In India there are serious concerns about the quality of education students receive under the current system. Karan Bhasin (Independent Economist) argues why the government should move away from a production subsidy to a consumption subsidy approach to the provision of primary and secondary education with the introduction of education vouchers.

The last three decades have witnessed an unprecedented reduction in absolute global poverty and this reduction has come with the backdrop of sustained economic growth in the developing nations – particularly in South Asia. With sustained levels of economic growth, developing nations also witnessed an expansion in enrolment rates in schools and colleges during the last three decades. Education is in fact a very important variable when it comes to reduction in inequality as Dr Bhalla rightly points it out as an asset or a store of wealth. Therefore, to ensure sustained progress in reduction of poverty and inequality, the expansion of quality education is a sufficient condition.

However, in the context of South Asia – and particularly in the context of India – despite the improvement of enrolment rates, there are serious concerns regarding the quality of education that the public education system provides to students. For instance, dropout rates continue to be high in India while teacher student absenteeism remains widely prevalent across schools. India’s weak primary and secondary education system has an historical connotation to it as since independence, successive governments have focused primarily on higher education institutions. Dr Bhalla () calls this an elitist approach towards education as only the affluent section of the population would benefit from such higher education institutions as most poor were deprived of primary and secondary education. As far as quality of education is concerned, in 2009 as per the PISA scores, Indian students were ranked 72 out of 74 countries that participated in the assessment. Since 2009, Government of India has boycotted the assessment until recently when it decided to participate along with 80 other participants to evaluate the performance of Indian students.

The decline in the quality of education has only accelerated since the government enacted the Right to Education Act (2009) which focused solely on an expansion in enrolment rates. This reflects the lack of focus in designing policies that are driven by improvement in well-defined outcomes. A direct consequence of the increase in enrolment rates was the sharp decline in teacher student ratio – India currently has 35.22 teachers compared to global average of 23.65. While India today experiences a shortage of approximately 10 lakh teachers, the available teachers are unevenly distributed across the country which further complicates the situation. India’s public education system, especially primary schools are the worst affected by this shortage of teachers. But the lack of teachers is not the sole problem of public schools as many of these schools also lack basic and adequate infrastructure. As a matter of fact, it is only recently that most public schools got a separate toilet for girls as India’s Prime Minister Narendra Modi stressed upon sanitation and launched the Swachh Bharat Abhiyaan.

Therefore, there is no denial that India’s public schooling system requires much needed reforms as limited state capacity combined with the lack of appropriate evaluation benchmark for public resources in education has been responsible for the faltering standards of public education system in India. The problem is far more challenging for India as states tend to have more powers and hence influence when it comes to primary and secondary education.

An alternative to funding public education

India and other similar South Asian nations are not unique when it comes to such problems as many of developed countries have successfully resolved them. An idea that may fit well for India, and other South Asian nations, is to consider an alternative mechanism for provisioning of public education. This alternative mechanism rests on the premise that state’s role should be limited to only financing such public goods while provisioning of them can be delegated to private individuals. Such a system is likely to lead to an opening up of the sector making it more competitive. Friedman (1955) proposed a voucher system for primary and secondary education in the United States of America. Since then, education vouchers have received much attention as an alternative to direct provisioning of the service by governments.

The role of education vouchers

Education vouchers or cash transfers for education is a consumption subsidy whereby students are paid a fixed monthly amount which can be used only for paying of their tuition fee and meeting other education related expenses. Given that the subsidy is available only when a student is enrolled at a school, it acts as an incentive for students to continue their education. Further, by linking the subsidy progressively to attendance, the state can effectively reduce absenteeism on part of the students. Cash transfers also opens exciting design opportunities that can formulate incentives for students to attain higher degrees irrespective of their socio-economic criteria. Further, with cash transfers, students are no longer confined to a choice of public schools as they can use the money at any private school of their choice.

The Delhi Education Voucher Project aimed at evaluating the impact of a pilot education voucher scheme on students and parents in Delhi. The project, as undertaken by the Centre for Civil Society found that over 60 per cent students and their parents who received education vouchers decided to switch to private education institutions and out of them, at least 90 per cent of the parents were happy with the performance of their children (CMS & CCS, 2009). This shows that the impact of education vouchers would be far too significant in terms of improving quality of education for a vast population of students who depend upon public schooling system.

Beyond the positive impact that an education cash transfer scheme will have on students, an underrated and often ignored benefit of such a scheme is in terms of opening the market for private schools to cater to the lower middle- and lower-income groups. Such a program will make private investments in the sector viable and it will result in healthy competition amongst firms to attract more students. This competition is critical towards resolution of all supply side issues that are caused by the limited capacity of the state such as lack of adequate teachers and the prevalent teacher absenteeism in India’s schools.

Voucher programs have been in place across many developed countries such as New Zealand and certain states in the United States of America for years. Additionally, few South Asian countries have implemented some form of an education voucher program, for instance, Bangladesh has a program that is designed solely for females that study in grades 6-10. Therefore, there is adequate cross-country experience and numerous studies have tried to evaluate the impact of voucher systems on students and learning outcomes. Therefore, the need of the hour is to reimagine public schooling not just in India but across the South Asian region and to implement education vouchers as the policy choice for public provisioning of primary and secondary education.

This article gives the views of the author and not the position of South Asia @ LSE blog, nor of the London School of Economics. Please read our comments policy before posting. Featured photo: Green Art Wood | Credit: Pixabay, Padrinan.

This article has been adapted from a paper that investigates the possibility of a targeted education voucher program for India. The paper can be accessed by clicking here.

Karan Bhasin is a New Delhi based policy economist. He tweets at @karanbhasin95.

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