1. The Right lesson

The Right lesson

Rising out-of-pocket spending on education makes a case for direct transfer of benefits in the sector.

By: | Published: July 2, 2015 12:31 AM

Children’s education finally seems to have caught on as a priority for households in India. As NSSO’s Social Consumption: Education survey data shows, out-of-pocket expenditure on primary education per student rose from Rs 1,413 in 2007-08 to R4,610 in 2014. The figures in rural India showed strong growth, rising to R2,811 from R826 for primary education, R3,242 from R1,370 for upper primary education and to R9,031 from R3,019 for higher secondary education. This is a strong hint of the rising aspirations of households that see education as a ticket to a better future, an assumption that is reinforced by research—the National Council of Applied Economic Research found the average income of households headed by graduates was almost 5 times that of households where the head was illiterate.

At the same time, the rise in out-of-pocket expenditure also points at the changing preferences of parents—as successive ASER reports point out, private school enrolment is rising, even in rural areas. This points squarely at a deficit of the quality of teaching in government schools, something that has been corroborated by the ASER surveys and the PISA findings on learning levels. The government spends 3.8% of the GDP on education, much lesser than what some comparable economies spend. But, even this meagre spending yields far lesser value than it rationally should. The government would serve students better if it directly transferred to parents the amount it is spending so inefficiently on public education. That way, the parents who already send their wards to private schools get some much-needed support while those forced, because of their low incomes, to put their wards in public schools could choose otherwise.

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