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Low Economic Efficiency of Public Expenditure in Education

  1. Despite increasing education spending, learning outcomes in India have not improved:
    A 2009 study by Tara Iyer in 115 districts in India concluded that increased expenditure shows a ‘mixed to positive’ impact on enrolment rates and transition rates (from primary to upper primary) but no impact on learning outcomes. Accountability Initiative’s research indicates that in the last 15 years, the central government’s expenditure on education has increased over nine-fold, but “comparing per student costs and learning outcomes in government and private schools, indicates that, in every state, learning outcomes in private schools are better than the government schools, while per student spending is much lower as compared to government schools.” As a recent World Bank report observes, it is not about how much you spend but how efficiently and effectively you spend - India doesn’t spend the allocated amounts, and spends with little ‘bang for the buck’.
  2. There is consistent underutilisation of education budgets:
    Particularly the Prarambhik Shiksha Kosh, a non-lapsable fund formed largely out of the education cess. Between 2009 and 2014, at best, government managed to spend 68% of funds collected through the education cess. Of this, 78% was spent on teacher and personnel salaries and 14% on infrastructure, whereas a meagre 5% was spent on quality of education. States, districts, and most importantly schools have little say in when and how the grants are to be utilised, and there are significant delays in fund disbursal.
  3. There is consistent underutilisation of education budgets:
    On account of large centrally managed education schemes such as SSA and Rashtriya Madhyamik Shiksha Abhiyan (RMSA). For example, the bulk of state budgets for elementary education are now used for paying teacher salaries (e.g., in Rajasthan, this accounts for over 90% of the total elementary education budget), leaving states entirely dependent on the SSA for non-wage related expenditure.
  4. The budgeting process itself is flawed:
    States are rarely given a budget envelope in advance of planning, and the final budget approved by GoI has little bearing on what states ask for - in some years the gap between demanded provision and actual allocation can be as much as 50%, leaving states with little incentive to articulate, measure, assess and remedy their real learning needs.
  5. The budgeting process itself is flawed:
    states struggle to hold on to decision-making power, and in the process many good ideas have failed to get implemented. More egregiously, central funding has entrenched a “one size fits all” approach where centralised norms undermine state-specific needs and priorities, and makes a focus on learning difficult. Building an outcome-focused system requires grappling with complex issues of curriculum design, pedagogical practice and teacher accountability systems, none of which are conducive to the one-size-fits-all centralised approach.

Page last modified on Tuesday May 10, 2016 13:46:10 IST

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