Question

Explain the crucial role of education in economic development. Evaluate, both in qualitative and quantitative terms how India has performed in this regard. Do you think a larger role of the private sector can provide efficient solutions to the problem of the Indian education system? ANSWER IN NOT LESS THAN 2000 WORDS.

Answer 1

Role of education in economic development

Education provides a foundation for development, the groundwork on which much of our economic and social well-being is built. It is the key to increasing economic efficiency and social consistency. By increasing the value and efficiency of their labor, it helps to raise the poor from poverty. It increases the overall productivity and intellectual flexibility of the labor force. It helps to ensure that a country is competitive in world markets now characterized by changing technologies and production methods. By increasing a child’s integration with dissimilar social or ethnic groups early in life, education contributes significantly to nation building and interpersonal tolerance.

Prior to the nineteenth century, systematic investment in human capital was not considered especially important in any country. Expenditures on schooling, on-the-job training, and other similar forms of investment were quite small. This began to change radically during this century with the application of science to the development of new goods and more efficient methods of production, first in Great Britain, and then gradually in other countries.

During the twentieth century, education, skills, and the acquisition of knowledge have become crucial determinants of a person’s and a nation’s productivity. One can even call the twentieth century the “Age of Human Capital” in the sense that the primary determinant of a country’s standard of living is how well it succeeds in developing and utilizing the skills and knowledge, and furthering the health and educating the majority of its population.

No country has achieved constant economic development without considerable investment in human capital. Previous studies have shown handsome returns to various forms of human capital accumulation: basic education, research, training, learning-by-doing and aptitude building. The distribution of education matters. Unequal education tends to have a negative impact on per capita income in most countries. Moreover, controlling for human capital distribution and the use of appropriate functional form specifications consistent with the asset allocation model make a difference for the effects of average education on per capita income, while failure to do so leads to insignificant and even negative effects of average education. Investment in human capital can have little impact on growth unless people can use education in competitive and open markets. The larger and more competitive these markets are, the greater are the prospects for using education and skills.

India’s performance in education sector

Education in India is provided by public schools (controlled and funded by three levels: central, state and local) and private schools. Under various articles of the Indian Constitution, free and compulsory education is provided as a fundamental right to children between the ages of 6 and 14. The approximate ratio of public schools to private schools in India is 7:5.

India has made progress in increasing the attainment rate of primary education. In 2011, Approximately 75% of the population, aged between 7 to 10 years, was literate. India's improved education system is often cited as one of the main contributors to its economic development. Much of the progress, especially in higher education and scientific research, has been credited to various public institutions. While enrollment in higher education has increased steadily over the past decade, reaching a Gross Enrollment Ratio of 24% in 2013, there still remains a significant distance to catch up with tertiary education enrollment levels of developed nations, a challenge that will be necessary to overcome in order to continue to reap a demographic dividend from India's comparatively young population.

At the primary and secondary level, India has a large private school system complementing the government run schools, with 29% of students receiving private education in the 6 to 14 age group. Certain post-secondary technical schools are also private. The private education market in India had a revenue of US$450 million in 2008, but is projected to be a US$40 billion market.

As per the Annual Status of Education Report (ASER) 2012, 96.5% of all rural children between the ages of 6-14 were enrolled in school. This is the fourth annual survey to report enrollment above 96%. Another report from 2013 stated that there were 229 million students enrolled in different accredited urban and rural schools of India, from Class I to XII, representing an increase of 23 lakh students over 2002 total enrollment, and a 19% increase in girl's enrollment. While quantitatively India is inching closer to universal education, the quality of its education has been questioned particularly in its government run school system. While more than 95 percent of children attend primary school, just 40 percent of Indian adolescents attend secondary school (Grades 9-12). Since 2000, the World Bank has committed over $2 billion to education in India. Some of the reasons for the poor quality include absence of around 25% of teachers every day. States of India have introduced tests and education assessment system to identify and improve such schools.

Although there are private schools in India, they are highly regulated in terms of what they can teach, in what form they can operate (must be a non-profit to run any accredited educational institution) and all other aspects of operation. Hence, the differentiation of government schools and private schools can be misleading.

In January 2019, India had over 900 universities and 40,000 colleges. In India's higher education system, a significant number of seats are reserved under affirmative action policies for the historically disadvantaged Scheduled Castes and Scheduled Tribes and Other Backward Classes. In universities, colleges, and similar institutions affiliated to the federal government, there is a maximum 50% of reservations applicable to these disadvantaged groups, at the state level it can vary. Maharashtra had 73% reservation in 2014, which is the highest percentage of reservations in India.

Role of private sector in education

The main rationale for involving the private sector is to maximize the potential for expanding equitable access to schooling and for improving learning outcomes. Private involvement in education can help to increase the level of financial resources committed to the sector and supplement the limited capacity of government institutions to absorb growing demand. There is also increasing evidence to suggest that the private sector is well equipped to meet the grow­ing differentiated demands of specific groups, for example, religious ones – even when the state provides sufficient places in public schools and universities.

To understand the role the private sector could play and realize the potential benefits that its involvement could provide, an understanding of how countries are currently engaging with the private sector is required. A government has several options involving different financing and provision solutions: independent private schools, government funded private schools, privately managed schools, and voucher schools. Independent private schools are fund­ed, owned, and contracted completely separately from the state system. Government funded private schools are run by non-state providers that receive support from the government in the form of direct payments, bursaries, grants, subsidies, or a transfer of schools resources such as textbooks. Privately managed schools are funded by the government but managed by private entities. These schools often have to meet performance benchmarks or other learning output measures through a charter or contract with the government. Voucher programmes typically involve the government paying private operators based on the number of enrolled students.

Increased private involvement can improve pedagogic, technical and management skills across all levels of education. Additionally, its greater management flexibility means that private schools can more easily introduce curricular and programme innovations and improved assessment techniques. Some studies show that the learning outcomes in private schools are equal to or better than those of public school student. In Andhra Pradesh, India, for example, a school voucher scheme has been shown to save the state more than two-thirds of pupil capitation, while enabling the students to significantly improve results across all subjects. Indeed, despite students spending less time learning mathematics and language, and al­though their teachers had lower levels of formal education and training than their public school peers, the private-school voucher students achieved significantly better overall results. Pri­vate schools appear to have a longer school day and school year, smaller class sizes, lower teach­er absence and extra time devoted to other subjects – English, science, social studies and Hindi – (Muralidharan and Sundararaman, 2013).

Other studies show that private providers can be more cost-efficient, being able to operate at lower costs than their government counter­parts, while achieving the same or better results. Parent involvement in private school has also demonstrated to have positive effects on learn­ing, teacher motivation, student attendance, etc., while active engagement results in fami­lies and communities holding schools account­able to a much greater degree. Indeed, research has consistently shown that when parents are involved in their children’s education, students do better. In this, fee-paying schools have an ad­vantage that state schools do not – the fact that parents are free to choose or change their child’s private school means that there is a built-in ac­countability mechanism.

Conclusion

Education is a basic human right and governments have the responsibility to ensure and protect this, but the state need not be the sole provider. An education system that acknowledges public and private providers and has accountability mechanisms to strengthen service delivery amongst the various education stakeholders. Governments can guarantee access to education through finance and private provision. Good ideas need to be piloted and subjected to rigorous assessments, the results of which should then be used to adjust programmes accordingly and successful pilots then scaled up as appropriate.