participants at our seminar believed that the State should do something about this. Especially now that education has become a fundamental right. This is where James Tooleys work becomes important. Part of his writing surveys literature from other countries and part reports on research he has been conducting in India. From this work, one deduces the following propositions.

Proposition 1: Cross-country evidence shows that private schools are more efficient. Controlling for socio-economic factors, private schools lead to better outcome (verbal, mathematical and cognitive abilities). But (and this is the surprising result), private schools are not more expensive. For the same per pupil cost, achievement is higher in private schools. For example, in Lucknow, the per pupil cost in unaided private schools is less than half that in public schools. This is the sense in which private schools are more efficient.

Proposition 2: Government schools have no accountability and this leads to poor physical facilities, high pupil teacher ratios and low level of teaching activity. This has of course been known and was also reported by Probe (Public Report on Basic Education in India) in 1999.

Proposition 3: An increasing number of poor in India are sending their children to budget private schools (this is what most of James Tooleys own research is about). These schools are run on commercial principles and are not philanthropic. Nor do they receive government subsidies. They charge between 10 to 20 US dollars a year per student, roughly 5 per cent of what middle class private schools would charge. However, they also have free places for really poor students, often as much as one-third. Labourers, rickshaw pullers, auto-rickshaw drivers and market stall-owners send their children to such schools, spending between 6 per cent and 11 per cent of income on education. To restate the obvious, children are not out of school because of lack of demand. They are not in school because the quality of government school delivery is terrible.

Proposition 4: Budget private schools have qualified teachers and spend resources on teacher training and curriculum development. However, they often lack physical infrastructure (libraries, computer, science equipment), although government schools are probably worse. Teachers in budget private schools are paid 25 to 40 per cent less than teachers in government schools. Although teachers in budget private schools are often more qualified, they wouldnt be able to obtain appointments in government schools, because of corruption and cronyism associated with government appointments.

Proposition 5: Rather than encourage budget private schools, governments discourage them through bribery and corruption. Recognition requires physical infrastructure, which these budget private schools often dont possess. Most of this physical infrastructure is unnecessary to improve the quality of education. But because the physical infrastructure doesnt exist, budget private schools have to pay bribes of around Rs 50,000 to obtain recognition and Rs 25,000 per year to retain the recognition.

Proposition 6: Public-private partnerships are also possible. For example, as in the Edison Schools system in the US, ailing government schools were contracted out to private management. Because administrative expenses dropped from 27 to 7 per cent under the Edison system, not only did actual funding on classrooms go up, 8 per cent return was also possible to investors. In several countries, poor students are allowed to exit from government schools by using State funded vouchers. This voucher idea was mooted in the report of the Prime Ministers Economic Advisory Council two years ago.

Proposition 7: In some countries, there have been successful attempts to route State funding through private schools. Hence, the equation between State funding and State delivery may have been regarded as axiomatic in the past. But it is possible to break this down. Now you understand why we regret not having asked James Tooley to present a paper. Perhaps the reactions of participants might have been different. Perhaps there might have been greater recognition of the fact that the licence-permit raj may have disappeared from industry, but continues to be pervasive for education. Especially primary education, which everyone regards as a desirable objective. And I am certain that what has been documented for education can also be documented for health care.