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Home > Media Room > Articles by supporters

Why India's most pro-education budget isn't good enough

Education World, 30 Nov, 1999
By Dilip Thakore

So vital is the nation's annual investment in education that the principles of zero or needs based budgeting have to be applied to this sector. This requires detailed assessment of the education needs of the nation's 375 million school-going children and mobilising the resources to match them, come what may. Dilip Thakore reports

Now that the dust stirred up by the flurry of press conferences, television studio and panel discussions following the presentation of the union Budget 2005-06 on February 28 has settled, educationists and academics across the subcontinent are poring over the minutiae of the 90-minute speech of Union finance minister P. Chidambaram and the subsequent clarifications and explanations made by officials of the finance and human resource development (aka education) ministries. the objective: to assess the impact of the most pro-education central budget in post-independence India .

Reaffirming that the National Common Minimum Programme (NCMP) of the Congress-led United Progressive Alliance coalition government - which against all expectations swept to power in New Delhi in the general election of May 2004 - "leans towards decisive intervention by the State in favour of the poor", Chidambaram gave education top billing in the Union government's Rs.172,500 crore plan (i.e investment) outlay. "On priority sectors and flagship programmes falling under the NCMP, I propose to provide an additional sum of Rs.25,000 crore in the next year. For example the allocation for education in 2005-06 will be 18,337 crore ( cf. 10,475 crore last year). Next only to education, the plan allocation for rural development will be 18,334 crore. On subsidy for fertilisers the estimate is Rs.16,254 crore. The estimated expenditure on health and family welfare is Rs.10,280 crore," said Chidambaram in his budget presen-tation address to Parliament.

Typically, Union human resource development (HRD) ministry officials starting with its octogenerian minister Arjun Singh, were reluctant to spare time for EducationWorld notwith-standing the hard reality that this is the only education-focused publication in the country. EW 's Delhi-based correspondent Neeta Lal had to bombard Shastri Bhavan with phone calls and faxes before she could get any one of the plethora of secretaries, assistant and joint secretaries to divulge the ministry's reaction to budget 2005-06. "Finally after a long chase, I arm-twisted Krishna Murari Acharya, joint secretary, elementary education (one) into giving me a brief telephonic interview," says Lal.

According to Acharya, Shastri Bhavan (which houses the ministry) is "quite happy" with Union budget 2005-06. "It's a very pro-education budget because there are larger provisions for funding education at all levels, especially for elementary education and the girl child. The benefits will be all-pervasive and hopefully ( sic ) will trickle down to the grassroots. Perhaps the most important aspect of this year's budget is the provision that total spending on education will rise to 4 percent of GDP - a full one percent more than last year. And most of it will be spent on elementary education, especially for the SSA (Sarva Shiksha Abhiyan) programme which guarantees free and compulsory education to all children in the age group six-14," Acharya told Lal in a hurried telephone interview.

Under the cabinet system of government, officials in the Union HRD ministry are obliged to sing hosannahs of the budget as they have been doing for the past half century, notwithstanding pitiful allocations for this vital sector in post-independence India . Nevertheless even independent educationists concede this is the most pro-education Union budget in living memory. Not only has the Centre's outlay for education increased by 75 percent, of the aggregate additional NCMP outlay of 25,000 crore for 2005-06, education has received 25 percent. But while in percentage terms the incremental education outlay seems impressive, it is pertinent to bear in mind that the Rs.18,337 crore budgeted for education by the Central government has to be spread over 31 states and four Union territories of India. It is pertinent also to bear in mind that the population of children (below the age of 18) is a massive 415 million. Assuming that 375 million of them require some sort of education, the per capita provision of the Union budget is Rs.489 per year or a mere Rs.40 per month, i.e is less than $1.

Therefore quite obviously the greater onus for educating gen-next has devolved upon the nation's 31 state governments whose combined aggregate annual outlay for education is Rs.92,000 crore, assuming that the HRD ministry's claim that education expenditure has risen to 4 percent of GDP (Rs.2,880,000 crore) is correct. If state government outlays are added to the Centre's budgetary provision for education, the average national per capita expenditure on education for 375 million children rises to Rs.2,940 per year or Rs.245 (US$ 5.45) per month - a sum pathetically inadequate to provide classrooms, teaching aids, teachers' salaries and textbooks. Hence contem-porary India 's shameful elementary education statistics: one-fifth of government schools (90 percent of the total) require multigrade teaching, 20 percent don't have proper buildings, 58 percent can't provide drinking water and 70 percent are bereft of toilets and sanitation.

Little wonder Dr. A.S. Seetharamu, professor of education at the Bangalore-based Institute of Social & Economic Change is unimpressed by finance minister Chidambaram's top-billing-for-education claim. " Ex facie the finance minister has made generous provisions for education and child welfare. As a percentage of planned expenditure it has been raised from 10 percent in 2004-05 to 12.75 percent this year. Likewise the allocation for Sarva Shiksha Abhiyan or the Education For All programme has been raised by 50.52 percent to Rs.7,156 crore; the outlay for the mid-day meal scheme by 140 percent to Rs.3,010 crore and the allocation for ICDS (Integrated Child Development Scheme) under which an additional 188,168 anganwadis or creches are proposed to be set up has been raised by 93.5 percent to Rs.3,142 crore. But these impressive percentage increases are on a low base. In relation to normative needs of the long-neglected education sector, they are still grossly inadequate," says Seetharamu.

According to Seetharamu, the finance minister's claim that a lion's share has been given to elementary education is "verbal and numerical jugglery". If the outlay for education had been calculated on a needs rather than an incremental allocations basis, the Centre should have "at least" doubled its provision of Rs.18,337 crore. Similarly the states need to double their aggregate provision of Rs.92,000 crore through a determined revenue mobilisation effort if multigrade teaching is to be eliminated and the average teacher-pupil ratio of 1:60 is to be halved to 1:30. "This is not as impossible as it sounds," says Seetharamu. "The corporate sector which benefits most from improved education standards must be forced to actively engage with the education system. Corporates, especially successful multinationals, need to be given tax incentives to donate to education institutions and a special education cess should be imposed upon IT companies which enjoy tax free status. Unfortunately the budget does not reflect any new thinking in these directions," he laments.

However other knowledgeable monitors of the economic scene tend to be somewhat more appreciative of Chidambaram's balanced revenue mobilisation and disbursement effort in budget 2005-06. Dr. Parth Shah former professor of economics at Michigan University , USA and currently president of the Centre for Civil Society, a highly-regarded Delhi-based liberal think tank, is appreciative of Chidambaram's tactical strategy of spreading controversial policy issues through the year instead of clustering them in the budget speech. Shah believes that substantially higher outlays for SSA, ICDS and the mid-day meal scheme apart; there are other commendable pro-education proposals in the new budget.

 "The new programme of providing full scholarships to SC/ST (scheduled castes and scheduled tribes) students who secure admission into listed 'institutes of excellence' is praiseworthy. These scholarships will not only cover tuition fees but also residential accommodation, textbooks and a personal computer. This is genuine empowerment of SC/ST students who will have a wider choice and therefore more appropriate and better quality education. The full scholarship programme is an addition to existing programmes of partial scholarships with an aggregate provision of Rs.6,253 crore. Moreover the government also proposes to award 2,000 fellowships to SC/ST students to pursue M.Phil and Ph D courses in select universities, which is a commendable initiative," says Shah.

Box 1

Education provisions of Budget 2005-06

The central government's budget 2005-06 presented to Parliament on February 28 by Union finance minister P. Chidambaram for "the greatest good of the greatest number," contained numerous provisions for education. Among them:

. The Centre's allocation for education has risen by 75 percent to Rs.18,337 crore

. The allocation for the Sarva Shiksha Abhiyan (Education For All) programme which covers all children between six-14 years of age has been raised by 50.5 percent to Rs.7,156 crore

. The provision for the mid-day meal scheme for school children under which "11 crore (110 million) children are covered today" has been increased by 140 percent to Rs.3,010 crore

. Provision for the umbrella Rajiv Gandhi National Drinking Water Mission raised by 43.5 percent to Rs.4,750 crore

. Extension of Total Sanitation Campaign (TSC). Currently TSC covers 452 of India 's 524 districts. A provision of Rs.630 crore made to extend TSC to all districts

. Larger scholarships to "meet the requirement of tuition fees, living expenses, books and computer" of all SC/ST (scheduled castes, scheduled tribes) admitted into a to-be notified list of institutes of excellence. Moreover 2,000 Rajiv Gandhi National Fellowships to SC/ST students pursuing M.Phil and Ph D courses in selected universities

. Total allocation for National Rural Health Mission increased by 22 percent to Rs.10,280 crore in 2005-06

. Six AIIMS (All India Institute of Medical Sciences, Delhi )- like institutions will be started in the current year

. Allocation for ICDS (Integrated Child Development Scheme) raised by 93 percent to Rs.3,142 crore. An additional 188,168 anganwadi centres (crèches) will be set up to augment the current 649,000; nutrition norm doubled

. The National Commission on Farmers has recommended the establishment of Rural Knowledge Centres all over the country using modern information and communication technology (ICT). NABARD to provide Rs.100 crore out of RIDF (Rural Infrastructure Development Fund)

. 67 ITIs (Industrial Training Institutes) in 15 states/ Union territories have been linked with industry and will be upgraded at a cost of Rs.1.6 crore each

. Public-private partnership between government and industry that will take up a skills development programme under the name Skills Development Initiative or SDI. Details of the scheme will be worked out and announced shortly

. In the cause of "gender sensitivities" under ten budgetary heads a sum aggregating Rs.14,379 crore has been allocated for women and child welfare

Commendably, despite its appropriate elementary education bias, budget 2005-06 has not neglected tertiary education. The special provision for SC/ST students admitted into institutes of excellence in higher education apart, the much publicised Rs.100 crore special grant to the Bangalore-based Indian Institute of Science to help it reach par status with Harvard and Oxford has enthused not a few academics. "I'd classify this as an education-friendly budget. The substantially higher allocations made for primary education and the SSA programme is a positive development because improved elementary education is the prerequisite of higher academic standards and the spread of education in general. Moreover the Rs.100 crore grant to the Indian Institute of Science is a big step in the right direction. We need IISc to have the labs and equipment to raise its quality of research to international standards. I hope the IISc management will use this money prudently to upgrade its research infrastructure. IISc is our global showpiece and we should bring it up to scratch," says Dr. Charan Wadhva, research professor at the Centre for Policy Research, Delhi .

Although the handsome grant made to IISc has been widely welcomed, some academics are inclined to regard it as evidence of the ad hoc elitism which Indian education is heir to (see p. 22). "Large annual government grants enable the IITs, the globally acknowledged symbols of Indian technical education, to provide highly subsidised education to a large number of students who are freely permitted to leave Indian shores immediately after graduation. Now a generous Rs.100 crore grant has been made to IISc. However little or nothing has been done to encourage or promote private sector institutes of technical education which despite stiff resistance and hostility have provided most of the trained manpower which has built up India's globally competitive IT (information technology) and BPO (business process outsourcing) industries. There is still widespread resistance to liberalising the terms and conditions under which private engineering colleges and technical institutions operate. Their state government-mandated tuition fees are unrealistic and numerous restrictions are imposed upon them for admitting full fee paying domestic and foreign students. While making this handsome grant to IISc, Union and state budgets have no time for privately funded, high-performance institutions which continue to be subject to numerous unreasonable restrictions and conditions," says K.G. Varghese the founder chairman of the Chennai-based Hindustan Group of five institutions of higher education.

Nevertheless there is general acknowledgement that within the constraints of the traditional strait-jacketed budgetary system which requires the finance minister to keep the ship of state afloat by distributing government revenue to every sector of the economy, Chidambaram has exhibited a clear and welcome bias in favour of education and child-related welfare schemes. In keeping with the temper of the times, this finance minister is sensitive to the rising clamour for more schools and better quality education within a society in which children and youth constitute the overwhelming majority of the population. Yet as the recently released State of the World's Children 2005 report argues, in the hopelessly laggard developing nations of the third world, the most pressing need is not larger outlays for education per se , but a frontal attack on child poverty caused by widespread multiple deprivations.

Against this backdrop, perhaps the most ameliorating feature of budget 2005-06 is the awareness of the crucial linkage between education and ubiquitous child poverty which characterises contemporary India . Consequently a substantially 75 percent higher Central government outlay for education apart, the Union budget has mandated a 93.5 percent higher provision for ICDS (Integrated Child Development Scheme); a 140 percent higher outlay for the mid-day meal scheme, and a 50.52 percent higher allocation for the national SSA (Education For All) among several other education-related initiatives (see box p.30).

This awareness of the larger dimensions of child poverty as a whole which need to be addressed, is a welcome and refreshing departure from past budgeting exercises. As SWC 2005 makes abundantly clear, addressing the core issue of child poverty requires the provision of shelter, nutrition, safe drinking water, sanitation, healthcare, education and information (newspapers, telephone, television etc). To give the beleaguered finance minister his due, despite pressure from industry and the middle class to provide tax reliefs, in budget 2005-06 he has made handsome incremental provisions under each of these heads.

As recounted above impressive incremental allocations have been made for ICDS, the mid-day meal scheme, SSA and provision of full scholarships for SC/ST students. In addition a sizeable outlay of Rs.10,280 crore has been budgeted for the National Rural Health Mission (2005-09); a 44 percent higher allocation for providing drinking water (Rs.4,750 crore); a too-modest Rs.630 crore for the Total Sanitation Campaign; a massive Rs.14, 379 crore under ten heads of demand towards grants for women and children; for rural housing a 10 percent higher allocation of Rs.2,750 crore through the much-criticised Indira Awas Yojana.

Moreover the finance minister also committed the govern-ment to radically improving rural infrastructure by drawing up and implementing President Kalam's Bharat Nirman "business plan" by the year 2009. In doing so he has committed the Union government to bringing an additional 10,000,000 hectares under assured irrigation; connecting all villages with a population of 1,000 (or 500 in hilly/ tribal areas) with a road; constructing 6,000,000 houses for the poor; providing drinking water to 74,000 uncovered habitations; reaching electricity to the remaining 125,000 villages and providing electricity to 23 million unconnected households, providing telephone connectivity to 66,822 unconnected villages - all of which will require "great resources". "Government believes that Bharat Nirman is an achievable project, and it is our intention to give rural India a new deal fully involving the Panchayati Raj institutions in the planning and implementation," said Chidambaram in his budget speech which even if partially translated into live on the-ground-projects, will directly reduce child poverty and deprivation nationwide.

But there's the rub. Given the pathetic track record of the Central and particularly the state governments 'captured' by perpetually hands-in-the-till bureaucrats, there is widespread scepticism about the government apparatus being able to translate the massive outlays provided in the budget and envisioned in the Bharat Nirman programme into tangible projects. With little fear of punishment for dereliction of duty or even for blatant defalcation and misuse of public funds in the 'soft state' into which post-independence India has metamorphosed, there's a huge shadow between project plans and implementation.

That's why knowledgeable monitors of the Indian economy despair whether the incrementally larger allocations for education and elimination of child poverty in general will make any impact at ground zero level. According to Swaminathan Anklesaria Aiyar, consulting editor of the Economic Times, most of the handsome social sector outlays made in the Union budget 2005-06 devolve upon the 31 state governments for delivery and "all the evidence shows that state spending is largely wasted... doubling outlays in such conditions means doubling waste". " India spends 4.1 percent of its GDP on education, but has just 65 percent literacy. China on the other hand, spends only 2.2 percent of GDP on education, yet has 91 percent literacy. Sri Lanka and Indonesia spend only 1.3 percent on education, yet have literacy rates of 92.5 percent and 88 percent respectively... Yet the CMP (Common Minimum Programme) - and the budget - pretend that more money is the answer," writes Aiyar in the Economic Times (March 17).

But while there is some substance in Aiyar's argument that the problem of India's education sector is inefficient use rather than paucity of resources, given the huge backlog in terms of infrastructure (one-fifth of the country's schools don't have proper buildings, another one-fifth are multi-grade institutions, and 70 percent are without toilets and sanitation), there's no side-stepping the reality that massive investment is required in the unforgivably neglected education sector. Of course the pre-condition of greater investment in education and welfare in general, is the creation of cast-iron, leak-proof budget allocation and monitoring systems. This not only requires task-oriented, leakproof systems at the project implementation stage, but reformation of the Union and state governments' budget formulation process. For a start the budgeting process needs to be restructured to reflect performance, production and output data of the year past (see EW editorial p.6).

However given that per capita expenditure on India's children and youth is a mere $.5.5 per month, there's no fudging the issue that larger resources have to be mobilised and canalised into the education and allied sectors given that 41 percent of Indians are below 18 years of age. Regretably most economists and business management experts aren't moved by arguments for redeployment of resources from other sectors in favour of education. "Eminent justice has been done to education in budget 2005-06 which has given a great push forward to elementary education in particular. Given the pressure for greater allocations from all sectors of the economy, the finance minister has done a commendable balancing act," says Prof. J. Philip former director of IIM-B (Indian Institute of Management, Bangalore ) and currently director of the Bangalore-based Xavier Institute of Management and Entrepreneurship (XIME).

Box 2

Expert comment on Budget 2005-06

Provisions for education cannot be looked at in isolation. There are critical inter-linkages between education and economic and social poverty. Reduction in poverty and income generation are the natural outcomes of better education. Thus investment in education is not merely a social sector intervention, it is a development challenge. This budget has proposed rural interventions which will have a critical social transformation impact. The other critical investments are in health and sanitation. Once these materialise they will have a direct bearing on education - Arvind Mohan , director (planning & development), Lucknow University .

Industrial training institutes need a fairer deal than meted out to them in the budget. Post-secondary, non-university enrollments are over 35 percent in all OECD countries. It is hardly 15 percent in India . A country on the road to industralisation should devote more attention to skills training. Otherwise the mad rush for engineering and management courses won't be halted - Dr. A.S. Seetharamu , ISEC, Bangalore

The most welcome provision of the budget is the increased allocation for elementary education, especially Sarva Shiksha Abhiyan. The funding for SSA has shot up from Rs.5,000 crore to Rs.7,156 crore this year and that's a huge step forward. This higher outlay will help galvanise new projects, focus on primary education as mentioned in the CMP and enable us to put more children into schools. There will be an increased focus on computerising education, providing good infrastructure and building more schools - Krishna Murari Acharya , joint secretary (one) elementary education, Union HRD ministry

The key factor I would like to highlight is that the provisions for education have to be monitored by agencies outside the government. The private sector needs to set up units for this. Expenditure by government needs verification and this has not been provided for. The public needs to know about outcomes of money spent. The government cannot be the spender and regulator. Moreover an unnoticed provision in the budget is the withdrawal of exemption hitherto given to education loan repayment installments from taxable income. This is very iniquitous and out of step with global practice - Sathi Alur , financial advisor, Spastics Society of India

This is a great budget for education and reflects UPA government's commitment to education. I am especially enthused by the creation of a non-lapsable Prarambhik Shiksha Kosh fund under SSA. It will help us realise our aim to bring the student teacher ratio to 1:30 in government schools and also provide more for amenities in them - Arvinder Singh Lovely , education minister, Delhi state government

It is a welcome budget. I'd say a dream sold. There are generous commitments and allocations, though for social sectors there is need for more. But where the money will come from and how it will be spent remains to be seen - Dr. Charan Wadhva, Centre for Policy Research, New Delhi

Unfortunately balanced budgeting while intellectually appealing, is unlikely to solve the problems of the country's youthful majority which urgently needs more accessible and better quality education to survive incremental foreign competition from better educated youth in the rapidly crystallising global economy. As Prof. A.S. Seetharamu of ISEC (quoted above) argues, there's an immediate need to double the national outlay for education to halve the nation's untenable 1:63 teacher-pupil ratio and eliminate multi-grade teaching. Therefore there is an urgent need to raise the national outlay for education to 6 percent of GDP as recommended by the Kothari Commission way back in 1964, and then to ensure that the Rs.200,000 crore allocated for education is prudently spent.

Resource mobilisation of this scale is not as impossible as it sounds. As has been repeatedly argued in the editorial columns of this publication, there is considerable scope for reducing annual allocations to defence and non-merit subsidies given to the urban middle class, to swell education and allied outlays. The annual defence budget of Rs.83,000 crore is unaffordable for a poor nation in which one-third of the population or over 300 million people live on less than $1 per day. Given that we already have a standing army of 1 million plus, quite obviously it has to be supported. But the annual defence allocation can be reduced significantly if the defence establishment is permitted to enter the infrastructure construction business (as is the practice in China ) and earn at least 20-25 percent of its keep. With some of the best engineers and construction managers in the country and a proven record of speedy project completion, the Indian Army is equipped to generate considerable revenue while raising standards of infrastructure construction in India .

Likewise some out-of-the-box thinking has to be done on the matter of unmerited subsidies for higher education, cooking gas, household electricity, water supply, fertiliser, foodgrains etc cornered by the relatively affluent middle class for which the aggregate outlay was estimated a few years ago by Chidambaram at 14 percent of GDP or Rs.400,000 crore per year. For instance with bank loans for higher education easily available, the unconscio-nable blanket subsidisation of college and university education by the Central and state governments needs to be replaced by a loans-cum-targeted subsidies system, and perhaps by promoting an Education Development Bank which would fund students and education institutions. Similarly there is considerable scope for replacing blanket non-merit subsidies for urban services by introducing means tested regimes to free resources for elementary education. Of course this will require solid work by bureaucrats and government servants. But that's why they are being paid an estimated Rs.100,000 crore per year. They too need to earn their keep.

In the final analysis although the Union budget 2005-06 is perhaps the most education-sensitive ever, the unprece-dented provisions it has made for the education and allied sectors have been allocated on the principles of incremental rather than needs-based budgeting. Yet so vital is the nation's annual investment in education that the principles of zero or needs-based budgeting have to be applied to this sector. In effect such a development strategy requires detailed assessment of the education needs of the nation's deprived 375 million children and mobilising the resources to match them, come what may.

True, budget 2005-06 is perhaps the most pro-education ever. But it should be regarded as the first step towards making education the top-most priority of the national agenda. The interests of justice, equity, social stability - indeed the future of 21st century India - demand it.

With Hemalatha Raghupathi (Chennai), Neeta Lal ( Delhi ), Vidya Pandit ( Lucknow ) & Gaver Chatterjee (Mumbai)

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