"The direct economic returns to the society from investment in primary education in India, where average cost of sending a child to primary school is Rs 318 per year, have been estimated to be above 20 per cent," the public report on basic education (PROBE) in India published by Oxford University Press said.

An increase of one year in average educational attainment of the country's work force raises output by 13 per cent, the report says, adding the return on educational investment is the most at the primary level and higher for female than male education.

The report is based on a random survey of 234 villages in five states of Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh and Himachal Pradesh, which account for 40 per cent of the nation's population and more than half of all out-of-schoolchildren.

Analysing statewise data provided by the probe team and National Sample Survey (NSS), the report said in Madhya Pradesh and Tamil Nadu, each year of extra schooling raised men's productivity by eight per cent and that of the women by 10 per cent, while in Andhra Pradesh primary education, compared with mere literacy, enhances individual earnings by about 20 per cent.

"As in other countries, economic returns to education in India are estimated to be higher than the returns to other investments," the report says. However, the government is yet to realise the high returns from education and has cited `resource crunch' as the reason behind its failure to raise educational expenditure from current two per cent to 2.5 per cent, an amount far short of the official goal of six per cent as announced earlier, it said.