Budget 2018: The finance minister, in his Union Budget 2018 speech, mentioned “education” the most number of times (to be precise, 29 times), amongst other buzzwords like agriculture (26 times) and health (21 times). However, a simple fact check tells us that he didn’t really walk his talk. Take the share of total spend on education in overall Budget 2018 expenditure, which has fallen to 3.5% in FY19 compared to 3.8% in FY18 (RE). Of the total allocation of Rs 85,010 crore for education, Rs 50,000 crore has been allocated for school education and the rest Rs 35,010 crore on higher education.
The increase in budgetary allocation for school education (6.4%) for FY19 is less than what it was in the previous fiscal (9%). Also, allocation on higher education has risen by a mere 0.4%. Within the higher education pool, the finance minister has allocated Rs 2,750 crore for the Higher Education Financing Agency (HEFA), which will fund higher education infrastructure in the country. Commensurately, the Budget 2018 allocations towards AICTE, IITs, IIMs and central universities have been cut.
The finance minister also stated that he proposes “to increase the digital intensity in education and move gradually from ‘blackboard’ to ‘digital board’.” Again, a simple fact check tells you that the Budget 2018 for digital e-learning for both school as well as higher education has been cut compared to the last fiscal, totalling around Rs 150 crore compared to Rs 160 crore in FY18. To his credit, the finance minister did speak of quality of education and training of teachers to improve and strengthen school education. But that hasn’t translated into any real action or announcement. This has direct implications for the much spoken about India’s demographic dividend.
The United Nations Development Programme (UNDP) revised estimates for 2017 highlight that India is home to the largest population of young people. With 834 million people under the age of 35, the young currently comprise almost 64% of India’s population (compared to China’s 47%). The ratio of working-age population to old-age dependent population—also called the potential support ratio (PSR)—is a reflection of a country’s window of opportunity or its demographic dividend. India’s PSR is 11.7, which means there are around 12 working-age people for every elderly aged above 65.
This ratio is expected to reduce to eight in 2030 and five in 2050. Despite having this demographic asset on its side, India has failed to utilise it. This, perhaps, is India’s biggest non-performing asset. The latest Economic Survey notes that India is committed to achieving the Sustainable Development Goal for education—‘Ensure inclusive and quality education for all and promote lifelong learning’—by 2030. The Survey also notes that India has made significant progress in quantitative indicators such as enrolment levels, completion rates and other physical infrastructure like construction of school buildings/classrooms, drinking water facilities, toilet facilities and appointment of teachers, etc, at elementary school level. While quantitative metrics might point to an improved situation, quality is not really encouraging.
Almost 25% of primary schools in India have a student classroom ratio higher than the ideal level of 30. According to data released by the ministry of human resource development, a comparison of gross enrolment ratio (GER) across primary (I-V), lower secondary (VI-VIII) and upper secondary (IX-XII) and tertiary education shows that GER fell from 101.4 in primary, to 62.5 in upper secondary education, to 23 in tertiary education. The latest Annual Status of Education Report (ASER) survey by Pratham highlights the reason behind this trend. About 76% of surveyed youth (aged 14-18 years) could not count money correctly.
More than half struggle with division (3 digits by 1 digit) problems. Only 43% are able to do such problems correctly. About 40% of 18-year-olds can’t read a simple sentence in English. And of those who can read a sentence in English, about 21% can’t understand the meaning of the sentence. This is very critical as the productivity of this age group has a direct bearing on India’s labour productivity as they enter India’s workforce. The results from the latest All India Survey on Higher Education (AISHE), too, are not very encouraging. The survey results show that while the number of colleges has increased over the years, college density—i.e. the number of colleges per lakh eligible population (age group 18-23 years)—and the average enrolment per college has not changed much for most of the states. Most of the colleges run only undergraduate-level programmes. Only 2.6% of colleges run PhD level programmes and 36.7% of colleges run postgraduate-level programmes.
While the quality of education is just one problem, skill development is another. The FY17 annual report of the ministry of skill development and entrepreneurship highlights that only 4.69% of India’s workforce has undergone formal skill training, compared to 52% in the US, 75% in Germany and 96% in South Korea. The report puts India’s estimated training needs across 34 sectors at 1,268 lakh during 2017-22. And top-ten sectors like construction, retail and textile account for almost 80% of the requirement. A relatively high ratio of working-to-dependent population (demographic window) can contribute to higher GDP growth. However, this can only happen if accompanied by policies that result in the translation of this high working-age population into higher labour force participation rate. If this doesn’t happen in a timely manner, it could lead to a bigger problem of non-performing human asset. India’s expenditure on education as a percentage of its GDP has remained below 4% historically, while the Kothari Commission in the 1960s had recommended a target of 6% of GDP for the same. Further research suggests even that may not be enough to close the gaps in the sector.
Bill Gates’s take on education system doesn’t paint a very happy picture of where India will be 20 years from now: “In the long run, your human capital is your main base of competition. Your leading indicator of where you’re going to be in 20 years from now is how well you are doing in your education system.” Even our target of the Sustainable Development Goal for education is slated for by 2030, when India’s PSR would have already dropped from 12 to 8. The issue of quality needs to be addressed at all levels, starting from primary education right until higher education and skill training, and this needs to happen before we lose out on our window of opportunity. Despite all the hype, Budget 2018 was just another missed opportunity for the education sector. If only the number of times the finance minister mentioned the word “education” in his speech had some direct bearing on what was in store for the sector in the Budget…
Authors are corporate economists based in Mumbai. Views are personal.