In 2011, the latest year for which reliable estimates are available, public expenditure on education in India amounted to about 3.2% of GDP.
This puts India, jointly with Cameroon, at 133rd on a list of 192 countries for which data is available. For a country striving to become an important economic power in the years ahead, this is not a comfortable position to be in. ‘Soft’ infrastructure, in the form of education and skill development, is a fundamental building block to economic growth.
Change was expected of the new government, which took charge in 2014 with a resounding mandate for development and growth. Against this backdrop, the Budget FY15 was promising in parts though not very dissimilar to Budgets of the previous government with respect to the education sector. New initiatives in teacher training (through the Pandit Madan Mohan Malviya Mission on Teachers and Teaching) were welcome, as was the decision to invest in quality higher and professional education through the setting up of new IITs, IIMs and AIIMS.
Overall, however, allocation towards education in the Union Budget grew only slightly over the previous year.
Much is, therefore, expected of the Budget FY16. The sector is in need of increased outlays and policy reform; initiatives and schemes within the sector need to be streamlined and monitored more stringently. Increasing public spending on education to 4.4% of GDP (the average for emerging markets) implies an additional outlay of over R1 lakh crore across central and state governments. With many states facing significant fiscal challenges in the near term, much of the onus for increasing outlays or funds available for the sector would fall on the central government.
Securing increasing funding for setting up of additional schools, particularly at the secondary education level, is a key expectation from the government in the near term. The number of public schools offering secondary education is far short of what is required, impacting reach and availability of secondary education for the poorer segments of the population. This is one of several factors leading to a significant drop in enrolments in higher classes—only about half of all students in a cohort remain in school till Standard X. A study by PwC, entitled ‘Future of India-The Winning Leap’ envisaged raising the average years of schooling for the population from seven (the current average) to ten, in order for India to achieve its growth and development aspirations. While direct allocations to school education out of the Budget may be one approach to bridge the funding gap, development of new and innovative models to harness alternative sources of funding will be critical. Public-private partnerships (PPP) to set up new schools have been explored in the past, and the development of investible models and structures will be critical to attract large-scale funding from the private sector.
Increased funding for continued education and training for teachers is another area the government will need to focus on. Studies by various organisations have shown that learning outcomes remain poor in schools across the country. Poor quality of education provided at government schools is often cited as a reason for increasing popularity of private schooling even among the less affluent sections of the population. Over 30% of teachers across all schools in India (private and public) are not graduates; schemes could be designed to provide specialised training to such teachers, taking into account their unique challenges and constraints.
Despite an estimated 12 million or more people being added to the labour force every year, most industries face a shortage of skilled labour. Since over half of those entering the labour force have not progressed beyond school education, it is essential that the reach of vocational training be extended to the school curriculum. Provision of certain types of training at the secondary school stage would raise employability for students as well as provide certain key industries with a larger pool of trained talent.
Skill development has been an area that the government, and the Prime Minister himself, has emphasised as being fundamental to economic growth and job creation in India. The proportion of trained workers in most trades and vocations is less than 10%. Initiatives such as “Make in India” and “Smart Cities”, to name a few, could drive requirements for large numbers of people with specific skills that may be in short supply today; skill development initiatives and schemes will need to address gaps and opportunities that may result from these requirements. In addition, funds would be required for modernisation of existing skill development and vocational training institutions such as the ITIs.
The Sarva Shiksha Abhiyan and the Mid Day Meal schemes have been successful in driving rapid growth in school enrolments across India; yet efficiency and quality of implementation have not been uniform. Systems to better monitor implementation of these schemes and utilisation of the funds, which can lead to streamlining and strengthening of the schemes themselves, is the need of the day.
In summary, the issues are many, and the need for the government to step up funding for the education sector is acute; India has a long way to go in order to catch up with competing nations. The Mexican government, for instance, spent over $2,900 per student in 2010—more than ten times what the Indian government did. A gap this wide cannot be bridged overnight; even doing so in the long term will require innovative approaches by the government to co-opt and harness alternative sources of finance. What the sector will look for, therefore, will be for the government to spell out its vision for the sector and to chart the course it intends to follow over the next few years.
By Dushyant Singh
The author is associate director, Strategy, PwC India