The Unknown Education Revolution in India

This is an op-ed piece of mine that appeared in today's issue of Mint. In response to the photo-post Photo-state of schools in an urban slum in Delhi, there were a few comments and emails deploring the state of schooling. I couldnt present the empirical side of the story, that there are improvements happening on ground. That there has been progress made through the regulatory cracks of schooling.So I wrote this article to present the other side of the story.

Unknown Education Revolution

There is a silent and telling revolt against the poor performance of government schools

Naveen Mandava

Walking around the hot summer streets of Sangam Vihar—Delhi’s largest slum colony sprawled over 150 acres and home to 4 lakh people—in 2005, Aditi Bhargava noticed that almost every street had a school.

These schools were often just holes in the wall or a room with a few benches populated by eager children. They were not government funded or subsidized, nor did they have world-class facilities.

These were low-budget schools, where poor parents paid small amounts extracted from their meagre wages in the hope that their children would get a good education, a promise too rarely delivered at the “free” government schools. View photographs in the Photo-state of schools in an urban slum in Delhi post.

Aditi’s discovery piqued my interest in this phenomenon. I realized that Sangam Vihar was not a path-breaking exception but part of a mainstream, silent and telling revolt against the poor performance of government schools.

Independent research continues to report strides both in the quality and quantity across all private schools in urban and rural areas. Most people in urban areas and at least 28% of the rural population already have access to private schools.

The surprise is not in the absolute number of schools, but their proliferation rate. Nearly 50% of the rural private schools accounted for in the study conducted by Harvard economists Michael Kremer and Karthik Muralidharan were established after 2000, and nearly 40% of private school enrolment is in these schools.

This massive expansion of private primary schooling across India is a harbinger of the Unknown Indian Education Revolution. The survey found that more than 80% of government-school teachers send their own children to a private school. When government teachers don’t trust government schools with their own children, it’s time to sit up and take notice.

So what is fuelling this extraordinary surge and what is the quality of education being imparted? The key to understanding this surge lies in the low entry barriers.

Schools need a “recognition” status so that they can issue valid “transfer certificates” to students leaving the school. But what the recognition status primarily ensures is that teachers are paid according to relatively high government salary scales.

In reality, a primary school doesn’t strictly need “recognition” from the state to start business. Also, rural schools don’t read too much into the transfer certificate. So the rural market for primary education is comparatively unregulated vis-à-vis to secondary education. This is similar to the software industry in India. The government’s light regulation of the sector helped it become an engine of growth.

It is not just the rural rich who are moving to private schools. Studies have found that a large mass of parents are shifting because of the low quality of government education, and concern for their children’s future.

Regulatory gaps and dissatisfaction with government schools are the key factors driving the demand for private schooling. There is already evidence of such a surge in Punjab, Haryana, Uttar Pradesh, Andhra Pradesh, West Bengal, Karnataka, Meghalaya and Delhi. In seven districts of Punjab, 86% of the private schools are unrecognized.

A majority of these private unrecognized schools are operating outside the scope of policymakers’ radars. It is a “don’t ask, don’t tell” situation. Officials think of it as a fringe phenomenon. Consequently, these schools do not make it into any of the education statistics compiled by education departments.

Private schools benefit from being “unrecognized” because they save on labour costs. Teacher costs are the largest expense in the schooling sector. State governments easily spend 90% of their total budget on teachers. In contrast, private-school teachers are paid one-fifth to one-tenth of government salary levels and have more flexibility to innovate and improve learning outcomes.

Studies carried out in India all share the common conclusion that private-school students outperform their government-school counterparts. For example, in a 2005 Delhi study, James Tooley found that children in low-budget unrecognized private schools did 246% better than government school children on a standardized English test, with around 80% higher average marks in mathematics and Hindi.

There are important lessons here for education policymakers in India. Education entrepreneurs need to be encouraged by removing rules that hinder the establishment and operation of schools in the primary, secondary and higher secondary areas of education. Competing schools will create choices for parents, improving access and quality for all. The government can then focus its limited education budget on the neediest sections of society.

Inadequate education in India is not only a funding problem but also a result of over-regulation of the school market. The burgeoning market of low-budget private schools has enormous potential to do public good.

Naveen Mandava is a doctoral fellow in Public Policy Analysis at the Pardee RAND Graduate School in the US. The school is part of the RAND Corporation, a non-profit research organization.

Public Good? Very Bad! Very Bad!

One way to think about incentives is the following. Invite three individuals Amar, Akbar and Anthony for a drink. There is a simple rule. Amar will pay for the drink. Akbar will however choose the drink. But, in the end, Anthony will consume it. How will the situation play out?

What are the incentives when the three entities of Payer, Chooser and Beneficiary are completely different? The most efficient is when all three are one. You decide, pay and benefit from it. The worst is probably when all three are different.

Now think of the characteristics of spending by the government. Think education. The government spends for it, and you benefit (atleast, should), but your choice is not involved. Think charity. You choose and pay, but others benefit. Run through the various Acts of the government and you will invariably find that either choice has been circumscribed or the government has taken the mantle upon itself to provide choice. And this "circumcision" of choice has no relation to the main function of a government, provision of public goods.

This is what Ajay Shah talks about in his blog post, A great new atlas of India is now available. Maps! The government pays for it, chooses how to deliver it, and you are supposed to benefit from it. Choice is limited because other players are severely restricted to provide them. Are the incentives to deliver there? How is restricting the provision of maps a public good? He goes on to talk about the public good mess of the government. I would highly recommend reading his blog if you are interested to know more about the Indian economy. For a not-too-short synopsis of his views read Moving Beyond State Capitalism. The author is Vijay Kelkar but I can see his collaborator Ajay Shah's strand of thought through it. This was the question that he had prompted, and I know of only one organisation that is working on it. What percentage of the government's actual spending is on public goods? How much is being spent by the state for ostensible private goods?

One could have theoretical arguments about what is a public good, but can an index be made that can customise government spending according to your theory of public goods. Why is it important? It will provide a sense of direction to a government and will hopefully spur competition between state governments to deliver more public goods. How they provide it is a different question!

Cross-posted on the Indian Economy blog.

Highway to educating India

Here is a colourful thought experiment. Colour blue every buck that leaves from the government’s pockets for the purposes of education. Yes, every single note, from the education departments; the social welfare departments; the public works departments and a plethora of others involved in education. After you track the flow of money, categorise where they end up. Amounts spent on teachers; schooling materials; mid-day meals and others.

Some of the results may be surprising. Read here.

However, this is not news. Mismanagement of government funding and low achievements of government schools are old hat.

Why spend so much money on a system that is not working well? Obviously because there does not seem to be a plausible system that can replace this entire education structure. Is that the case?

Let us turn to the purported success of the government in building the highway. There is a world of difference between the Indian government embarking single-handedly on building 15,000 miles of highway and educating 192 million children. There are issues of building and then of maintaining in either of them. And even if you are efficient in physical engineering, it doesn’t mean the same as being efficient in social engineering. However, the cinch is this. The government has employed private sector partnership in building the highway but still desists from it in educating its students. Can one learn from some of the successful principles employed in this highway building task? There were incentives for early completion and penalties for late execution. Apparently the interest shown by the private sector in the highway project was due to the three major factors of ensured revenue repayment, fair bidding and speedy execution.

What they did was to set up an environment of accountability and incentives and executed it well. Would it be possible to replicate a similar environment in education?

You could have one or more of the four kinds of accountability in education.

1. Bureaucratic accountability (sarkar will take care through rules and regulations)
2. Professional accountability (teachers and principals are educated and they will take care)
3. Performance-based accountability (the sarkar will take care through measurements of performance in tests)
4. Market accountability (if you don’t take care, I will take to somebody who cares)

These are the factors that determine the quality of your money, the bang for your buck. It is not a surprise when you read James Tooley’s report where he finds that there is a sector of “private budget schools” that is catering to the poor, and students in these “private schools achieved at or above the levels achieved by their counterparts in government schools in both English and mathematics.”

The education system for long has been under the strangle-hold of the first two factors which obviously haven’t worked in our country. This has hence led to a decline in quality and access. Isn’t it time to move on to the next ladders of accountability? This would involve thinking of the schooling sector as a market and not as a government sector. Which are the regulations that impinge from an explosion in the supply-side of schooling? Here is a hint, think licence!

Cross-posted on The Indian Economy Blog

We don't want heroes like Manjunath!

I am your average Joe. The kind of person who wouldn't mind giving a lookover at a beautiful woman, and also the kind of person who would risk his hand (mind you, not my life, that is for my girlfriend or sister or mother, and not in that order, please) for a damsel in distress.

The average person thinks he is braver than the average person. On that count, I am below average! I hate being in situations where I have to compromise my integrity between the repair of a telephone connection and the payment of an extra baksheesh. And I would be paranoid of being in a situation where I had to take on a goon who threates the quality of my job with my life. However, there are a few men among us who would risk their life for what they believe to be the true worth of their duty. But why should they risk their life? I repeat the question to myself because it holds the key to the worth of a man, a noble man's valuable life. This world needs heroes alive and not dead.

During my graduation years in engineering, an apparently simple question tormented me a lot. Why don't people kill each other for their ends? And it is not as difficult as it is made out, most murders are on-the-spot decisions than pre-planned ones. You may shudder at the question but do believe my naivete in pursuing its answer. And it turns out that the average person's life was far more risky in the past than it is today.

Does our tacit knowledge of ethics answer our accordance to the value of life? Definitely to a great extent. Perhaps more importantly, the answer lies in the rise of institutions, especially of law and order and protection of contractual rights. Random killing of people breeds high insecurity and very costly for a society. And moreover, ascribing equal value to people's lives and punishing them for a transgression made murder less likely. And finally the fact that even if you did murder a person, you couldn't take away his rights. To give a crude analogy, in the past, Kingdom A could invade Kingdom B and subjugate the residents of B and it wouldn't be considered a human rights violation. Today that is not the case any longer.

A more sophisticated analogy would be this. If Corporation A invades the "customer territory" of Corporation B, and asks the customers of B to mandatorily be customers of Corporation A, we would laugh off it off. Now reverse the logic. If Corporation B does not allow Corporation A to enter its "customer territory" and makes its customers implicitly a captive customer base for itself, we begin to doubt. But then, this keeps happening all around us. From limiting certain kind of businesses to only preferentially granting allotments for particular businesses. Like petrol pump licences.

If you have not realised who am I talking about, read it here. The economics of the tragedy runs like this. You have oil much in demand. And it costs a bang. What you can do is add a cheap adulterant (kerosene) which costs one-third (approx.) of the price of oil, and sell it thus making a neat profit. There is a 53 paise profit per litre sold. A typical service station sells about 1 lakh litres of diesel every month. That makes for a profit of Rs 53,000 per month per service outlet. Maybe worth targeting a honest officer who treatens to ruin your adulteration process!

Two questions: Does kerosene really come so cheap? And if oil is being adulterated, why do not customers switch the diesel-providers?

Well, kerosene doesn't really come cheap. What makes it cheap is a government subsidy at Rs 10-11 per litre. And more importantly, every 1 of 3 litres Kerosene distribution intended for household consumption through PDS outlets flows back to industry in one form or the other.

The second question is more simple. Petrol pump allotment is a political process (remember the analogy of Corporation B "protecting" its customers from Corporation A) so you need a licence for it. On top of that you have a state-run corporation granting them, little wonder there is so much susceptibility to political machination and insulation from market discipline.

What does "market discipline" mean! Think of it as the relationship with your doodhwala. If he gives too much water in the milk, you threaten to go off to another doodhwala, or well, switch to packaged milk. Now imagine if the state decreed that you couldn't threaten or switch your doodhwala, what would be the outcome?

Transplant the same relationship to the oil company and the service outlet. In this case, the company cannot cancel the contract of the service outlet because the outlet has been selected through a political process and not a market process. If it were a market process, there wouldn't be licences with political strings, the oil company could easily disband the service outlets for null enforcement of quality standards. Again, under a market process there would be lots of oil companies and lots of service outlets, with the unadulterated outlets gaining customers and reputation and the guilty ones being discharged from the process. Again, the key is that political decisons regarding production (subsidised price of kerosene) and distribution (granting of licences for outlets) be in the institutional realm of competitive markets as much as possible. In a market it is more difficult to bully your employer or customer into submission, whereas in a political process one often finds that force works. The market process won't be so smooth, but the oil will be of better quality, those who deserve thrive and there wouldn't be need of a death like Manjunath.

When heroes are emerging, it implies that we need better institutions, NOT more heroes!