How much should India spend on education? The Education Policy of 1968, based on the recommendations of the Kothari commission (1964-66), decided that Indian public expenditure on education must be 6% of gross domestic product (GDP). This goal was reaffirmed in the New Education Policy of 1986 and its revision in 1992, with a suggestion that every attempt must be made to go beyond 6%. There has been no comprehensive education policy articulated since then, but each successive government has on multiple occasions reaffirmed this goal of spending 6% of GDP on education. For the sake of clarity: “spending” and “expenditure” includes both operating and investment spends.
India has never reached even near this goal. The closest it has come was in 2001, when this number hit 4.4%. The number has been over 4% only in three years since the goal was set; it has hovered between 3.3% and 3.8% since the 1980s, and currently it is at 3.8%.
Over the past few decades, this number of 6% of GDP for public expenditure on education has become a commonly accepted norm across the world, with credibility drawn from actual experience across many countries. It is a directional and normative goal, not a precise measure for what may really be required for the educational well-being of any nation.
For a reality check, let us compare our situation with the Organisation for Economic Co-operation and Development (OECD) countries as a group and with Brazil. It is relevant to note that educational attainment on all dimensions vary significantly for these countries; nevertheless, all are better off than India, e.g. on school completion rates, learning levels, gender equity and inclusion.
As against the 3.8% number of India, the public expenditure on education in the OECD is 5.4% and in Brazil 5.8%. This large difference is not particular to the current period, but seems to stretch across decades. In reality, this headline number vastly understates India’s shortfall. Let us look at just three key gaps that this number hides.
First, the stage of the education system of these countries is very different from that of India. These countries have invested and built their systems while India is still in the investment and building phase. We are way short of our actual need of (e.g.) secondary schools, colleges and teachers. There are some critical parts of the education system where we have hardly invested, most notably in teacher education, physical & social sciences, humanities and vocational education. In this investment and build-up phase, we need more money than countries that are done with the build-up, but we are significantly short of them. This large cumulative investment gap stunts the system and its capacity structurally, i.e. this is a structural investment gap.
Second, we cut corners and underfund almost everything by design, other than teacher salaries. Even on teachers, many states underfund the actual system requirement, by not appointing teachers and by hiring teachers at much lower salaries with short-term contracts. Almost every expenditure head is ludicrously underfunded, e.g. school budgets for teaching-learning material, training for teachers and principals, expenditure for basic things such as electricity bill and maintenance, research in colleges and universities. One shocking number that is emblematic of this underfunding: each child is supposed to get a nutritious mid-day meal at school for Rs.3.4. And this number has hardly been revised in the face of soaring food inflation. This operational funding gap makes ineffective, whatever we have built structurally, and eventually erodes it.
The third issue is very basic, about the proportion of population that the education system has to serve. Let me list the estimate for the proportion of population in the age group of 6 to 21, which the education system must be designed to take care of. This number is about 29% for India, 18% for OECD and 23% for Brazil. With that high a proportion of the population to be educated (to continue for decades), India needs proportionately more money, even if other things were to be equal. India’s demography will not let us escape this basic capacity gap. What is triumphantly called demographic dividend is actually a social powder keg, unless the youth are educated for economic and social contribution.
With the accumulated funding deficit over decades, the magical thinking (of many) that private funding can substitute being disabused by reality, the economy demanding dynamic and higher capacities of the workforce, soaring societal expectation from education, and the massive population of the young, it’s clear that we need sustained public spending much in excess of what we have done, probably way over 6% of GDP.
But this is not going to happen till India’s poor tax-to-GDP ratio, which stands at about 18%, compared to about 35% for OECD and for Brazil, improves substantially. Education (and health) will suffer and so will India, till this matter of overarching governance and policy is addressed squarely. This is not a matter of finance, but of sustained political action over time, not merely by the professional and elected political class, but by the public, by all of us.
Anurag Behar is the chief executive officer of Azim Premji Foundation and leads sustainability initiatives for Wipro Ltd. He writes every fortnight on issues of ecology and education.
