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Privatization of Education in India

Tuesday December 20, 2011 03:29:06 PM, Shahidur Rashid Talukdar

While India can boast of having the third largest higher education system in the world, reality is that India is facing a severe shortage of skilled human resources. The reason for such a contrasting situation is the extremely low quality of primary, secondary, and college-level education in India. A possible way-out from this situation is privatization of the education system, which is predominantly public at present. Privatization of education has the potential to improve the quality of education as well as to reduce the cost. However, to ensure access to education for all, the government must design an effective transfer-payment system.


Although India’s national literacy rate currently exceeds 75%, a study by Pratham, a voluntary organization, finds that only 53.4% children in Standard V can read a Standard II level text, and that nationally there has been a decline in the children's ability to do basic math! Another study by NASSCOM finds that 75% of technical graduates and more than 85% of general graduates are unemployable! The problem with the present Indian education system is that it is delivering a huge quantity of output, in the name of educated populace, with poor quality.


This alarming situation is due to the unavailability of skilled teachers, the lack of determination among the existing teachers to teach effectively, the poor physical infrastructure, and a low level of parental input toward their wards’ education. The deteriorating trend in the educational system continues largely because of the lethargy and mismanagement of the public schooling system which accounts for nearly 80% of all schools


Despite many efforts from the government to revitalize the public education system, the quality of public education is dwindling. Consequently, enrollment in private schools, colleges, and universities, is on the rise. For instance, a recent study finds that in the city of Hyderabad, 73% of families in slum areas send their children to private school. A general realization is that the return on investment in the private schools/colleges is much higher as compared to the government schools and colleges, with some notable exceptions.


The reason this is possible is the difference in approach between the two. The public education system – following a top-down approach – is accountable only to the government machinery. So even if the teachers in public schools don't deliver a good quality education, they don't suffer themselves because their jobs are secure. However, in the case of private schools – run through a bottom-up approach – the management and the teachers are directly accountable to the respective parents. If they fail to deliver an expected quality of education, the parents would react. They might even pull out their wards from the school. This implies that the teachers’ performance would affect the schools' income and reputation. Consequently, the teachers would lose their jobs. So a private school has to deliver a good quality education. In fact, they do it better than majority of the public schools.


Another issue is the cost of education. Most of the public schools are richer than their private counterparts in terms of total expenditure (on record, at least) and incur a much higher expenditure on the teaching and administrative staffs’ salary. The private schools, on the other hand, are thrifty about infrastructure and, in general, pay much lower salaries to their staffs. Thus, on average, at a fraction of the expenditure of a government school or college, a private institution can provide a better quality of education than the public institutions. 


Thus, private schools can provide a better education at a lower cost. So privatization of the primary and secondary educational systems can help ameliorate the situation by improving the quality of education while reducing the cost. But given India's poverty status (roughly 80% of the population  lives below the national poverty line), only a few parents will be able to afford the cost of private education. Hence, one can't advocate for a blanket privatization of the entire educational system without taking care of the cost. However, given the present scenario, an alternative system which provides a better education, without over-burdening the poor parents, needs to be put in place. Now the question is: What this system should look like?


The best solution, of course, is to fix the public education system. But with the track-record of the bureaucratic administration in India, it does not seem realistic to hope for such a positive change. One realistic way, I think, is to gradually privatize the schools and maybe the colleges, too. The government should take care of the educational expenditure by disbursing to the parents/guardians the cost of their wards’ attending schools through transfer payments rather than funding the schools and colleges directly. This way, private agencies will run the institutions, and the parents will be able to afford the cost. Since the parents will have a control over the money, they can decide whether or not to send their wards to a certain school or college. This keeps the benefit of the public education system – affordability – intact while bringing in the efficiency – high quality and low cost – of the private system.


The challenges of introducing such a system will be manifold. First, the government needs to make sure that schools exist in every locality. Left to the entrepreneurs themselves, they may fight to open too many schools in high-income localities where the students will be better compared to the low income localities. So the policy makers must ensure that low income localities also get a due share of the schools. The government must direct and incentivize the program so that marginalized areas are not left out.


The second challenge is to ensure quality. Although the private schools, in general, are better than their public counterparts, but relying too much on them can also be costly. The quality of the private schools also varies significantly. While some of them may provide a good quality education at a reasonable cost, others may end up becoming money-making machines without caring for the quality of education. So the government should come up with an effective mechanism to determine, monitor, and control the quality of education in the private system.


Another challenge to implement this mechanism is to come up with an effective transfer-payment system. This has to take into account the cost of education in a given locality, the frequency of transfer-payments, and a proper utilization of funds disbursed. The policy-makers should make sure to issue the payment checks on a regular basis to families that have school-going children. If the checks or vouchers are not regular or enough to cover the costs, then again, the poor will suffer more. The government must develop a policy framework so that a higher efficiency can be achieved without losing the poorer section of the population.


Thus, privatization of the country’s education system, coupled with a well-tailored transfer-payment system, can help improve the quality of education in India and reduce costs for parents.



Shahidur Rashid Talukdar is a graduate student at Texas Tech University, USA. More of his writings can be found on his blog:









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