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Thursday, August 4, 2011

Education System of India: Its Functions, Drawbacks

Education System of India: Its Functions, Drawbacks

Why is India still a developing country and what is stopping it from being a developed country? This particular question strikes me every time when I read something about India’s education system. I see India’s education system as a stumbling block towards its objectives of achieving inclusive growth.

Let me inform you about certain startling facts. India is going to experience a paradox of nearly 90 million people joining the workforce but most of them will lack requiste skills and the mindset for productive employment according to a report in DNA. India has about 550 million people under the age of 25 years out of which only 11% are enrolled in tertiary institutions compared to the world average of 23%.

I wouldn’t be laying too much emphasis on the drawbacks of India’s public education system because it has been an issue well debated over in the past and the main flaws have already been pointed out before. I will be focussing on how the education system’s failure is leading to another social issue of income inequality and hence, suggest certain policies to improve India’s education system and reduce inequality.

The really critical aspect of Indian public education system is its low quality. The actual quantity of schooling that children experience and the quality of teaching they receive are extremely insufficient in government schools. A common feature in all government schools is the poor quality of education, with weak infrastructure and inadequate pedagogic attention.

What the government is not realising right now is that education which is a source of human capital can create wide income inequalities. It will be surprising to see how income inequalities are created within the same group of educated people.Let me illustrate this with the help of an example:

Let us take P be an individual who has had no primary or higher education. His human capital is zero and hence it bears no returns. Let Q be an individual who completed his MBA from S.P Jain college and let R be an individual who completed his MBA from IIM Ahmadabad. The average rate of return for an MBA student is 7.5% (hypothetical). Q gets a rate of return of 5% and R gets a rate of return of 10% due to the difference in the reputation and quality of the management school. Let the income of P, Q and R be 1.In a period of 10 years, P will be having the same income as he does not possess human capital. For the same time period Q will earn an income of (1+0.05)^10=1.63 and R will earn an income of (1+0.10)^10=2.59. Now lets see what happens when the rate of return on human capital doubles. Earnings of P will not change since he does not have any human capital. Now Q is going to earn (1+0.10)^10=1.63 and R is going to earn (1+0.20)^10=6.19. Flabbergasting! As soon as return on human capital increases proportionately income inequality increases. With return on human capital doubling, Q’S income increases by 59% and R’s income increases by 139%.

The above example just shows the effect of the quality of human capital n income inequality. So if the government does not improve education system particularly in rural areas the rich will become richer and the poor will get poorer.

Hence, it is imperative for the government to correct the blemishes in India’s education system which will also be a step towards reducing income inequality.

Certain policy measures need to be taken by the government. The basic thrust of government education spending today must surely be to ensure that all children have access to government schools and to raise the quality of education in those schools. One of the ways in which the problem of poor quality of education can be tackled is through common schooling. This essentially means sharing of resources between private and public schools. Shift system is one of the ways through which common schooling can be achieved. The private school can use the resources during the first half of the day and the government school can use it during the second half. It is important to remember that the quality of education is directly linked to the resources available and it is important for the government to improve resource allocation to bring about qualitative changes in the field of education. Common schooling is one of the ways in which government can use limited resources in an efficient way and thus improve resource allocation.

Another reason for poor quality of education is the poor quality of teachers in government schools .Government schools are unable to attract good quality teachers due to inadequate teaching facilities and low salaries. The government currently spends only 3% of its GDP on education which is inadequate and insufficient. To improve the quality of education , the government needs to spend more money from its coffers on education.

Most economists feel that the only panacea to the ills of the public schooling system is the voucher scheme. Under the voucher system, parents are allowed to choose a school for their children and they get full or partial reimbursement for the expenses from the government. But however, the voucher system will further aggravate the problem of poor quality of education in government schools. Such a system will shift resources from government schools to private schools. This will worsen the situation of government schools which are already under-funded. Moreover, if the same amount given as vouchers can be used to build infrastructure in schools then the government can realize economies of scale. For example- The centre for civil society is providing vouchers worth Rs 4000 per annum to 308 girls. This means that the total amount of money given as vouchers is Rs 1232000. If the same amount can be used to construct a school and employ high quality teachers who are paid well then a larger section of the society will enjoy the benefit of education. A school can definitely accommodate a minimum of 1000 students.

I hope government takes certain appropriate policy measures to improve the education system otherwise inequalities are going to be widespread and India’s basic capabilities will remain stunted. Let us strengthen the case for a stronger education system.
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