Report No. 3 South Asia Human Development Sector 37834 A Policy Note on The Grant-in-Aid System in Indian Education November, 2003 Discussion Paper Series INDIA A Policy Note on The Grant-in-Aid System in Indian Education MAIN ISSUES AND OPTIONS FOR REFORM Human Development Sector South Asia Region The World Bank CONTENTS Acknowledgments Executive Summary 7 Chapter I. Background and Objectives 1 1 Chapter II. The Grant-in-Aid System in India An Historical Perspective 1 2 Chapter III. Size of the Private Aided Sector in India School Education 1 3 Chapter IV. Size of the Private Aided Sector in India Higher Education 1 7 Chapter V. Public Expenditure on Grants-in-Aid 1 7 Chapter VI. Performance and Costs of Aided Institutions 1 8 Chapter VII. Issues for Reform in the GIA Sector 2 3 Chapter VIII. Recent attempts at Reform 2 7 Chapter IX. Grant-in-Aid Mechanism and Public Subsidization of Private Sector an International Perspective 3 0 Chapter X. Recommendations for Reform 3 3 Chapter XI. The Reform Program Requires Management and Technical Capacity Building and Additional Financing in the Short Run 4 0 References 4 7 Tables Table 1 Distribution of schools by management, 1995-96 1 4 Table 2 Distribution of schools by management, 2000-01 selected states 1 5 Table 3 Enrolment Shares in Private Institutions at Primary and Secondary Level by State (1993-94) 1 5 Table 4 Urban Areas: Enrolment Shares in Private Institutions at Primary and Secondary Level (1993-94) 1 6 Table 5 Higher Education: Institutions and Enrolment by Type of Management, 2000-01 1 7 Table 6 Share of Grant-in-Aid Expenditure in Public Education Budgets 1 8 Table 7 Distribution of GIA Across Levels (% of row totals), 2000-01 1 9 ! Table 8 Gross Enrolment Ratio (6-11 year age group) and Enrolment In Aided Institutions 1 9 Table 9a SC/ST Enrolment at Percentage of Total Enrolment By Level and Type of Institution (1995-96) 2 0 Table 9b Rural Enrolment as Percentage of Total Enrolment By Level and Type of Institution (1995-96) 2 1 Table 9c Enrolment of Poor as Percentage of Total Enrolment By Level and Type of Institution (1995-96) 2 1 Table 10 Cross-Country Comparison of Private Sector in Education, 1998 3 1 Table 11 Comparison of Public-Funded Private Schools: India and Netherlands 3 5 Charts Chart 1 India: Costs and Performance of Government and Private Schools 2 3 Annexes Annex 1 Kerala 4 2 Annex 2 Comparison of Grant-in-Aid Code of Different States 4 5 Annex Table 1 Key Features of the Legislative Framework for GIA in Kerala 4 2 " ACKNOWLEDGMENTS This Policy Note was written by Sajitha Bashir in the South Asia Human Development Sector Unit (SASHD) of the World Bank, and is part of the analytic work on Critical Issues in Reforming State Education Systems. It draws on specially commissioned consultancy reports on particular aspects of the system of public subsidization of the private education sector in India and abroad. Najmi Nafis, consultant, collected and analyzed data from state government education budgets. Tabulations of household survey data on participation in public and private education were prepared by Indicus Analytics, as part of a broader analysis of education data from the National Sample Survey, 1995/96. New Concept Consultancy Services, New Delhi, undertook a review of the Grant-in-Aid system in India, under three heads: (i) National Overview, with basic educational statistics by stages; (ii) Legal Framework, which reviewed the GIA codes in various states; and (iii) a case study of the GIA system in Kerala, based on secondary data and interviews with policy makers, administrators, teachers and parents. James Tooley (Professor of Education Policy, University of Newcastle upon Tyne) prepared a detailed analysis of the GIA system in Karnataka, which used secondary data and information collected from field visits to schools and colleges in various districts. This analysis also examined the possibilities of reforming the existing GIA system, including the financial and managerial implications of moving to a different system. Ayesha Vawda (MNSHD,World Bank) prepared a review of international experiences in granting public subsidies to the private sector. The report benefited from comments received from Manuela V. Ferro (peer reviewer and Lead Economist, SASPR), Charles Griffin (Sector Director, SASHD), Emmanuel Jimenez (Sector Director, EASHD) and Michelle Riboud (Sector Manager, SASHD). # $ EXECUTIVE SUMMARY Main Findings and the disadvantaged in many states but its performance Recommendations in terms of equity goals has been mixed. Using the state as an unit of analysis, the Gross Enrolment The system of providing public subsidies to the Ratio (GER) for the 6-11 year olds is positively private education sector in India, called grant-in- associated with the extent of use of aided institutions aid (GIA), originated in the colonial times and at the primary level, even after controlling for per initially consisted of financial support to private non- capita state income. The relationship does not hold profit institutions for a part of the recurrent and for the enrolment ratio for the 11-14 or 15-17 year capital costs of providing education. The private age groups.Althoughitisimpossibletoinfercausality sector, in general, financed the major part of the from this association due to the limited number of capital costs. A significant change occurred in the observations(states),theresultdoesraisethequestion early 1960s, when many states, following the whether subsidization of the private sector is an example of Kerala, tied the subsidy to teachers effective means of expanding access especially at salaries, which were placed on a par with those of the primary level. The participation of the poor teachers in government institutions. New private and disadvantaged groups in aided institutions varies institutions could request GIA which was usually by state and level of education. At the primary level, granted - by operating for a minimum number of in most states, they serve a greater proportion of years without aid, ensuring minimum standards and SC/ST, rural and poor students than the facilities as required by the GIA code and obtaining unsubsidized private schools, but not as much as recognition from the regulatory bodies. The GIA the government schools. In some states (most of mechanism involves supply-side financing, with them with small GIA sectors), however, the grants linked to teacher salaries and considerable unsubsidized schools serve a greater proportion of regulation of private institutions by the government. the poor. At levels beyond primary, the subsidy to The experience with demand-side interventions private institutions greatly favors the richer groups (scholarships and stipends) has neither been on a because relatively few of the poor reach the higher large-scale nor very salutary. stages of education. An extreme case is that of Orissa where subsidies to the private sector are highly Most Indian states have made extensive use of the inequitable, because the state provides public aid privatesectortoexpandaccesstosecondaryandhigher almost entirely for private colleges while it has relied education by providingpublicsubsidies.Thegrant-in- exclusively on government provision at the primary aid institutions are significant providers of education, level where access is still relatively restricted due to particularly secondary education and above, in many overall constraints on government expenditures. large states of India. At the primary level, over 80 percentofenrolmentisingovernmentschoolsinmost Six broad sets of issues which affect the present statesbutfourstateshavemademoderatetoextensive system are discussed in further detail: (i) rigidities in use of aided schools at the primary level. In other the GIA system for higher education including states, private unaided schools, rather than aided inability to adjust the subsidy to changes in student schools, are more prominent at the primary level. At demand; (ii) teacher issues, including inflexibility in the secondary level, in seven states, over two thirds of teacher deployment, delays in appointments, delays enrolmentisinprivateinstitutions,mostofthemaided. in disbursement of salaries, linking teachers salaries At the tertiary level, nationally, one-third of total to government pay scales and lack of accountability; enrolmentisinprivateaidedinstitutions,buttheshare (iii) weak legal framework and/or inability to issignificantlyhigherinstateswithaslargernumberof implement laws; in addition, many states have tens colleges. of thousands of pending court cases involving aided institutions; (iv) limited resource mobilization by The GIA mechanism seems to have expanded access private sector; (v) lack of monitoring, leading to at the primary level; it has also served the poor and gross abuse of the subsidy in some states, and lack % of quality assurance of providers; and (vi) lack of government can better achieve these goals by using competition and a holistic framework for private direct government provision or by using the private sector development. unaided sector. Comparing the educational outcomes and costs of the government, aided and Attempts at reform in various states have been ad- unaided sectors can provide some guidance in hoc and piecemeal with frequent reversals in policy, answering this question. There are relatively few leading to disruptions in education. The primary studies comparing the sectors on these attributes, motivation for reform has been to contain public especially on the effectiveness or value added by expenditures rather than to improve the system of institutions of different types. It is clear, however, public subsidies to the private sector so that they that the costs in government institutions are at least contributetotheeducationalgoalsofimprovingaccess, as high as in aided institutions, and much higher equity, quality and efficiency. Many states tried to cut than in unaided institutions. Under current cost backonthesubsidybillbypreventingnewinstitutions conditions, expansion through the government from becoming eligible for aid, withdrawing support sector alone seems a fiscally unviable option. to teacher posts that fell vacant in aided institutions Expansion through the private unaided sector, on andforspecificcoursesinhighereducation.Theresult the other hand, poses serious equity issues since poor hasbeenoftentolockinexistinginefficienciesandthe students will be unable to pay the required fees, inequitabledistributionofpublicspending,witholder especially at higher levels. aidedinstitutions,whichoftenservetherichergroups, continuingtoreceivehighlevelsofsubsidyperstudent, This evidence in this study suggests that continued whilenewprivateinstitutions,oftenoperatingatlower use of the system of public subsidies for the private cost and in poor areas, get no subsidy at all. Since sector is a viable option for expanding access for the institutionsaresometimesallowedtohireunsubsidized poor and mobilizing additional resources for education teachers, there are often two streams of teachers at and is preferable to eliminating these subsidies. Thre e vastly different salary levels, creating problems of main approaches in continuing the system of morale and management. public subsidization of the private sector can be delineated: (i) retain the main features of the Due to the problems in using the current system of present GIA system but improve its providing subsidies to the private sector, and faced administration to ensure it achieves educational with the challenges of having to expand access to goals; or (ii) reform the system to move to a education, state governments have by default fallen system of performance-based grants for schools; back on either using direct government provision or (iii) move to a student-based subsidy system or using the private unaided (self-financing) sector. allowing students to choose between public and Where budgets are constrained, which is the case in private schools. the poorer states, states have relied on direct government provision to expand access to primary The choice of strategy will need to be state- education in rural areas but tried to cut costs by specific, determined by state priorities regarding using community supported schools, lower-paid sub-sectors, and will need to take into account parateachers, alternative schools and so on. In urban the political and social feasibility of implementing areas and in secondary and higher levels, they tend reforms. However, for all states, it is desirable to to rely on the unaided sector. While both strategies move away from the present ad-hoc revisions to the minimize the burden on the states fiscal resources, GIA policy towards a holistic reform effort that is they raise issues of equity, since the poor tend to grounded in the states vision for the education system. receive education of a lower quality or at a higher The relative priorities for different states are cost (and sometimes both). discussed in the study. Reform of the higher education sub-sector is probably a priority for Should the government cut back or eliminate all states because equity issues are most subsidies to the private sector? If expanding access, pronounced here and efficiency losses are improving equity and quality are the goals of greatest, but it is also more difficult because of education sector policy, the question is whether the the involvement of Universities; consequently, it & needs a different approach from that in other colleges, neatly summarized in levels. Overall, the reform process should be comprehensible language to be accessible to guided by educational goals and priorities and all. not short-term fiscal stress. Reforms are most likely to succeed when they are situated within a (d) Strengthen financial management and do framework and strategy for the entire sector. independent audits with elaborate parameters on a sample basis to carry out physical For many states, retaining the present GIA system verification, auditing of accounts and and improving its administration is the most viable evaluations of learner achievement. short-term strategy. International experience suggests that moving to a student-based subsidy (e) Review all existing rules and regulations to system or a performance-based grant system for simplify and delete potentially conflicting schools requires considerable development of provisions. Undertake computerization, institutional capacity to develop criteria for releasing consolidation and classification of pending funds and for developing systems to ensure that the legal cases to promote speedy disposal. Initiate funds reach the targeted students or schools. For penalties against institutions that are engaged performance-based systems, an independent quality in open fraud (for instance, with no students assurance organization that provides information on or teachers). school quality and learning outcomes is also required. Additional steps within the existing system The involvement of professional and/or competent which, however, require careful planning and non-governmental organizations is often a pre- implementation, could help to mobilize requisite for implementing such systems. resources from the private sector and enforce Improving the efficacy of the current GIA accountability for results: system: (f) Introduce greater flexibility in fees for richer Immediate steps can be taken to improve efficiency, students and make resource mobilization by reduce corruption and abuse and ensure ease of private managements a condition for compliance by managements, such as: continuing the grant. (a) Improve targeting of the aid for higher (g) Create independent quality assurance educationbyphasingoutcoursesatthecollege organizations/mechanisms to monitor quality level that face low demand and offering aid to and learning outcomes and exert external newer courses; introducing equity criteria for pressure on institutions to upgrade quality and colleges for continuation of the grant. improve accountability. (b) Create and regularly update a computerized Moving to an alternative system of providing databaseoninstitutions,students,teachers,and subsidies to the private sector. performance indicators. The database should have two parts; (i) a public set of outputs The two alternatives are to move to a performance- that is available in hard copy and on a website linked grant system for schools or to move to a student- could be used by parents, teachers, legislators based grant system. In the first case, the school and local bodies and (ii) an internal database receives a grant conditional on achieving certain that serves as MIS to improve financial performance standards (equity, enrolment, management and performance monitoring. learning outcomes). In the second case, the grant Since many state governments lack internal is calculated per pupil and can be given either to technical capacity, the creation and the institution or directly to the students. In both maintenance of this database could be cases, the major reform is to delink the grant outsourced to competent private parties. from teachers salaries and give greater discretion to private institutions in using the grant within (c) Publish a comprehensive update of all rules broad guidelines. A performance-linked grant and regulations applicable to schools and system requires establishing systems for setting ' standards and monitoring quality. At the school in administering it and hence, may not be feasible level, this may require establishing an independent for states with weak administrative capacity. The body to do this; at the college level, this requires willingness of the state government to undertake revitalizing the Universities. A student-based grant appropriate preparatory actions and creating system is theoretically better in terms of targeting organizational homes for this task will need to be of poor students, but requires considerable assessed. administrative capacity (especially if the number of students is large and hence may not be feasible Reform of the GIA system is best situated within a immediately for states with large GIA systems). coherent strategy for the sector as a whole, encompassing the government system as well as the Since both these are major reforms, and may private unaided system. In particular, reforms in encounter resistance from existing beneficiaries, the teacher management and school management are reform program needs to be spelt out in detail for required in government institutions; and a consistent each state. The main steps involved are discussed in policy regarding curriculum and language of the study, some of which are: instruction is required to allow competition between the government, aided and unaided institutions. (a) At the university level, create a fund to enable institutions to opt out of GIA is probably Finally, the risk of moving to a grant system delinked best to jump start the process and promote from teachers salaries, is that annual grants can be voluntary buy-in to the reform. It is best to highly susceptible to short-term budgetary constraints, link this reform to other measures to promote creating potentially serious dislocations for students. quality and relevance, such as curriculum This is because, typically, non-salary expenditure renewal, pedagogical innovation and greater in education is not protected when there are autonomy. revenue shortfalls. Measures to protect the grants from annual fluctuations will be required to make (b) At the secondary level, both an incremental the reform process credible and acceptable. approach (allowing schools to move from the teacher-linked grant to a per-pupil based Irrespective of the approach to reform adopted in grant as aided teachers retire or leave) and an individual states, individual state government institutional opt-out approach can be education departments may find it difficult to start considered. the process and develop a well-thought out program (c) Both approaches will require reforms in of reform without additional technical inputs or regulations enabling private institutions to financial incentives. State fiscal adjustment programs mobilize additional resources through fees can offer financial incentives for state governments and other sources. to opt for change and to achieve educational goals through more efficient use of their resources. (d) In both cases, involvement of reputable Another strategy is for the Central government to groups outside the government (professional provide financial and technical assistance for states groups or credible private organizations with to develop and implement reform packages that meet no direct conflict of interest) is required to centrally laid down criteria and guidelines while make the reform transparent and successful. allowing for diversity in state-specific educational needs and goals. These interventions can also help to Both approaches will require additional financing in monitor progress in the reform program, to the short-term and considerable technical capacity introduce changes with the experience of building of government officials to design and monitor implementation and to expose states to experience the new grant scheme and partner with outside groups of similar reforms elsewhere. A Policy Note on The Grant-in-Aid System in Indian Education: Main Issues and Options for Reform Background and Objectives adjustment programs, such as in Uttar Pradesh, Orissa and Karnataka. Many of these attempts failed The aim of this Policy Note is to contribute to the facedwithoppositionbyprivateinstitutions,teachers broader discussion on how the private sector can and students who often successfully approached the be best used to achieve priority educational goals in courts for obtaining stay orders. In many instances, India. These goals include expanding access to the reforms have been ad hoc and they have not elementary education, and increasingly to secondary been necessarily guided by the goal of achieving andtertiaryeducation,ensuringequityinparticipation educational objectives and an evaluation of and completion rates, as well as improving quality alternative means. Furthermore, reforms have been and relevance at all levels of education. Achieving attempted in individual states, often ignoring these goals will require significantly higher resources experiencefromotherstates;theCentralgovernment and also more efficient use of existing resources. has not directly intervened in these reform attempts. Many countries are trying to use the private sector to mobilize additional funds and to promote competition and greater efficiency in the use of This Policy Note lays out the main issues in the GIA public funds for education. system and discusses options for reform. The key conclusion is that providing public subsidies for private This study focuses specifically on the publicly aided education is a viable means for achieving educational private education sector in India. India has a very goals of improving access for the poor and for greater large private sector in education, much of it operating resource mobilization. The alternatives are to resort to under a voucher-like system. Educational directgovernmentprovision,whichishighercostand institutions receiving Grant-in-Aid (GIA) from the may be less effective, and unsubsidized private state government budget receive subsidies for provision,whichisinequitable.TheGIAsystemisone teachers salaries, in proportion to the number of way of providing subsidies to the private sector, and studentstheyenroll.Despitethechallengesoffinding ithasworkedfairlywellinthepastinseveralstates,but additional resources to expand access and improve it needs reform to improve equity targeting and quality, during the nineties, many state governments performancemonitoring,andreduce inefficiencies.For in India have been trying to restrict public subsidies many states, improving the existing GIA system may to the private sector in education. In order to deal be the best immediate option, but other models of with the pressures of enrolment expansion, while giving subsidies (direct financing of students, containing fiscal costs, governments have usually performance linked grants to schools) should be opted for utilizing low cost (and in some cases, lower consideredwhereappropriateinstitutionalcapacityand quality) alternatives to expand access through direct implementationconditionsexist.Whilereform efforts government provision, especially at the primary level, could be initiated in individual states, the Central and making greater use of the private unaided (self- government can also provide financial and technical financed) sector at all levels of education. assistanceforstatestodevelopandimplementreform packages that meet centrally laid down criteria and Reform of the present system of granting public guidelines, but allow for diversity in meeting state- aid to private educational institutions is considered specificeducationalneedsandgoals. imperative, both due to fiscal pressures and due to the challenges of managing this huge sector.Avariety The paper describes the scope and coverage of the ofreforms have been attempted in many states over GIA system across different education levels and the last decade. Reductions in GIA were explicitly states; analyzes the benefits of this system and the posited by state governments as part of their fiscal main problems in implementation; summarizes the recent attempts at reform in several states and The GIA system was introduced by the British international experience with public subsidization administration in 1859, in the erstwhile Bombay of private education; and discusses options for Presidency, with the aim of promoting voluntary improving/reforming the system of public subsidies effort and reliance on local resources. The role of to the private sector, which could be used in the the colonial state in direct provision of education context of Central government education programs was restricted to the few English-medium schools or the state fiscal adjustment programs. The paper and the universities. Initially, voluntary effort in is based on several background papers/reports: (i) education was undertaken mainly by Christian a review of the national statistics and public missionaries, but later with the advent of social expenditures on GIA institutions; (ii) a review of reform movements, other communities started the legal and regulatory framework at the national establishing schools and seeking financial assistance level and in specific states; (iii) a case study of the from the government. state of Kerala which has made extensive use of GIA institutions and achieved universalization of The historical origin of the GIA system has had elementary and secondary education and a high level a lasting imprint on the characteristics of the of enrolment in higher education; (iv) a detailed private institutions receiving public subsidies. A study of GIA institutions in Karnataka, including very large number, especially of the older financial simulations of moving to a different type institutions, continue to be those affiliated to the of subsidy system using data from a sample of church; others are associated with other religious schools; and (v) a review of international experience or caste groups who saw modern education as a in providing public support for the private sector means to economic, social and political in education.1 advancement. Non-pecuniary goals often motivated the establishment of these private The Grant-in-Aid System in India institutions, but education itself was seen as vital An Historical Perspective to achieving these goals. This is especially true of the regions where western education had made The private sector in India refers both to institutions: large inroads by the time of independence in (a) that were established by private persons and particular, Kerala, Tamil Nadu, southern continue to be managed privately but which receive Karnataka, and Maharashtra. The aided public aid on a regular basis (called aided institutions); institutions that were set up in the post- and (b) that are managed privately but receive no independence era, in these regions as well as in public funds (called unaided institutions). Most of other states which formerly had few education the latter are recognized institutions, i.e., they are facilities and expanded education after certified by the government to have minimum independence, were more eclectic in nature. The standards of physical and teaching facilities and are non-profit status, although formally adhered to authorized to offer students for public examinations. for legal reasons, was not necessarily the primary Some states allow unrecognized institutions, which motive for establishing the institution. In many do not satisfy these criteria to function especially at states, accessing political power via the education the elementary level; students from these institutions system (but not necessarily providing education have to gain entry into a recognized institution by itself) was the primary motive of establishing the time they wish to appear for publicexaminations private educational institutions that received or, alternatively, are allowed to appear as private public subsidies, through instruments such as the candidates in public examinations.2 teachers unions. 3 A great impetus to the establishment of private 1References of all background papers used for this study are given at the end of the paper. educational institutions was provided by the 2Again, a few states allow students to appear as private Constitutional provisions under Articles 28, 29 and candidates in public examinations at the end of the lower 30, which provided that minorities, whether based secondary stage, which eliminates the need to study in a recognized institution at any stage. on language or religion, were entitled to establish 3Kingdon and Muzammil (2001). educational institutions to preserve their language and culture. They can also receive government TheKeralamodelbecamethemodelforotherstates assistance but they cannot exclude any student purely although certain features of the Kerala GIA system on the grounds of religion or language. were not adopted by all states. Specific features of the As originally formulated and implemented for Kerala GIA system were: (i) transparency the GIA schemewasincludedintheKeralaEducationActand several decades, the grant-in-aid system in India provides public funds to private institutions to cover Rules passed by the Legislature and any changes requiredlegislativesanction;(ii)flexibilityinmanagement part or all of the teachers salaries and a part of other recurrent costs (called maintenance grants), structure;(iii)appointmentofaManager,whoisnota teacher or a principal and who is legally responsible, while the private management finances all the capital costs and part of the recurrent costs. A major by every institution; (iv) staff and student strength verification by the government to sanction teacher reform introduced in Kerala soon after independence, which introduced uniformity in the posts; (v) provisions for government to re-deploy teachers from surplus post schools; (vi) direct treatment of private and government teachers, became the model for most other states. Kerala paymentofteacherssalariestoreducecorruption;and (vii) mandatory parent-teacher associations in every had made the most extensive use of private institutions even at the primary level since the 19th school to oversee functioning of the school and prevent abuse of the aid. century by enabling private educational institutions established by various religious and caste communities to seek public aid. The GIA rules Size of the Private Aided Sector in encouraged the private managements to mobilize India School Education their own resources, only subsidizing part of the recurrent costs. This led to considerable diversity in In school education (classes 1-12), the private-aided the availability of resources across private schools, sectorislarge at the secondary and higher secondary, variation in teachers salaries and teachers being but there are significant differences across states. In subjected to arbitrary removal by management. 1995-96, the latest year for which all-India data are After independence, the Kerala Education Bill (1957) available, approximately 44 percent of higher sought to introduce uniformity in the operations secondary schools and 34 percent secondary schools of aided and government schools, specifically in were private-aided (Table 1). Only 2.4 percent of the appointments and salaries of teachers and their primary schools and 10.1 percent of upper primary rights. The Bill proposed that: (a) private institutions schools were private aided. had to appoint teachers from a district list of qualified and accredited teachers; (b) private schools Data on the distribution of schools by management could be taken over by the government for non- type are available for selected states for 2000-01 compliance with the rules; (c) a local education and reveal considerable variation across states in the authority would be constituted to oversee all schools proportion of aided institutions (Table 2). In in the area; and (d) private teachers were to be paid Maharashtra, Uttar Pradesh and Kerala, over half the same salary as those in government institutions the institutions are aided at the secondary and higher although the full salary was not payable by the secondary levels (and at the primary level also in the government. These provisions of the Bill were latter). The absolute number of aided institutions is opposed by the private managements and very large in these states 8,000 in Kerala, 10,000 in opposition Congress party at the time. Nevertheless, Uttar Pradesh and 14,500 in Maharasthra. Uttar a fresh Act passed in 1958 by the newly elected Pradesh, however, has almost double the number Congress government embraced almost all of them, of private unaided institutions, most of them with the major change that while private primary and upper primary schools, whereas Kerala managements would retain the right to appoint andMaharasthrahavefewerunaidedinstitutions.The teachers (fulfilling prescribed criteria), the other three states Andhra Pradesh, Punjab and government would pay salary to the teachers in aided Himachal Pradesh have relatively few aided institutions at the same level as in government institutions, and a greater proportion of unaided institutions. institutions. ! Table 1: Distribution of schools by management, 1995-96 Type Govt/LB Private Aided Private unaided Total Primary No. 544040 20378 28992 593410 % 91.7 3.4 4.9 100.0 Upper primary No. 133935 17591 22619 174145 % 76.9 10.1 13.0 100.0 Secondary No. 33305 24582 14418 72305 % 46.1 34.0 19.9 100.0 Higher No. 10349 10926 3379 24654 Secondary (10+2) % 42.0 44.3 13.7 100.0 Source: MHRD Enrolment shares indicate, however, that the private level (1-17 percent) and with the exception of West aided sector plays a larger role than that indicated by Bengal, there is greater or the same reliance on the theshareofschools,evenattheprimaryandelementary private unaided sector rather than the aided sector levels. Data on enrolment are available only for 1993 at this stage. These states, however, rely almost from the 6th All India Education Survey (AIES)4 The exclusivelyonaidedinstitutionsatthesecondarylevel, shareofprivateaidedinstitutions,forIndiaasawhole, with enrolment shares exceeding those in the first was48percentatthehighersecondarystage,46percent category of states. The private sector is relatively atthesecondarystage,31percentattheupperprimary small at the primary stage but very large at the stage and 11 percent at the upper primary stage. Data secondary stage. Orissa is noteworthy in that it has on enrolment shares for individual states reveal some virtually no private sector aided or unaided at interestingpatterns,bothintherelativeimportanceof the primary stage, but has a large aided private sector the private aided and unaided sector across states and at the secondary stage. acrossdifferentlevelsofeducation(Table 3).5Although the relative share of aided institutions is likely to have The third group of states (Madhya Pradesh, gonedownsincethen,duetothecurbsongivingGIA Andhra Pradesh, Haryana, Punjab and Rajasthan) tonewprivateinstitutions,thepatternsareunlikelyto makes limited use of the private aided sector in havechangeddramatically. the primary stage and moderate use at the secondary stage. At the primary stage, there is The first category of states comprises those which greater reliance on the unaided sector compared rely heavily on aided institutions at both primary to the aided sector, whereas the secondary stage, and secondary level; the share of private unaided there is almost equal reliance on both types of institutions is relatively small at both levels. Kerala private institutions. Overall, the private sector is is unique in that over half the students at all relatively small at both levels, accounting for 10- stages, from primary to higher secondary, are 20 percent of enrolment. enrolled in private aided institutions. Tamil Nadu is also fairly consistent in its use of aided Finally, the last group of states (Himachal Pradesh, institutions, with the enrolment share rising from Assam and Bihar) make negligible use of the private 30 percent at the primary stage to 42 percent at sector at both the primary and secondary stages; the the higher primary stage. Maharashtra makes considerable use of private aided schools at the 4 Conducted by the National Council of Educational Research primary level (37 percent) but even more so at and Training (NCERT). the secondary level (89 percent). 5 For ease of comparison across states, enrolment shares at only primary (classes 1-4/5) and secondary (classes 8/9 10) are used since enrolment shares in aided institutions at the The second group of states Gujarat, Uttar Pradesh, upper primary stage (classes 5/6-7/8) and higher secondary WestBengal,OrissaandKarnataka makes relatively stage (classes 11-12) are likely to differ depending on the whether the former is linked to secondary schools and the little use of the private aided sector at the primary latter to colleges. " Table 2: Distribution of Schools by Management, 2000-01 selected states (percent of all schools at each level) State Type Primary Secondary Higher Secondary Total (nos) Maharashtra Aided 5.4 66.3 88.3 14,502 Unaided 5.1 25.2 4.8 6,340 Uttar Pradesh Aided 1.6 48.2 74.7 10,092 Unaided 11.9 22.9 6.2 20,266 Kerala Aided 59.7 50.9 42.6 7,919 Unaided 2.3 13.5 9.0 801 Andhra Pradesh Aided 3.6 8.4 - 3,362 Unaided 2.3 24.3 - 6,934 Punjab Aided 0.6 9.5 14.1 478 Unaided 6.2 10.9 9.5 1,273 Himachal Pradesh Aided - 2.5 3.9 61 Unaided - 13.9 14.3 333 Note: The total number of institutions includes upper primary institutions. Source: MHRD Table 3: Enrolment Shares in Private Institutions at Primary and Secondary Level by State (1993-94) Primary Secondary % PA % PUA % PVT % PA % PUA % PVT Large private sector at both levels mainly private aided Kerala 57 4 61 56 2 58 Tamil Nadu 29 3 33 36 4 40 Maharashtra 20 7 27 78 11 89 Large private sector at secondary level mainly private aided Gujarat 4 12 16 89 2 91 Uttar Pradesh 4 18 22 77 9 86 West Bengal 17 0 17 74 2 76 Orissa 1 1 2 51 18 69 Karnataka 11 10 22 53 14 67 Moderate size private sector at both levels small private aided sector MadhyaPradesh 3 13 26 9 20 29 AndhraPradesh 9 10 19 16 12 28 Haryana 3 7 10 13 13 26 Punjab 5 6 11 19 6 25 Rajasthan 4 16 20 9 6 15 Small private sector negligible private aided HimachalPradesh 1 5 6 4 6 10 Assam 1 1 2 6 2 8 Bihar 2 1 3 4 2 6 Source: Calculated from Sixth All-India Education Survey, NCERT. # enrolment share in aided institutions is very low at stage: between 30-60 percent of primary both stages. enrolment is in these institutions in Gujarat, Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, The importance of the private sector, and the Haryana, Punjab, Rajasthan and Himachal Pradesh. relative importance of the aided and unaided This implies that there is a clear division in urban sectors are markedly different in urban areas areas in these states between the poor, who largely (Table 4). In order to facilitate comparison with attend the government schools, and the richer the overall enrolment shares in Table 3, the same sections, who attend the fee-charging private grouping of states has been maintained. Several schools. points are striking. First, the private sector as a whole accounts for 40-70 percent of enrolment At the secondary stage, seven states in the first at the primary stage in all states, except West two groups rely heavily on aided secondary Bengal (31 percent) and Orissa, Assam and Bihar schools in urban areas. However, in four of them, (each less than 15 percent). Second, while the first the contribution of rural-aided institutions is group of states makes use of the private aided greater than that of urban-aided institutions (in sector in the primary stage both in rural and urban terms of enrolment shares in the respective areas, many of the states in the second and third locations). These are Kerala, Maharashtra, Gujarat group make considerable use of aided institutions and Orissa (italicized in Table 4). In other words, at the primary stage in urban areas but not in aided institutions have contributed to rural rural areas. In the latter set of states, public aid secondary education in these states more than in to private institutions benefits the urban urban areas. population to a considerable degree. Third, a significant number of states rely on the private At the secondary stage, seven states in the first two unaided sector in urban areas even at the primary groups rely heavily on aided secondary schools in Table 4: Urban Areas: Enrolment Shares in Private Institutions at Primary and Secondary Level (1993-94) Primary Secondary Rural Secondary % PA % PUA % PVT % PA % PUA % PVT % PA % PUA Kerala 60 8 68 52 5 57 57 1 Maharashtra 37 17 54 76 22 99 80 10 Tamil Nadu 50 9 59 48 7 55 25 2 Gujarat 8 31 39 87 3 90 92 1 Uttar Pradesh 11 53 64 78 6 84 77 12 West Bengal 29 2 31 73 4 77 75 0 Orissa 3 9 12 27 10 37 58 20 Karnataka 25 27 52 56 16 72 50 11 MadhyaPradesh 7 41 49 11 24 35 7 16 AndhraPradesh 22 33 55 29 23 52 5 3 Haryana 14 32 46 32 29 61 2 3 Punjab 21 22 43 37 13 50 6 1 Rajasthan 13 46 59 18 13 31 1 0 HimachalPradesh 5 35 40 6 17 23 3 4 Assam 1 3 4 6 2 8 6 2 Bihar 7 6 13 8 5 13 2 1 Source: Calculated from Sixth All-India Education Survey, NCERT. $ urban areas. However, in four of them, the how this share varies across states at different levels contribution of rural-aided institutions is greater than of education and how it has changed over time. that of urban-aided institutions (in terms of States have been ranked by the share of GIA in enrolment shares in the respective locations). These total public expenditure in 2000-01. areKerala,Maharashtra,GujaratandOrissa(italicized in Table 4). In other words, aided institutions have Eight states spend more than quarter of their public contributed to rural secondary education in these education budgets on subsidies to the private sector. states more than in urban areas. The proportion is as high as 81 percent in West Bengal. In all these states, GIA accounts for over Size of the Private-Aided Sector in half the public spending in higher and secondary education, but the proportions in some states are as India - Higher Education high as 90 percent. In West Bengal and Kerala, GIA The only information available for higher education accounts for 84 and 55 percent, respectively, of at the national level is for 2000-01. Of the total publicspendingattheelementarylevel.Anotherthree 13,072 institutions, 42 percent are private aided states, while spending a relatively small share of their (Table 5). About 37 percent of the total enrolment total education budget on GIA, nevertheless spend is in private-aided institutions approximately 3.1 between a quarter and two-fifths of their higher million out of a total 8.4 million. However, the education budget on GIA. The remaining four states distribution across states is markedly different. Madhya Pradesh, Rajasthan, Bihar and Himachal Although the break-up of enrolments by public and Pradesh display relatively low shares of GIA in private sectors is not available for individual states, both total education and sub-sectoral public it is likely that most of the growth in enrolment in expenditure.Notsurprisingly,theseare also the states states with rapidly expanding higher education with relatively low enrolment shares in aided sectors has occurred in private unaided colleges or institutions. in self-financing courses. Since 1992/93, restrictions on government funding have made it One state, West Bengal, has significantly increased difficult for governments to open new colleges, the share of GIA in public education expenditure sanction new courses or staff. Many state from 51 to 82 percent. Three states, however, have governments/universities have granted recognition/ considerably reduced the share of GIA in total affiliation to unaided colleges and Universities have education expenditure by about 10 percentage points also authorized new self-financing courses in Tamil Nadu, Assam and Orissa. Other states have government and aided colleges. maintained a more or less constant share. Clearly, subsidies to the private education institutions Public Expenditure on Grants-in- constitute a significant claim on public education Aid expenditures in a majority of states, especially at the secondary and higher education levels. The sheer size The size of the aided sector suggests that a significant of these subsidies implies that the management and share of the public education budget will be devoted administration of these subsidies is an important for subsidies to the private sector. Table 6 shows Table 5: Higher Education: Institutions and Enrolment by Type of Management, 2000-01 Management Universities Colleges Universities + Colleges Enrolment (in thousands) Government College 245 4097 4342 3443 Private Aided College 5507 5507 3134 Private Unaided College 21 3202 3223 1822 Total 266 12806 13072 8399 Source: University Grants Commission. % Table 6: Share of Grant-in-Aid Expenditure in Public Education Budgets State Share of GIA in Total Share of GIA in Public Public Education Expenditure Expenditure at each level (2000-01) 1990/91 2000-01 Higher Secondary Elementary High share of GIA in Total Public Expenditure West Bengal 51.1 81.7 44.6 94.2 84.4 Uttar Pradesh n.a. n.a. 70.3 76.7 n.a Kerala 55.2 52.8 57.1 51.7 55.3 Maharashtra 49.4 44.7 87.2 77.8 0.1 Gujarat 35.3 33.9 64.2 88.7 0.0 Tamil Nadu 59.7 32.1 54.6 34.9 26.2 Assam 33.3 24.8 29.8 66.3 6.4 Karnataka 24.1 n.a. 65.4 n.a. n.a. Low share of GIA in Total Public Expenditure- Large share in Higher education Haryana 9.9 10.0 35.8 7.8 2.0 Orissa 29.9 9.1 42.7 7.7 1.3 Andhra Pradesh 18.0 7.9 26.5 20.0 7.3 Low share of GIA in Total and Sub-Sectoral Public Expenditure Madhya Pradesh 5.8 5.7 12.8 7.8 1.6 Rajasthan 5.9 3.2 11.1 3.7 1.5 Bihar 1.2 1.6 0.0 3.6 1.1 Himachal Pradesh 1.1 1.3 10.5 1.1 0.4 Note: 1. Total includes GIA on technical education. 2. Data for 2000-01 are revised estimates. 3. For Uttar Pradesh, public subsidies to private institutions could not be obtained for elementary and for total. 4. For Karnataka, GIA on elementary, secondary and total not available for 2000-01. 5.Data for Bihar in the last year are for 1999-2000. Source: Compiled from Detailed Demand for Grants for Education of individual state governments. component of the management of the education subsidies to the private sector have been used in budget as a whole. these states for higher education rather than school education. Table 7 shows the distribution of total GIA across levels of education. In the eight states where GIA Performance and Costs of Aided represents a high share of total public spending on education, the major share of GIA goes to Institutions Access and Equity secondary education. The exceptions are Kerala Public subsidization of private schools can (where 51 percent goes to primary) and Tamil Nadu enhance access by eliminating the direct costs of where almost primary and secondary get almost schooling. Using data for 16 states, a simple equal shares. It is also noteworthy that the states, regression analysis shows that the gross enrolment which have a low share of GIA in total public ratio for the 6-11 year age group is positively spending on education, also tend to spend a larger related to the percentage of enrolment in aided share of the GIA on higher education (except for institutions, even after controlling for per capita Bihar). With the exception of Haryana, these states state income (Table 8). The relationship does not are also those which are more backward hold for the enrolment ratio for the 11-14 or educationally and primary enrolment and 15-17 year age groups, suggesting that the grant- completion rates are relatively low. The most striking in-aid mechanism may have been more useful in case is that of Orissa which spends nearly three- promoting access at the primary level by greatly quarters of the total GIA on higher education. Public expanding coverage. & Table 7: Distribution of GIA Across Levels (% of row totals), 2000-01 States Elementary Secondary Higher Technical Total (Rs.bill) High share of GIA in Total Public Expenditure West Bengal 37.6 54.8 7.6 0.0 33.88 Uttar Pradesh n.a. n.a. n.a. n.a. n.a. Kerala 50.7 31.2 16.7 1.4 14.16 Maharashtra 0.1 67.4 26.3 6.2 38.18 Gujarat 0.0 76.9 23.2 0.0 11.32 Tamil Nadu 40.3 39.1 19.7 0.9 16.65 Assam 15.2 66.3 18.4 0.0 5.74 Karnataka n.a. n.a. n.a. n.a. n.a. Low share of GIA in Total Public Expenditure- Large share in Higher education Haryana 8.5 29.3 56.7 5.5 1.34 Orissa 8.9 18.5 72.6 0.0 1.53 Andhra Pradesh 20.8 39.1 38.7 1.4 5.52 Low share of GIA in Total and Sub-Sectoral Public Expenditure Madhya Pradesh 18.5 20.7 33.0 27.8 1.36 Rajasthan 28.1 36.9 23.4 11.7 1.04 Bihar 48.8 46.5 0.0 4.6 0.51 Himachal Pradesh 18.8 21.9 59.3 0.0 0.09 Note: See Table 6. Source: Compiled from Detailed Demand for Grants for Education of individual state governments. By itself, the regression result for the 6-11 year age The participation of the poor and disadvantaged in group does not establish a causal relationship and a aided institutions presents a mixed picture across rigorous evaluation of this hypothesis cannot be states. In particular, where the GIA is concentrated attempted without controlling for factors that on the secondary and higher education levels, a influence choice of different types of schools. disproportionate share of public subsidies to the However, it does suggest that public subsidies to private sector are captured by the higher income the private sector are particularly useful at the groups (since their participation rates at these levels primary level to expand access. Their usefulness at are higher). We examine three aspects of equity: the higher levels depends in part on how many students share of SC/ST enrolment, rural enrolment and are able to complete the primary level, which is poor students in total enrolment in the government, related to both family constraints and the quality of aided and unaided institutions. schooling provided. Table 8: Gross Enrollment Ratio (6-11 year age group) and Enrolment in Aided Institutions Explanatory Variables Constant Per capita income % Enrolment in aided schools Coefficient 43.54 3.05 0.29 Standard error 7.54 0.95 0.16 T-value 5.78 3.23 1.8 R-squared: 0.64 Note: Dependent variable- GER for 6-11 year age group (NSS, 1995/96); real per capita state GSDP in thousands of rupees (1995/96 state data); % enrolment in aided schools at the primary level (6th AIES, 1993/94). Number of observations: 16 states. ' The proportion of SC/ST students in aided In all states, government institutions have an institutions is greater than that in unaided overwhelming share of rural students at the primary institutions, but it is considerably lower than that level (Table 9b). Aided institutions have a high in government institutions (Table 9a). This is true proportion of rural students at the primary level in at all levels, but the differences are especially Assam, Bihar, Kerala, Tamil Nadu, Uttar Pradesh striking at the primary level, where it is clear that and West Bengal. Other states, however, have a the government schools have very high significantly lower share of rural students in aided proportions of SC/ST students, compared to institutions. Especially noteworthy are the relatively the population share of these social groups. In high shares of rural primary students in unaided Kerala and West Bengal, the proportion of SC/ institutions in many states in all but five states ST students in aided institutions is close to their (Gujarat, Karnataka, Maharashtra, Tamil Nadu and share in government institutions and their West Bengal). In secondary education, government population shares (in Kerala, aided institutions institutions cater predominantly to rural students in actually have a higher share at the college levels). all states. Aided institutions, on the other hand, cater Other states in which aided institutions have a predominantly to urban students in eight states; share of SC/ST close to their population share contrary to expectations, unaided institutions have at the primary level are Bihar, Orissa, Tamil Nadu a largeruralclienteleinatleastsixstates.Atthehigher and West Bengal. Beyond the primary level, the level, the patterns are very mixed across states. proportion of SC/ST student falls in many states. Overall, therefore, public subsidies to the private To what extent do private aided institutions serve sector disproportionately benefit other caste the poor at each level of education? At the groups while the unsubsidized private institutions primary level, the proportion of students from do not provide for significant sections of the the poorest 40 percent of households (classified SC/ST population. Apart from a few states, the by per capita monthly consumption expenditure) SC/ST students rely almost entirely on direct varies from 9-15 percent in five states and from government provision of education. 16-30 percent in nine states (Table 9c). It is only Table 9a: SC/ST Enrolment as Percentage of Total Enrolment By Level and Type of Institution (1995-96) Primary Secondary Higher Govt. Aided Unaided Govt. Aided Unaided Govt. Aided Unaided AP 28 13 9 19 12 10 6 10 6 Assam 26 37 4 26 28 23 8 22 0 Bihar 26 17 10 11 2 3 14 2 2 Gujarat 34 10 0 33 18 0 30 6 0 Haryana 30 15 11 14 10 0 12 0 0 Karnataka 25 8 11 22 14 14 12 6 Kerala 12 9 5 11 5 11 11 15 0 MP 10 18 15 34 9 24 20 4 0 Maharashtra 27 15 11 29 17 24 11 21 0 Orissa 35 40 9 25 21 30 23 10 0 Punjab 46 16 13 23 12 8 27 11 21 Rajasthan 36 19 20 33 17 0 21 26 0 Tamil Nadu 33 24 16 21 16 18 15 11 11 UP 28 16 16 22 14 15 15 14 0 West Bengal 38 36 16 34 26 3 20 15 0 Source: Computed from NSS 1995/96. Table 9b: Rural Enrolment as Percentage of Total Enrolment By Level and Type of Institution (1995-96) Primary Secondary Higher Govt. Aided Unaided Govt. Aided Unaided Govt. Aided Unaided AP 85 29 45 55 15 25 21 40 6 Assam 94 61 45 85 61 54 85 70 100 Bihar 90 51 56 63 37 61 42 76 87 Gujarat 81 3 4 66 33 12 41 11 0 Haryana 92 24 58 85 4 35 33 2 0 Karnataka 83 23 10 73 63 48 31 37 39 Kerala 80 81 66 77 72 69 30 58 62 MP 82 18 35 61 28 30 33 0 0 Maharashtra 78 20 3 59 51 41 35 29 18 Orissa 89 32 27 76 83 98 53 55 27 Punjab 84 27 47 79 23 43 37 43 0 Rajasthan 88 24 44 74 23 11 53 14 100 Tamil Nadu 78 49 23 71 29 20 28 25 43 UP 93 58 65 77 72 61 42 38 0 West Bengal 82 65 18 68 55 12 40 21 0 Source: Computed from NSS 1995/96. in Kerala that the enrolment share of the poorest share (45 percent). The share of poor students in two quintiles slightly exceeds their population unaided schools is generally lower than in aided Table 9c: Enrolment of Poor as Percentage of Total Enrolment - By Level and Type of Institution (1995-96) Primary Secondary Higher Aided Unaided Aided Unaided Aided Unaided AP 18 18 3 11 0 0 Assam 19 9 17 12 0 0 Bihar 21 11 8 4 1 0 Gujarat 9 6 18 12 8 0 Haryana 13 21 5 12 0 0 Karnataka 12 6 11 18 2 9 Kerala 45 13 22 15 10 4 MP 11 7 5 0 1 0 Maharashtra 18 11 19 26 6 2 Orissa 26 5 11 11 3 0 Punjab 20 23 11 5 14 0 Rajasthan 9 12 14 0 0 0 Tamil Nadu 26 4 9 0 2 0 UP 18 30 18 20 8 0 West Bengal 29 4 5 0 0 0 Note: Figures indicate the share of pupils from the bottom two expenditure quintiles in total enrolment at each level and type of institution. Source: Computed from NSS 1995/96. schools, with some important exceptions However, apart from the problems associated with Andhra Pradesh, Haryana, Punjab and Uttar using examination results as an indicator of quality, Pradesh. In these states, the private unsubsidized the examination marks are not value added schools are providing greater access to the poor measures and do not control for the better socio- than the subsidized private schools. Overall, economic background and higher prior performance however, the poorest children are enrolled levels of students entering unaided institutions. Two generally in government schools. The proportion studies that have been done for Tamil Nadu and of the poor in aided institutions drop at the Kerala, respectively, that do try to control for student secondary level, partly because of their lower background and prior performance show that aided completion rates. As a result, at the secondary institutions do better than both government and level, the proportion of the poor is more similar unaided schools at the primary level (Bashir, 1997 in aided and unaided institutions. At the higher and Verghese, 1996). Furthermore, there are level, there are very few poor students overall, significant variations within each sector with low and negligible numbers in both aided and unaided performing and high performing schools within institutions. government and aided schools. Summarizing the conclusions from these analyses: In principle, the fact that there is greater private control over the management of the teaching force K in Kerala, the aided institutions serve the SC/ in aided institutions should lead to improved teacher ST, rural and poorest sections, at least in performance. Most state laws allow institutions to proportion to their population shares and the recruit teachers themselves (with government shares of these students are at least the same representationandundergovernmentguidelines)and as in government institutions aided teachers are not subject to transfer or K aided primary institutions in half the states deputation, which allows continuity of teachers in serve primarily urban students the institution. Job security and salaries on par with those of government teachers also promotes stability K aided secondary institutions cater and prevents the frequent staff turnover that is a predominantly to urban students characteristic of unaided institutions, which offer K aided institutions at the primary level have a much lower salaries and short-term appointments. higher proportion of the poor than unaided The general impression (undocumented by schools (with some exceptions) but a lower systematic studies) is that teacher accountability and proportion than governmentschools.Atother performance is better in aided institutions than in levels, they predominantly benefit the richer government ones in Kerala, Tamil Nadu, Karnataka sections and Maharashtra. K overall, government schools serve the poor Nevertheless,variousstudiesindicatethatthequalityof and the disadvantaged to a greater extent than teachers and their performance can be as low as in aided and unaided institution. governmentinstitutions.Motivationislowwhensalaries arepaidlate;teachervacanciescausedbyinabilitytofill Quality sanctioned posts (either due to lack of government approvalorunavailabilityofeligibleteachersinreserve There islittle documented information on the relative categories)increasestheworkloadforemployedteachers. quality of government, aided and unaided schools. In-serviceteachertrainingandprofessionaldevelopment No assessments of student learning are available nor arenotmandatoryinprivateinstitutionsandmanystate is there reliable evidence on labor market outcomes governments do not allow private-aided teachers to of students in different types of institutions. Average participateintheirownprograms. examination results at the secondary level in Andhra Pradesh, Tamil Nadu and Kerala indicate that In Uttar Pradesh and Orissa, there is considerable students from the private unaided schools do much evidence that a large number of aided institutions at better than private aided and government students. the secondary school level are of inferior quality to government institutions. In Orissa, many institutions Costs had not passed a single student in the secondary school leaving examination. In these states, it appears Studies of unit cost in government and aided that aided teachers are less accountable than institutions are not available for all states. Analysis government teachers. A related problem impinging of per pupil public expenditure data for Andhra on quality is that in these states, the private Pradesh (Oxford Policy Management, 2002), managements do not provide the necessary Karnataka (World Bank, 2002), Tamil Nadu (Bashir, minimum infrastructure and facilities. A feature of 1997), and Uttar Pradesh (Kingdon, 1996) suggest both these states is that aided institutions have been that in these states at least, unit costs are comparable, primarily established by politicians. if not lower than in government schools, at the elementary and secondary level. The conclusions regarding quality are necessarily tentative but can be summarized as follows. Where Comparison of costs and effectiveness are even private managements are interested in providing the fewer. Data collected for two studies in the early educational service (for whatever reason political, nineties suggest that private schools (aided and cultural, religious), and where general public demand unaided) do perform better than government for education is high, the quality and performance schools and at lower cost in Tamil Nadu and Uttar of aided institutions (on average) tends to be higher Pradesh at the primary level (Bashir, 1997 and than that of government institutions. In this case, Kingdon, 1996). However, these results need to be the greater management control over teachers confirmed for other levels and other states with more enables greater accountability and managements also up-to-date data. invest their own resources to improve quality. On the other hand, where the purpose of establishing Issues for Reform in the GIA aided institutions is not primarily educational but motivated by capturing the public subsidies through sector employment of teachers, private management Six broad sets of issues merit consideration: control actually seems to lower teacher accountability and there is no additional resource mobilization from (i) rigidities in the GIA system for higher education; the private sector. (ii) teacher issues; (iii) weak legal framework and/or Chart 1 - India: Costs and Performance of Government and Private Schools 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0 Lucknow Lucknow Tamil Nadu Tamil Nadu Aided Unaided Aided Unaided Cost Achieve. Note: Variables are (1) ratio of private to public cost and (2) ratio of private to public achievement Source: For Tamil Nadu, Sajitha Bashir (1997); For Lucknow (UP), Geeta Kingdon (1996) ! inability to implement laws; (iv) limited resource some additional benefits); in Kerala they are mobilization by private sector; (v) lack of monitoring redeployed even to non-teaching government and quality assurance of providers; and (vi) lack of posts because of the overall decline in enrolment. competition and a holistic framework for private Managements that run several institutions can also sector development. manipulate enrolment to keep the sanctioned posts. The problem is especially severe for regions Rigidities in the GIA system for higher where the child population is declining (Kerala, education Tamil Nadu, southern part of Karnataka, Andhra Pradesh) and where private unaided schools are Inability to adjust the subsidy to changes in growing. The permanency of posts also affects student demand: quality to the extent that it is difficult to get rid At the college level, new courses that are in line with of incompetent teachers. Security of tenure, on student demand are not eligible for GIA in many, the other hand, is important for ensuring teacher while the older, less popular courses with low continuity and commitment, and for ensuring that student enrolment continue to receive full subsidy. the system benefits from skills gained through This creates the situation where public subsidy is experience and investments in in-service training. provided to courses that are not in demand in the labor market (although in higher education, some Delays in teacher appointments: courses which have low enrolment may deserve Although managements have the authority to recruit subsidies on account of externalities and/or the need teachers, approval has to be first sought for to preserve domain knowledge). recruitment and a government representative often sits on the recruitment board since a public subsidy Problems in defining the workload for college is involved. This often leads to delays in teachers: appointments reducing quality. Where reservation For primary and secondary school teachers, quotas apply, there are further delays since eligible workload is defined in terms of a pupil-teacher ratio candidates from the reserved categories may not (and lesson plan), in colleges it is defined in terms be available.6 The issue here is how to ensure that of teaching contact time (16 hours per week for the public subsidy is used for the stated purposes. degree level work and 20 hours per week for pre- Delayed disbursement of salaries: university colleges). This sometimes leads to the creation of new combinations of subjects to increase In Karnataka, this was universally reported to be the workload even though there may not be many the case both at school and college level (although students for the course. they were eventually paid by the end of the month), but delays were not reported in Kerala. Other studies Teacher issues in Delhi and Bihar indicate long delays in release of salaries. Often, the ways and means position of the Inflexibility in teacher deployment: state government means that salaries for teachers in aidedinstitutionsremaininarrearsforseveralmonths. Since teachers are appointed for permanent positions, the present system is relatively inflexible Linking of teachers salaries to government pay when enrolment declines in a particular aided scales: institution. While many state governments have the legal authority to redeploy teachers should Although this is not legally binding, since the amount there be a surplus, and some have done so (Kerala, of aid is not a right of the management or Karnataka), redeployment is usually time teachers, in practice, most state governments offer consuming, difficult to implement and does not the same or similar pay scales to teachers in aided always reduce the fiscal burden. In Karnataka, aided teachers can be redeployed only to other 6There are variations in state practices in reservation for aided aided institutions (since government teachers get teacher posts: Kerala has no reservation while Karnataka employs the same quotas as in government institutions. " institutions. Benefits and pensions often differ, are variations across states in the clarity of the however. (In Kerala, however, aided teachers are rules and regulations and more importantly, in statutorily required to get the same benefits and pay their enforcement. Many states have a grant-in- as government teachers, which adds to the fiscal aid code, which is a collection of government burden). The revision of pay scales due to the Fifth orders that form conditions upon which aid is Pay Commission has created additional expenditure granted and regulated.7 The code is non-statutory pressures on state governments as well as litigation in nature; however, as executive instructions, they and unrest, when pay scales have not been upgraded. have constitutional sanction under Articles 162 and 74 of the Constitution. Violations of the Management commissions for recruiting conditions of the GIA code can also result in teachers: criminal sanctions. The Kerala GIA scheme is In all states, including Kerala, it is reported that unique in that the conditions for grant are managements take commissions from prospective embodied in the Kerala Education Act and Rules teachers for recruiting them. Due to the enormous framed under the Act, and hence are more difference in pay and benefits between teachers in transparent major changes can therefore be government-funded institutions and private self- enacted by only the legislature. Orissa, on the financing institutions, there is an over-supply of other hand, has not even compiled all the relevant teachers for the former. Estimates suggest that each Government Orders into an easily accessible GIA new teacher contributes about two or three years code. Most state governments have clear of her prospective salary to get a job in an aided guidelines on entry and exit that are enforceable institution. Existing teachers may continue to pay 10 by law and provisions for penalty for abuse of percent of their monthly salary to managements in the subsidy, mismanagement and non- ordertoretainthejob.Where guidelines for recruiting performance. However, these provisions are teachers are adhered to, these practices will not rarely invoked and criminal actions against necessarily affect the quality of education; where the managements for misuse of subsidy or non- guidelines are flouted, in effect sub-standard teachers performance are rare. More importantly, are recruited at high cost to the public exchequer. violations of the GOs are often retroactively Field reports from teachers suggest that many legalized by either the courts or the legislature. institutions use these donations for partially An example of this is the Orissa Aided financing investment in new facilities and Educational Institutions (Appointment of improvements in quality, but many managements Teachers Validation) Act, 1989 that approved the simply pocket them. appointment of teachers who had initially been appointed in violation of the existing rules. Lack of accountability: Abuse and fraud: Teachers in aided institutions serve at least two masters: the government, which pays their salaries, Open cases of fraud are frequently reported in Uttar and the management, which has the right to appoint Pradesh and Orissa. These include non-existent or terminate them. In colleges, the affiliating institutions,fictitiousteachersandinflatedenrolment university could also be considered another master. tojustifyteacherpositions.Attheotherextreme, such Accountability for quality and outcomes is not fixed open abuse does not exist in Kerala, while some cases at any level. are reported (but are also dealt with by the government) in Karnataka. Open abuse is closely Weak legal framework or associated with the level of monitoring both through data collection systems and by communities through implementation of laws parentteachersassociations. Credible legal framework: Unlike many developing countries, Indian states have a well-developed legal framework but there 7 See Annex 2 on distinctive features of GIA codes in various states. # Over-regulation: Limited resource mobilization from Aided institutions are covered by specific grant-in- private managements aid codes, specific government orders issued from time to time, general laws covering all educational The key problem is that fees are very low or non- institutions and government employees as well as existent,somanagementhasnoseparateincome national and state case law. Karnataka, for example, in which to invest in facilities: has as many as 6 codes for granting aid for each This is compounded by declining enrolment for sub-sector, in addition to the general laws. There many institutions. Most GIA codes do not have a arefivebasicissues:(i)regulationscoverminutedetails provision for matching grants from the private regarding school facilities and leave little room for sector. The financial contribution of the private managerial discretion or innovation (ii) sector is expected to be met through the numerous incompleteness of rules and regulations, including regulations regarding provision of physical facilities those relating to eligibility, type of grant given and and other inputs, which are often flouted. The financial management processes (iii) inconsistency wealthy charitable trusts and foundations are able between practice and policy and between the various to invest heavily and to that extent, the GIA system different acts leading to litigation (iv) frequent minor does promote private sector resource mobilization. changes to rules and regulations that cause confusion However, other managements are not able to (or with managements and allow scope for abuse. are not interested) to do so. At least part of the reason for heavy management commissions on Non-compliance with regulations due to teacher appointments (as reported by teachers inflexibility in the norms: themselves) is to plough back part of the There is discrepancy between the law as laid out contributions into upgrading school facilities. in the books and as understood in the field and as However, there is no guarantee that the resources actually practiced. Schools serving remote areas or mobilized in this way will lead to investments in in urban areas are not able to meet all regulations education; at least part of the public subsidy reaches (for instance, land requirements for playgrounds are private pockets for non-educational purposes. almost impossible to meet in urban areas) but nonetheless providing valuable, otherwise unmet, Negligible Investments in Quality educational opportunities. Improvement: One result is that managements do not invest in Litigation: quality improvement and curriculum upgradation States are overwhelmed by litigation, which runs into (the latter is also regulated by the government or tens of thousands of cases. Review of litigation at University). Many states do not allow aided teachers the national level and in selected states shows that to participate in government provided in-service litigation has burgeoned in the field of admission in teacher training; neither do the aided institutions higher education (by students) and in service matters invest in teacher training themselves. at all levels (by teachers). There are very few instances of state-management disputes with respect to audit. Weak Monitoring and non-existent Litigation regarding admission is generally related quality assurance to issues of reservation and whether managements turned down eligible students for specific courses. Weak monitoring systems: Litigationregarding service matters relate to teacher Many states do not have well-established systems appointments, promotions, pensions and so on. The for data collection even for numbers of institutions, reasons for few cases regarding audit is that either students and teachers. Kerala and Tamil Nadu, on thestateisnotregularlyconductingauditorenforcing the other hand, have good statistical and monitoring standards. Cases of penalties enforced against non- systems. In these states, the GIA institutions are also complying managements are negligible, despite the required by law to establish Parent Teacher enormous detail in the regulations. Associations that act as a monitoring mechanism. $ However, even a fairly advanced state like Karnataka The conventional argument for public subsidies has serious issues with data collection and reliability: to the private sector is that they promote a more very little data is collated at the state level and there efficient and equitable production of educational is hardly any computerization or analysis of this data; outcomes by allowing choice for students and data are readily available at the district and block greater competition among providers. The GIA level but there are many anomalies. Aided schools system, however, eliminates competition since in Karnataka are not required to establish School some private institutions receive grants in Development and Monitoring Committees. Other perpetuity (although contingent on student states with very large GIA systems do not undertake enrolment) while others do not get any public systematic data collection even at the lower levels. subsidy at all. Data on students and teachers in aided institutions at the college level is unavailable at the state level in Lack of a holistic policy framework for the almost all states except Kerala. Consequently, the private sector: entire financial management system of GIA has Private education either takes place outside the weak underpinnings. system altogether or is subject to extensive government regulation. Private unaided schools are Limited involvement of beneficiaries: allowed to offer instruction in the English medium and different curricula (for example, of the more The current GIA system is in the nature of a contract demanding Central Boards of Education) but between the government and the private private aided schools and government schools are management. Apart from Kerala and Tamil Nadu, not allowed to do so. This has led to a fall in demand most states do not mandate parent teacher in some areas, and surplus teachers and unutilized associations or school development committees in facilities financed by public funds. The differential private institutions. The experience of both these treatment creates inequities in educational provision states, as well as international experience, suggest with richer students being able to access education that the involvement of parents in monitoring use that is considered more beneficial either for higher/ of the aid, student and teacher performance could professional education or for labor market reduce gross abuse of the system. outcomes. The existing subsidy mechanism does not enable poor students to access these private schools. Quality assurance is absent at all levels: At the same time, the distinctions between the grant- Currently, public examinations at the secondary and in-aid and other unaided institutions are getting higher secondary levels provide the only means of blurred and it is not clear that that the subsidy is assessing quality at the school level. Universities are being used for intended purposes, as aided unable to fulfill this function adequately in higher institutions are now allowed to open self-financing education, because of the hundreds of affiliated courses (at the college level) or fill vacant posts with colleges and political involvement in the teachers hired at market rates (schools and colleges). management and administration. The absence of reliable quality assurance systems is one of the main The GIA mechanism does not allow flexibility reasons why many of the legal provisions regarding to promote specific educational objectives: withdrawal of aid for non-performing institutions Since the GIA allows government funding to be cannot be implemented. channeled only through the supply side, targeting specific population groups or areas, or promoting Lack of competition and a holistic educational goals such as introduction of innovations and quality improvement is difficult. framework for promoting private sector participation Recent Attempts At Reform GIA system locks in existing inefficiencies The Constitution itself provides an example for the and poor quality: reform of the grant-in-aid system but until recently % many states have not introduced major reforms. few have been re-deployed, partly due to Article 337 of the Constitution entitled aided resistance by private managements because educational institutions managed by the Anglo- they lose their discretion in selecting teachers Indian community to continue drawing aid, on a (and hence commissions), because of subject reducing scale, for the first ten years after adoption mismatch and because aided teachers (unlike of the Constitution. Thereafter, aid was completely government teachers) are free to participate stopped for these institutions. Recent attempts at in political activities. Most surplus teachers are reform in individual states, some of which are primary teachers and special teachers discussed below, have been driven mainly by fiscal (language, craft, etc.). Protected teachers are compulsions to reduce revenue expenditures. Many therefore often re-deployed in non-teaching states have introduced provisions since the early posts. nineties barring inclusion of new private institutions within the GIA scheme and new institutions have K Reduction of salaries to surplus teachers: In to give an undertaking that they will not seek 2001, the government announced that those admission to GIA. This has not been followed in teachers who could not be absorbed Uttar Pradesh and Orissa, until recently; some states, elsewhere before June 30, 2002 would be paid such as Karnataka, have made specific exceptions only half their salaries. Following a 32-day for institutions with SC/ST management. States have strike in May 2001, the decision was also stopped or reduced maintenance grants, so postponed. that public aid is restricted to teachers salaries. With the exception of Gujarat, the reform efforts have K Closure of uneconomic schools: About 2,244 tended to be ad-hoc in nature, and fiercely contested, schools are considered uneconomic with leading to many reversals and patch-up agreements enrolments below hundred. About 58 betweenthegovernment,managementsandteachers. percent of them are aided; the All of the efforts, including those in Gujarat, have overwhelming majority of them are lower not dealt with the issue of using public subsidies to primary schools. 48 schools have been the private sector for promoting educational goals closed to date and another 393 schools (promoting equity, enhancing quality and instituting would be closed in 2003. Since the criterion accountability), focusing almost exclusively on for closure is only low enrolment, there are reducing the fiscal burden to the state. significant negative impacts on equity. Most of these small aided schools are in hill areas Kerala and in remote areas, which serve tribal and dalit communities. Keralas rapid demographic transition and absolute decline in the child population has led to two issues K Sanctioning of English-medium classes in in school education: (i) falling pupil-teacher ratios; government and aided schools: This policy has and (ii) unviable schools of very small size. Demand been adopted to specifically address parents for English-medium education has also exacerbated demand, which also leads to the students theseissues. joining unaided schools. In 2002, the government announced that English-medium The government has taken the following steps to classes could be started from class 5 in aided address these issues: schools and that qualified English teachers will be appointed in both government and aided K Redeployment of surplus teachers in aided schools. schools: The unofficial estimates of such teachers, called protected teachers because K Delinking of the pre-university (classes 11 and their salaries continue to be paid by 12) from colleges: In 1996, the government government irrespective of whether they announced that these classes would be work, vastly exceed the official estimates attached to schools. Teachers who became (12,000 unofficial; 2,408 - official). Relatively surplus in colleges were absorbed by & introducing special subjects such as travel and make up the difference. Following protests tourism, communicative English, etc. Selected by college teacher unions, the order was secondary schools (both government and reversed. aided) were to be allocated the plus two courses. The government selection was set K A recruitment freeze on all teaching and non- aside by the High Court in June 2000 teaching posts in aided institutions was following a petition alleging arbitrary selection announced in March 2001; all vacant posts in of schools. Subsequently, the Cabinet colleges were to be treated as unaided. Again, approved sanctioning of plus-two courses in the teachers union led to a cancellation of unaided schools also and unaided courses in this order so that posts that were vacant on aided schools. All these moves are being March 1, 2001 could be filled (but not opposed by the Aided Schools Managers subsequent ones). Association. K In 2001, the pre-university colleges were separated from the previously composite colleges K Identification of surplus teachers in colleges: Approximately 1700 private aided college by a government order. This would enable the teachers and 1500 non-teaching staff are teaching staff to be recruited at lower PUC considered surplus, but redeployment is scales, rather than the degree college scales. virtually impossible at this level. The K Both in schools and in colleges, managements government has not been filling vacancies and are allowed to hire unaided teachers at market managements have been allowed to fill in salary levels for unfilled vacancies. posts with part-time and guest teachers for the last five years. K In the last two years, a few thousand aided schools teachers have been re-deployed. Karnataka However, the process has not continued this year. Due to the difference in benefits for The GOK has taken the following steps to try and aided and government teachers, the reduce the GIA expenditure: Department cannot re-deploy aided teachers to government schools. K In 1997, the government announced that only colleges and schools founded before 1987 would be admitted to the GIA code. Subsequently, the Madhya Pradesh order was relaxed for institutions with SC/ST GOM decided to withdraw its aid to private schools management to allow institutions that were at the rate of 20 percent per year for five years. The founded up to 1992. The private school aid will be converted to a block grant, giving schools managements and employees associations are discretion to purchase inputs. Schools and colleges lobbying for extension of the cut-off date so will be expected to raise their fees and compete for thatnewinstitutionscangetthesubsidy. students. The new policy also makes colleges and universities the employers of teachers who recruit K New GIA courses have been banned since 1990-91; this order has largely held although new staff on renewable five-year contracts with some colleges get around it by creating new promotion on merit. Guidelines for staff salaries combinations of courses, creating workload have been prepared by the state government. and/orrecruiting new teachers. New courses in colleges are unaided courses with teachers Gujarat paid at much lower levels. Gujarat is the only state with a sizeable aided K In March 2000, the Chief Minister announced sector at the secondary level that has attempted a 15 percent cut in GIA to colleges; the major reform of the financing mechanism. The government contribution to teacher salaries main features of the reform, introduced are: (a) would be reduced with colleges having to grants for new institutions are restricted to ' schools in certain geographical locations which in scope, in the provisions made for financing are underserved; (b) financial support is given and in the extent of regulation of schools. The on a declining basis reaching 50 percent of total empirical evidence on the impact of vouchers recurrent expenditure; (c) the government pays a on quality and efficiency is mixed. fixed amount of Rs. 4,500 per teacher (which is about two-thirds the salary of a primary teacher AsTable 10 shows, the private sector is relatively in a government school); managements are small in most industrialized countries but tends to allowed to pay higher amounts; (d) there is be larger in developing countries. Even in those flexibility in fees; and (e) the maintenance grant is countries with large private sectors, the extent of delinked from the number of teachers and has private financing is relatively small, indicating a been linked to the number of classrooms. reliance on public subsidies. By contrast, many developing countries have large private sectors, but Grant-in-Aid Mechanism and even amongst them, the extent of private financing Public Subsidization of the Private is relatively low indicating that public funds subsidize the private sector. Sector an International Perspective Industrialized countries that offer the classic voucher scheme are relatively few in number. The grant-in-aid financing mechanism can be treated Most industrialized countries that subsidize the as an implicit voucher scheme since students can private sector do not operate classic voucher choose between a public and private school and schemes but pay directly for teachers salaries and since payment of the subsidy in these systems is tied other expenses, often linked to norms in public to enrolment, with common criteria for public and schools. The former group of countries has a privateschools.Theclassicvoucherschemeenvisages very small private sector in education and the a payment (cash or coupon) given directly to students subsidy is linked to the level of per-pupil with students submitting vouchers to the school of allocations in public schools. Coverage in terms their choice. The value of the voucher is determined of percentage of enrolment is therefore low. The on the basis of a common level of expenditure per voucher provides a high level of subsidization, pupil. The general principle, however, is that funding covering 70-100 percent of total costs, including follows students; the intended purpose is to enable most teacher costs and also some operating choice among consumers and hence, competition expenses, materials and equipment, building costs among schools. The GIA system is similar to the and even transportation. classic voucher system in that if a student chooses a private aided school in India, funding (in the form Among those which operate the classic voucher of payment for teachers salaries) follows students. scheme are Denmark and Sweden, where the In principle, the GIA system allows a student from government gives private schools a per-pupil a non-privileged background to move to a private subsidy or grant that the schools manage school. The main difference from a classic voucher themselves. In Denmark, the voucher makes up scheme, however, is that schools do not have 80 85 percent of school tuition cost and parents discretionary choice over how to spend the public contribute the rest of the tuition and fees. subsidy since the grant is tied to teachers salaries. Swedens voucher plan requires every municipality to fund local enrolments in private schools; the There is a considerable amount of theoretical value of the voucher equals the per pupil work on the avowed advantages of the voucher expenditure in public schools and independent mechanism specifically, on benefits derived schools must be open to all students and charge from promoting parental choice and competition no tuition. The U.S. has no uniform voucher among schools - although practical experiences scheme. There are examples of public and with large-scale voucher plans are limited in the privately financed vouchers, although all are small world, including in the United States. There is no compared to schemes in the rest of the world. single voucher plan and there are many differences Generally, the voucher equals a proportion of ! Table 10: Cross-Country Comparison of Private Sector in Education, 1998 Country Proportion of enrollments in Proportion of financing from private institutions (%) private sources (Primary and Secondary) Primary Secondary Percent Australia 26.3 34.0 15.9 Chile (v) 41.6 45.2 31.3 Denmark (v) 10.9a 15.1a 2.1 France 14.3 20.3 7.3 Germany 1.9 6.8 24.1 Hungary 3.2a 4.6a 8.0 Indonesia 17.2 42.4a 18.2 Japan 0.8 16.5a 8.3 Jordan 24.8 9.4 2.0b Korea, Republic of 1.7 37.5 20.7 Malaysia 1.4 3 2.0c México 6.3 10.7 13.8 Netherlands 69.9 78.7 5.7 Norway 1.5 4.7 0.9 Peru 12 16.1 38.2 Philippines 7.7 29.5 40.3b Spain 32.4 26.7 10.8 Sweden (v) 2.3a 1.7a 0.2 Switzerland 3.3a 7.8a 11.9 United States (v) 11.7a 9.6a 9.2 United Kingdom 5.2 8.3 5.7 * Note: a. 1995 data; b. 1997 data; c. 1996 data. (v) indicates that the country operates a classical voucher scheme. Source: Vawda, 2002. per pupil expenditure in public/private schools students for secondary school attendance, was and targets low-income minority households. initiated as part of a Bank-funded project. Similarly, the New Zealand Targeted Individual Entitlement Scheme (TIE) has a very low Industrialized countries that offer subsidies to private coverage, covering 160 students per year. Low- institutions through payment of teachers salaries income Maori children were helped to receive include Australia, France, Germany and the quality education in private schools with the Netherlands. Only the Netherlands has a very large voucher amounts varying by grades and covering private sector. It also offers the best example of part of the school tuition. this where fiscal equality between public and private schools is constitutionally mandated. Examples of classic voucher schemes in developing countries are also few. The largest The Indian grant-in-aid system is comparable both program is the Chilean voucher scheme, where in size and in the nature of the subsidy to the all schools received payments based on monthly system of subsidizing private schools in the enrolments and an administratively determined Netherlands. Nevertheless, there are important voucher for each pupil. The Colombian differences between the Indian and Dutch program, where scholarships are given to poor systems. The similarity between the Indian and ! Dutch systems lies in their common objective refuse admission to pupils of other religions a (protecting rights of parents of different feature that has considerable ramifications for the backgrounds) and in the extent of their coverage social effects of the education system. at the secondary level. The Indian grant-in-aid system, however, is equally pervasive at the India has not adopted other mechanisms for tertiary level but hardly so at the elementary level providing subsidies to private institutions on a large (except in a few states) whereas the Dutch system scale. Examples of demand-side interventions do is pervasive at the elementary level but not at the exist for example, scholarships for SC/ST students tertiary level. The other common features are: and rural girls in some states but their coverage is the legal framework for private schools (to be small and uneven, and corruption is rampant in many established as non-profit organizations), the extent states. Other countries have adopted other of regulation regarding teachers salaries and fees mechanisms for promoting private participation. and the mode of delivery of the subsidy (payable The schemes include interventions on the supply- to institutions). Beyond these basic common side (subsidies to private operators to encourage features, there are marked divergences between them to establish schools) or on the demand-side the two systems. (targeted at eliminating the demand constraints that are either preventing families to send children to Public subsidies in India cover mainly the salary school or continue in school). component while the private promoter is expected to incur capital and other non-salary recurrent A review of these mechanisms shows that if the expenditures. In the Netherlands, all costs are subsidy does not cover teachers salaries (as in the covered by the government. These differences arise direct or implicit voucher scheme), the subsidy from the different objectives in the two countries enables only a small proportion of the poor to attend in the former, promoting voluntary contributions private schools and the private sector tends to be for education is important, whereas in the latter, small (because it caters only to those that can afford promoting equity in financing of public and private the fees). On the other hand, if the private sector is schools is considered important. In India, state large and caters to a large number of the poor, it governments are responsible for determining tends to be of very low quality. The use of such eligibility for the subsidy and for providing it financing mechanisms can ensure better-targeted allowing considerable diversity across states; in the finance, but because of the need for transparency Netherlands, the Central government provides the and capacity building to administer such subsidies, entire subsidy. One major difference lies in the they have been most successful as part of an coverage of private institutions: in India, new private externally financed project with considerable external institutions are generally not eligible, creating a supervision. situation whereby some institutions permanently receive aid while others never get any aid. In the Targeted bursaries and matching grants are examples Netherlands, on the other hand, every private school of supply-side interventions. Targeted bursaries are is eligible for aid. Differences in the regulatory cash payments that may go directly to schools, framework regarding the type of education, municipalities, or provinces and are earmarked for selection of pupils and fees are also striking. These specific purposes, such as improving the curriculum are much more regulated in India to be in conformity or increasing school access for minority, indigenous, with regulations in the government schools hence, or poor children. Therefore, they have the potential private aided schools follow the same curriculum, of improving access, equity, and educational quality teaching methods and examinations; they are obliged by introducing competition between schools/school to admit all eligible pupils and cannot charge fees districts. Governments may also target resources to except in line with those set by the government schools or communities through matching grants, schools. In the Netherlands, differences in content community grants, a mix of public and private sector and teaching methods are explicitly allowed, support and community financing schemes to either although the government prescribes the broad propel the supply of schooling and/or catalyze the curricular areas. More importantly, schools can demand for education. These mechanisms employ ! the school, community and/or the private sector in government institutions are at least as high as in aided contributing financially as well as in proposing institutions, and much higher than in unaided innovative programs for educational improvement. institutions.Undercurrent cost conditions, expansion They could be given in lump sum, but are usually through the government sector alone seems a fiscally tied to outcomes, including the number of students unviable option. Expansion through the private attending a school, the number of classrooms unaided sector poses serious equity issues since poor constructed by a private school, the land and student students will be unable to pay the required fees, performance. especially at higher levels. Examples of demand-side interventions (other than This evidence in this study suggests that continued the classic voucher scheme) are stipends and student use of the system of public subsidies for the private loans.Stipends are cash payments that a public agency sector is a viable option for expanding access and makes to a family to either offset a childs schooling mobilizing additional resources for education and is expenses or to compensate a family for the loss of preferable to eliminating these subsidies. Three main the childs labor. Generally core expenses such as approaches in continuing the system of public books, tuition, and transport, and incidental expenses subsidization of the private sector can be delineated: such as materials, game fees, and clothes are covered. (a)retainthemainfeaturesofthepresentGIAsystem A stipend is particularly effective in the poor to but improve its administration to ensure it achieves attend an institution of their choice. The Bangladesh educational goals; or (b) reform the system to move Female Secondary School Program, which is to a system of performance-based grants for schools; externally funded, is one of the largest such or(c)movetoastudent-basedsubsidysystemallowing programs.Studentloans are used usually at the tertiary studentstochoosebetweenpublicandprivateschools. level. Loans can be in the form of commercial Before discussing these approaches in greater detail, private loans or government-guaranteed student thissectionoutlinessomegeneralprinciplesthatshould loans. The government may take an active role by guide the reform. selecting candidates or establishing regulations. Agreement on the goals and principles of the Recommendations for Reform reform program is necessary and their articulation is necessary to build public support. As stated earlier, the impetus for reform of the GIA system has come from fiscal considerations and state The following are important for most states: governments have resorted to various ad-hoc promoting greater equity, reducing abuse and measures to contain the growth in expenditures. inefficiency in the use of subsidies, enhancing quality These considerations have often ignored the fact and accountability, enhancing resource mobilization that state governments are committed to achieving from the private sector and introducing different certain educational goals, including universalizing mechanisms for administering subsidies in order to participation and completion of elementary achieve different educational objectives. education, improving equity at higher levels and raising quality at all levels. Should the government State-specific approaches are required in order cut back or eliminate subsidies to the private sector to take into account the enormous differences or should it use alternative means to achieve these across states in the use of GIA. goals? The alternatives are to resort to direct States should decide which sub-sector(s) is (are) a government provision or to use the private unaided priority for reform, and which strategy is sector. Comparing the educational outcomes and appropriate, based on an evaluation of how best to cost of the three different systems government, achieve educational goals and the institutional aided and unaided can help to answer this question. capacity to implement reform. For all states, however, There are relatively few studies comparing the it is desirable to move away from the present ad-hoc sectors on these attributes, especially on the revisions to the GIA policy towards a holistic reform effectiveness or value added by institutions of effort that is grounded in the states vision for the different types. It is clear, however, that the costs in education system. Consensus building among the !! main stakeholders about the goals of the reform sector and a large private unaided sector. and detailed operationalising would be required to Urban primary education in many states is sustain the reform program. Broadly speaking, the also of the same kind. Since the poor are relative emphases and priorities for various effectively barred from attending fee-paying categories of states are as follows: institutions, they attend the lower quality government institutions, which reduce their (a) states where GIA has been used to improve chances of continuing to higher levels of access at the primary level: These are Kerala, education and their labor market performance Tamil Nadu, Maharashtra and West Bengal. (employment and earnings). The main issue Reducing GIA, or closing down small aided for these states, and in urban education for schools, would immediately have a negative many states, is to promote greater equity impact on participation of the poor and those through targeted subsidization of the poor living in remote areas. Where there is a decline to attend private schools. in the child population, the immediate priority is to introduce greater flexibility in the teacher In addition, the political strength of the private sector norms without reducing access. A new managements and teachers associations needs to be strategy for small schools would be taken into account. States with large aided sectors appropriate modeled on those in other have powerful lobbies of these groups that are able countries facing similar issues in order to to influence policy. Among them, Karnataka and save on resources while providing education Uttar Pradesh, both with large GIA sectors, are two of high quality. of the four Indian states which have an upper house (Legislative Council), which has 1/12 members (b) states where there is heavy reliance on GIA elected by graduates and 1/12 by teachers. at the secondary level: the above four states as Representatives of the private managements well as Gujarat, Uttar Pradesh, Orissa and association and teachers association are often Karnataka fall into this category. Improving members of the legislature. the equity targeting of the public subsidy and using it to leverage more private sector Reform in the higher education sub-sector resourcemobilizationforqualityimprovement requires a different institutional framework are the main issues for these states. from that in the school education sub-sector. (c) states where a disproportionate share of GIA The government has a smaller direct role to play in goes to higher education: Orissa and to a lesser higher education even vis-à-vis GIA colleges, extent Andhra Pradesh fall in this category. In especially in relation to quality improvement and both states, participation and completion performance monitoring which is the role of the levels at primary and secondary levels are very Universities. In school education, on the other hand, low and strongly biased in favor of the rich. the government can play a more direct role since it Hence, subsidies to private colleges are sets the standards for curriculum, examinations and captured by the rich. The main issues here are academic standards. to (a) redirect the subsidies for higher education to primary education; and (b) find Working out mechanisms to resolve conflict, alternative financing sources and mechanisms in conjunction with clear articulation of for higher education. In both cases, a policy goals, is necessary to avoid the reform framework to use the private sector program being mired in endless litigation. participation for the benefit of the poor needs to be developed. The existing legal framework does not confer public aid as a matter of right on institutions and (d) states where there is limited reliance on GIA hence, in principle, there should be no difficulty at any level: these are Madhya Pradesh, in changing the terms on which aid is given. Aid Rajasthan, Bihar and Himachal Pradesh. As is given granted on the basis of agreements; there noted earlier, these states have a government is no legal impediment to changing the !" Table 11: Comparison of Public-Funded Private Schools: India and Netherlands India Netherland Objective Promote voluntary effort in education; protect Freedom to establish schools and determine educational and cultural rights of linguistic and principles and organization of teaching. religious minorities Encourage parental choice and financial equity between public and private schools Level of education All levels, but especially secondary, higher Primary and secondary (classes 1-12) secondary and general higher education Coverage In many states, only private institutions All private schools in the country (70 percent established before 1986-87 but varies across of all schools, covering approximately 70 states. Considerable variation in coverage but percent of pupils) half the institutions at secondary and higher levels in many states are private aided Private management Varies according to legislative framework in Any group of parents; schools have to be run different states; in general, can be individual, as non-profit organizations institution and corporate body but institution has to be run as non-profit organization. Contribution of All capital expenditure (land, buildings, None (additional parental contributions private institutions equipment,non-salary recurring expenditures allowed) as per government norms) to be incurred by private institution; voluntary parental contributions allowed. Type of subsidy Payment of salaries of teachers and some non- Voucher (formula-based); government covers teaching staff by government; number of teacher cost of facility, equipment, staff and running posts and salaries to be approved by expenses as in public sector schools of same government and are usually based on the same level norms as in government institutions Mode of delivery Payable to institutions/teachers Directly to all private schools Public financing State governments; Central government has no Central government: 100%; local government direct financing role has no financing role Education content All publicly funded institutions must follow state Schools are free to determine principles and and processes government prescribed curricula, textbooks and organization of teaching but Central submit pupils to common public examinations government regulates curricular goals. An along with government institution students. independent inspectorate evaluates all Language of instruction has to be Indian; English schools, government and private. medium institutions are not eligible for subsidies. Unaided institutions are not subjected to regular inspections. Selection of pupils Schools must admit all eligible students, Schools can refuse admission to children of irrespective of community or religion; religious different religion instruction is not compulsory for pupils Fees No tuition fees payable; other fees set at No tuition fees nominal level in agreement with government and common for all institutions of a particular level in a state Source: For Netherlands, compiled from Vawda (2002). !# framework. Nonetheless, as the extensive litigation Three broad approaches to reforming GIA can on the subject shows, the legal powers of the be delineated: government alone do not determine whether reform can be implemented without judicial (i) Strengthening the existing system in order to challenge. The method of implementation, the improve effectiveness, equity orientation and extent of change and the duration of the transition responsiveness to demand. would determine the legality. The courts are (ii) Moving to a performance-based grant system. concerned with the arbitrariness of government action, the immediate impact on teachers and (iii) Moving to a student-based grant system. negative consequences for students interests. Possible steps for each of the above are Another consideration is whether the interests of discussed below and could address many of concerned parties are taken into account in the issues listed in Section 8 above. The first proposing new changes. As a facet of fair approach will not address the issue of promoting procedure, notice of impending change and greater competition or introducing greater meaningful consultation with affected parties are variety in financing mechanisms for specific likely to reduce litigation that can stall the entire objectives. The other two approaches are better reform process. Specific steps that could be in this respect, but they are also more considered are: demanding in terms of design and implementation as the subsequent section K informing the concerned parties about discusses. The steps listed for the first approach proposed changes are a pre-condition to moving to either of the two approaches. For many states, moving K seeking the views of these parties in a meaningful dialogue to either of the second or third approach involves a major reform and considerable K giving sufficient time for adaptation by additional institutional capacity, and may institutions, teachers and students required to tried out on a smaller scale. K providing the rationale and justification for the change, specifically in terms of the overall Strengthen the existing GIA system goals of the government in education, priority actions promoting equity, instituting greater systems of accountability, making institutions viable, Immediate steps can be taken to improve targeting avoiding corruption and enabling public of aid, modernize data management processes, subsidies to reach a greater segment of the improve the legal framework and strengthen population financial management (Steps (a) - (d)). The existing system can also be modified to enable private Where aid is non-statutory, changes can be carried managements to mobilize additional resources and out by appropriate amendments to government to introduce performance monitoring (Steps (e) orders, the Codes and amending individual (f)), but this will require further operational detailing contracts after securing the consent of the donee for determining criteria for fees, estimating revenues institution with the caveat that the amended orders and setting up assessment systems. should be publicized in easily comprehensible language (see below). If the terms of aid are (a) Improve Efficiency and Targeting of the contained in Rules, the amendment to the Rules has Aid to be justified at various government levels; if the (i) Allow colleges to opt out of GIA for terms of aid, or some conditions are found in parent unpopular courses in return for receiving Acts, approval of the State Legislature will need to aid for newer courses. This addresses the sought to amend those parts, necessitating, in turn, issue of the subsidy going to irrelevant a broad political consensus over the nature of the and outdated courses while the newer reforms. courses rely exclusively on private !$ financing, which limits quality respective Universities. Further detailed improvement. Courses that were breakdown of the data by discipline and considered necessary for protecting courses will also be required for policy domain knowledge could continue to planning. receive aid. The college would have to enter into an agreement with the (iii) Data analysis should cover indicators government to opt out of GIA and be linking physical and financial data such as responsible for working out agreements expenditure per pupil, per teacher and with teachers. This could also be per institution, variations across socio- attempted at the secondary level. economic groups, regions and levels. (iv) The data on student enrolment should (ii) Establish equity criteria for providing the be used along with school-mapping grant-in-aid, such as proportion of exercises and demographic projections to students from disadvantaged or poor evaluate teacher needs in different types backgroundsandlinkthegranttofulfilling of schools and make forward estimates such criteria of these requirements. (b) Modernize Data Management Processes (v) Funding and appropriate technical expertise will need to be provided for (i) Revamp the data collection and some states that currently lack adequate management system for aided institutions capacity. at the school stage (including higher secondary). At a minimum, reports must (c) Improve the Legal Framework show enrolment, teachers, institutions, broken down by district and management (i) Create an accessible, updated summary type (government, aided and unaided) of all rules and regulations in and growth over time. Over time, more comprehensible language. Such a sophisticated indicators such as document could be relatively easily performance, repetition, dropout, collaged at the government level and promotion, and graduation rates, distributed at low cost to all institutions student/teacher ratios and per student and to the department officers.Thiscould subsidy cost can be given. Given the also be maintained on a website for open limited technical capacity of most state access. education departments, the best course (ii) Simplify rules and regulations. A is to outsource the data management and comprehensive enquiry should be analysistocompetentspecializedagencies. undertakenintowhetherexistingrulesand Data collection methods must be regulations are required to raise standards improved by giving specific in schools with the aim of simplifying responsibilitiestoheadteachers,blockand them. district officers for collecting and checking the reliability of the data. The (iii) Computerize and classify pending cases professional agency could carry out with the aim of speedy disposal. This is random checks in the field. The data itself essential both in order to reduce the couldbemaintainedandregularlyupdated inordinate time spent by government on a website that is accessible to the officials on court cases and in order to public. enable introduction of new reforms. (ii) Parallel recommendations would apply (iv) Create and support strong parent teacher forhighereducation,buttheresponsibility associationsinaidedschoolsthataremade could be fixed either with the state responsible for monitoring student government directorate or with the attendance and teacher presence. Legal !% codes and orders should be amended to (e) Enhance Resource Mobilization by the confer specific powers on these bodies. Private Sector Thecommittees/associationscouldbethe nodal point for forwarding complaints (i) Introduce greater flexibility in fees with so that the government has an reimbursement or waiver of fees for independent feedback mechanism. This poorer students. In order to combine this will help to reduce abuse on account of with the equity targeting of aid, the connivance between managements and government needs to develop criteria for teachers. students who can be charged higher fees, more precise estimates for revenue (v) In states where abuse and fraud are mobilization and monitor the use of rampant, implementing the existing legal additional resources. A monitoring provisions, including revoking of mechanism needs to be put in place. recognition or imposition of penalties, (ii) Make resource mobilization by private discontinuation of the grant (while taking managements a condition for continuing appropriate action to protect the interests the grant of students) is a necessary first step. (f) Create independent quality assurance (vi) Establishing clear and simple criteria, organizations/mechanisms to monitor related to monitorable indicators of quality and learning outcomes and exert student performance, for withdrawal of external pressure on institutions to aid and implementing these will help to upgrade quality and improve improve quality. accountability. (d) StrengthentheFinancialManagementand Move to a performance-based grant Institutional Capacity system (i) Pay salaries directly to teachers. This will The basic principle of this reform is that continuation help to reduce open fraud and abuse by of the grant would be contingent on various aspects of management. performance. The grant would continue to be given to institutions but the existing grant would be (ii) Evaluate the nature and effectiveness of de-linked from teachers salaries and given in a audit and other controls by outsourcing lump sum. To begin with, the total grant would audit with elaborate parameters. These be the existing teaching grant, which is gradually include: a) an independent audit of a reduced to a pre-determined level (for instance, certain percentage of schools/colleges on it could cover 50 percent of teacher costs or a random sample basis, similar to random could be a fixed salary contribution per teacher). scrutiny of income tax returns. In this The key feature of the system is that the grant method, the auditor would go into the would be linked to outcomes and processes, such records and carry out physical verification as student performance, innovative programs, of students, teachers, facilities and inclusion of special groups, and matching grants expenditure; b) test audit of all accounts from the private sector or the community. The books and inspection of all equipment; important element of the design is to define the c) evaluation of learner achievement on nature and scope of the subsidy, what costs it a random sample basis of 5-10 percent would cover and how performance would be of aided institutions each year by a monitored. reputed outside agency; and d) comparison of the independent audit In order to do this, the areas in which performance report with the returns filed with the would be appraised and the method of performance government. appraisal will need to be delineated. !& K Student performance: At the school level, curriculum and teaching-learning assessmentofstudentlearningatvariouslevels methodology, community participation (e.g., Terminal years of primary, upper and other aspects of institution functioning. primary, secondary and higher secondary This kind of rating would be most stage) could be a condition for aid. All appropriate for secondary and higher institutions receiving aid would be required secondary schools and colleges; most to have their students assessed. In order to elementary schools are too small to do this. be fair and credible, assessments must be done by a competent professional agency and One method of introducing such a system on a the content and methodology of the gradual basis is to provide funding to all schools on assessment must be subjected to professional the basis of development plans prepared by and public scrutiny. Further, allowance must institutions with the participation of the parents be made for the background of students in committees. Reform could initially be restricted to an institution, since poorer and more high schools, which in any case, appropriate the deprived students generally perform lower greater share of the current grant-in-aid. A portion on tests. In this case, a value added of the existing grant-in-aid could be converted to approach, focusing on improvements in grants for improving quality and performance, with achievement will be more appropriate. conditions for matching grants from communities/ Performance targets will need to be set for private sector (which could be relaxed for schools individual institutions. Models for establishing in disadvantaged areas or serving such groups). such systems of assessing student Alternatively, additional grant money could be performance exist in other developing provided to schools with the incentive of accessing countries and could be followed although more untied funds if they surrender some of the their adaptation to a system of providing existing grant-in-aid (for instance, as aided teachers grants has proved more problematic. In retire or leave the post). Schools would develop higher education, the role of the Universities their own performance criteria on the various in monitoring student performance has to outcomes. This approach has the added merit of be enhanced; appropriate changes to the devolving greater authority, responsibility and University Acts may be required for this. accountability to schools, which is necessary to bring about substantial improvement. However, in order K Teacher accountability: Again at the school to initiate this process, manuals and procedures for level, insistence on a system of preparing and approving development plans, and performance evaluation of teachers, for releasing funds will need to be developed. including but not restricted to a system of self-appraisal, is feasible. Insistence on An alternative approach is to establish an professional up gradation of teachers autonomous organization for monitoring school (through participation in in-service quality and conducting learning assessments. programs, or additional qualifications) Although its main objective will not be (and should would also be desirable to promote not be) to determine how much grant will be investments in training. Managements could released, its rating of individual institutions on be allowed to develop a system of outcomes and processes could form the basis for incentives and penalties for teacher release of grants on pre-determined criteria. performance. This could be supplemented by external supervision (on a sample basis) Move to a student-based grant on teacher performance and reports from program parent committees. In this approach, the subsidy would be given directly K Institutional rating: In this case, performance to students who would have the freedom to choose would be judged on such issues as between different types of institution. The institutions management processes, innovations in total grant will depend on the number of students !' who opt to enroll there. Possible ways of doing this If such a major reform were contemplated, there are discussed below. would need to be broad political consensus, strong leadership and professional inputs to: With an incremental approach, a policy is required to compulsorily transfer GIA funds that arise K draft an appropriate incentive scheme through vacancies and/or teacher requirement to a K establishpartnershipwithacrediblethirdparty Student Scholarship Trust Fund (SSTF). In order (professionals or private organizations with to incentives schools to take on disadvantaged no direct stake in running such institutions) students, an Incentive Contribution for Enrollment could be initiated. The scholarship fund could be K monitor its progress and adapt in the light of used to provide scholarships to poor students to implementation experience attend school and to pay the schools incentive K insulate the reform program from short-term contribution for new students. political considerations. Adopting a more radical approach, individual As discussed earlier, the theoretical advantages of a institutionscouldoptforcompletefinancialautonomy student-based voucher program are many, but there in return for opting out of GIA status, but would has not been much experience worldwide with large- have to provide scholarships for poor students. The scale implementation. Specific issues that need to be school could move two teachers each year out of addressed at the design and implementation stage GIA(through normal attrition or retirement, but this are: couldalsobeincentives)andreplacethemwithunaided teachers. The grant-in-aid for these teachers salaries K targeting and selection of beneficiaries eligible wouldbeconvertedtoascholarshipfund.Inthiscase, for scholarship schools or colleges would begin a process of cost- recovery from richer students in a phased manner, K eligibility criteria for participating institutions while the remaining students would have their fees K assessment of the capacity and motivation of funded out of the scholarship fund. Since private institutions administrationofascholarshipprogramhasnotbeen salutary, involvement of credible non-government K a sound system for tracking students and groups with no direct stake in such a program would voucher renewals benecessary. K ensuring timely payment of scholarship grants Financial simulations undertaken for Karnataka on K minimizing the costs of administration, which the basis of data from a small sample of schools can be high for such schemes and colleges show that initially additional financing amendment of the existing legal framework would be required for the transition, but over a K period of seven years, institutions could finance an K introducing budgetary changes to transfer increasing proportion of poor students from the salary expenditures to grant expenditures scholarship fund and would have a small surplus left for re-investment.8 The Reform Program Requires The major disadvantage of this approach is that the Management and Technical good institutions may opt out of the scheme leaving Capacity Building and Additional the poor performing institutions to continue Financing in the Short Run receiving the aid. Hence, enabling institutions to opt out would need to be combined with remedial The major constraint to the effectiveness of actions, penalties or discontinuation of aid to errant subsidization mechanisms in developing countries has institutions, giving students the option to join other been the implementation capacity of operators, institutions (and making acceptance of such students intermediaries, and administrations given different a condition for opt out by other institutions). responsibilities. Capacity building through training " at all levels of implementation is required to minimize Reduced or delayed payments reduce program problems. Government institutions will need to take credibility and ownership by beneficiaries. The on new management and accountability functions secondary school scholarship program in Colombia instead of merely paying teachers salaries. Many of was adversely affected due to such delays with the reforms suggested in the previous sections, negative consequences for the long-term objective including those for improving the existing system, of improving quality. Finding methods to protect require that certain actors play a role that they were such expenditures in the budgetary process will be a neither willing to perform nor capable of fulfilling. challenge. Individuals or organizations given resources to operate their own schools may or may not have the Irrespective of the approach to reform adopted in capacity or organizational skills to meet the challenge. individual states, individual state government education departments may find it difficult to start In the short-run, any serious reform program will the process and develop a well-thought out program require additional funding either to strengthen of reform without additional technical inputs or monitoring and financial management processes, or financial incentives. State fiscal adjustment programs to create quality assurance mechanisms. Moving to a can offer financial incentives for state governments performance-based or student-based system will to opt for change and to achieve educational goals require even morefundinginitially.ReformingtheGIA through more efficient use of their resources. mechanism into an instrument for promoting equity Another strategy is for the Central government to and quality cannot be seen merely as a cost-cutting provide financial and technical assistance for states exercise. In the long run, this may leverage additional to develop and implement reform packages that meet resources from the private sector and plug efficiency centrally laid down criteria and guidelines while losses in the use of public funds. allowing for diversity in state-specific educational needs and goals. These interventions can also help to A crucial aspect of moving to a non-salary based grant monitor progress in the reform program, to system is to protect the non-salary expenditure introduce changes with the experience of component, which is typically reduced when state implementation and to expose states to experience governments are faced with budgetary constraints. of similar reforms elsewhere. " Annexure 1 Kerala (1957) sought to introduce uniformity in the operations of aided and government schools, The state of Kerala has made extensive and long specifically in the appointments and salaries of use of the grant-in-aid system; it is also the state teachers and their rights. The Education Bill became with the highest levels of educational participation the subject of the most intense political conflict; and completion. Almost 90 percent of students who managers of the private institutions (linked to other enter class 1 reach class10. Something on outcomes political parties) led the opposition to the Bill, which private sector contribution. eventually led to the dismissal of the government. The grant-in-aid codes were operational since the Three specific points of contention were (a) private early 20th century in the princely states of both institutions had to appoint teachers from a district Travancore and Cochin and enabled private list of qualified and accredited teachers; (b) private educational institutions established by various schools could be taken over for non-compliance religious and caste communities to seek public aid. with the rules; and (c) a local education authority However, the GIA rules encouraged the private would be constituted to oversee all schools in the managements to mobilize their own resources, only area. Private teachers were to be paid the same salary subsidizing part of the recurrent costs. This led to as those in government institutions but the entire considerable diversity in the availability of resources salary was not payable by the government. across private schools, variation in teachers salaries and teachers being subjected to arbitrary removal The next Congress government modified these by management. clauses and passed the Education Act of 1958. Ironically, the main feature of the previous Bill The major reform of the GIA code occurred under unification of the salary, leave and other service thefirstelectedCommunistMinistryinKerala,which conditions of teachers in government and aided came to power in 1957. The Kerala Education Bill institutions and protection of teachers against Annex Table 1: Key Features of the Legislative Framework for GIA in Kerala Transparency GIA is governed by KER; in other states, there are a multiplicity of codes and acts that govern aided institutions. Management structure Flexibility regarding structure of management individuals and trust, societies and religious organization can establish schools/colleges but they have to appoint and pay for Manager. Conflict of interest Person appointed as teacher cannot be Manager. Staff strength verification Education officer fixes teaching posts after finalizing number of division. Effective pupil attendance is calculated through surprise visits by education officers. Disciplinary action State govt. can take disciplinary proceedings against aided teacher, if the management does do not so. Redeployment of surplus State govt. can appoint surplus staff to other aided or government teachers schools. Inspection Schools are subject to regular inspection by administrative officers of School Education; Vice-Chancellor has the authority to dismiss a manger guilty of corruption, malpractice etc. Parent Teachers Mandated by the Rules in all aided schools and actually in existence. Association " arbitrary action was preserved; however, Issues in the Current GIA System: managers retained the right to appoint teachers while the government undertook to pay the salary of the Despite its strengths, the Kerala GIA system faces aided teachers. Increasingly, managers took recourse many problems and requires reform. These to the rights accorded by the Constitution for problems have arisen due to two main factors: (i) protection of minorities, to shield their rights in rapid demographic changes, leading to an absolute appointments of teachers. In effect, the rights of decline in the child population; and (ii) changing the managers were preserved in almost all demand for education, in terms of curriculum and conditions except salary, which was passed on to courses. The present GIA framework does not allow the government. The political influence of the easy adaptation to these changing conditions. The managers led to an enormous increase in the subsidy problems are as follows: to the private sector. Surplus teachers: Due to decline in the child The Kerala Education Act and Rules became the population, the number of surplus teachers has model for the GIA policy and practice across many increased. Officially, there are about 1500 such states. The key features of the legislative framework teachers; unofficial estimates put the number at 12- are shown in Annex Table 1. 15,000. The KER mandates that the government is responsible for the protection of the salary and Strengths of the Kerala GIA system: benefits of teachers rendered surplus, even though they can be redeployed to teaching or non-teaching Equity focus aided institutions, both at school posts. This leads to a fiscal burden for the state and college level, are distributed fairly evenly government, while at the field level, there is across all the districts. For the state as whole, 59 corruption in order to save redundant posts. percent of all schools are aided; the variation across districts is 42-71 percent. Unaided schools Inflexibility in the curriculum: Institutions receiving represent only about 4 percent of the total in aid have no choice regarding the curriculum. At the almost all districts. Although some aided schools school level, the state curriculum with instruction in cater to the richer students (especially in urban the mother tongue must be followed. On the other areas), the majority cater to the same clientele as hand, private unaided schools are allowed to offer in government schools. English medium instruction and alternative (recognized) syllabi. There is greater demand for Government monitoring of student and staff a this, leading to decline in enrolment in both aided special cell, called the Supercheck Cell, headed by a and government institutions. At the college level, Deputy Secretary to the government has been institutions get aid for teachers only in approved constituted.Thecellconductsregularcheckstoensure courses. Introduction of new courses requires schools follow staff fixation norms and check approvals of the University and the government is enrolmentandattendanceofstudents.Thecellreports not obliged to provide aid for such courses. This irregularitiestotheDirectorofPublicInstruction,who leads to a situation where the low-demand courses may take action based on the report. The Deputy continue to receive the highest subsidy (aid) while Secretary also checks the annual data and inspection the newer courses receive no subsidy. Low student reportsoftheEducationofficers;theorderregarding demand renders existing aided posts surplus, but staff fixation is issued on July 15thand inspection is to there are enormous difficulties in declaring these be completed by November. posts surplus. Less abuse of public subsidies due to the above, as Management commissions in teacher recruitment: well as the existence of PTAs, cases of non-existent Financial donations by prospective teachers to the aided institutions and fictitious teachers do not arise, managements at the time of recruitment are reported unlike in other states. However, there are problems to be commonplace. Notification and advertisement of corruption in appointment of teachers, discussed is mandatory as per the KER but interviews are below. considered a formality with a decision having been "! taken beforehand. The amounts range from Rs. 3 who becomes a claimant if a vacancy arises. lakhs for a primary teacher to Rs. 8 lakhs for a Managements also charge for hiring temporary secondary teacher (approximately 3 years average teachers and often 2-3 claimants arise for subsequent salary at each level). College teachers pay similar vacancies, leading to litigation. amounts. The system of donations has become more widespread now and even teachers who had Litigation: The number of court cases is not been recruited earlier reported that while such computerized and estimates ranged from 4-5000 donations were not taken earlier, management now pending cases. On average, the Kerala High Court demands regular contributions in the form of has pronounced a judgment on about 15 cases deductions from the salaries. However, most relating to aided institutions every year for the last respondents in interviews conducted for this survey twenty years. Cases relating to colleges, constituting felt that about half the amount was used by about one-fifth of total cases, almost always relate managements to invest in infrastructure for the to student admissions (eligibility, reservation, school. disciplinary action) or teacher appointments. The majority of cases at the school level on the other Recruitment of temporary teachers: The KER hand, relate to staff/management conflict provides for appointment of a temporary teacher (appointments, suspensions promotions, seniority). if a teacher is on leave for more than two months, "" Annexure 2 Comparison of Grant-in-Aid Code of different States State Manage- Teachers Condition Fee Grants Audit Teachers Distinct Features ment of Service Control Training Whether Whether Prior Whether Heads of Account- Whether only parity in approval state has Grant: ability code society/trust pay scale required control 1.Recurring Whether applies to or also with Govt. before Grant also teachers through teachers dismissal/ 2.Non- required training individual turnover recurring to file institutes Grant returns Delhi Society/trust Yes Yes Yes Yes Yes No 1. Rules provide that every school should be administered by a registered trust or society. 2. Provision for rent grant and hostel grant is provided in the Rule. Orissa Yes Yes Yes Yes Not known Yes No 1. Sec. 23 prescribes for the Orissa Education Development Fund. This fund is managed by a committee constituted by the State Government. Grants of the state, and donations are credited to the fund. The objects of the funds are: i. to issue grant in favour of educational institutions for implementation of improvement schemes ii. grants of interest free loans to educational institutions. Karnataka Society/trust Yes Yes Yes Yes Yes Yes 1. No proprietary or single manager school is recognized under the Code. 2. Not more that one member of a family be a member of Managing Committee. Kerala Yes Yes Yes Yes Yes Yes No 1. The Act provides for individuals to constitute the management. 2. Sec. 9 of the Act prescribes that the Government is under an obligation to pay the salary of all teachers in aided school directly or through the Headmaster of the school. The Government assumes complete responsibility for the disbursement of salary of teachers and other members of the staff. Thus, the very concept of a teaching grant has been eliminating. 3. Part II of the Act deals with compulsory education. Sec. 23 directs the State Government to provide for free and compulsory education of children. Sec. 26 obliges the guardian of child to send him or her to school 4. Welfare schemes for teachers, such as provident fund, common pool of surplus teachers, who would be given employment, provision for compassionate appointment, etc., is provided in the Act. 5. Amendments are carried out only through Legislative Assembly by passing a law, whereas in other states it can be done at the departmental level by way of Government Orders. "# State Manage- Teachers Condition Fee Grants Audit Teachers Distinct Features ment of Service Control Training Whether Whether Prior Whether Heads of Account- Whether only parity in approval state has Grant: ability code society/trust pay scale required control 1.Recurring Whether applies to or also with Govt. before Grant also teachers through teachers dismissal/ 2.Non- required training individual turnover recurring to file institutes Grant returns MadhyaPradesh Yes Yes 1. Thestatehasacompletecontrolovertheprimary education,whichisfreeandcompulsory. 2. ThegrantinaidcodeisintheformofGovernment Orders. It is apparently a matter decided by the Governmentandintimatedtotheinstitutionsseeking aid. Andhra Pradesh Yes Yes Yes Yes 1. LikeinDelhi,AndhraPradeshalsohasprovisionfor hostelrent. 2. Other than school grant in aid code also relate to colleges for general education and for teachers training and also for institutions forspecialeducation. Maharashtra Society/trust Not known Not known Yes Yes Yes No 1. Actprovidesthatthemanagementshouldberegistered eitherunderthesocietyregistrationActorunderthe MaharashtraPublicTrustAct. 2. ThereisaprovisionforSchoolBoardorEducation Committeewhoareresponsibleformaintaining adequatenumberofprimaryschools,forsanctioning grantinaidforalsowithdrawalofrecognition. Rajasthan Society/trust Yes Yes Not known Yes Yes 1. TheRajasthangrantincodealsorelatestotheinstitutions foreducational,culturaldevelopmentandphysical cultureofthepeople. 2. Proprietaryinstitutions,whicharenotregisteredunder theSocietyRegistrationActandRajasthanPublicTrust Act,areineligibleforreceivinggrant. 3. Themanagingcommitteeoftheinstitutionreflectsa secularcharacter.Aspertheprovisionnotmorethat two-thirdsofmembershipofthemanagingcommittee canbelongtoanyparticularcaste,sectorcreed. Uttar Pradesh Not known Yes Yes Yes Yes Yes Not known 1. ThereisaprovisionforaseparateboardforBasic Education,intermediateEducationandSecondary Education.SuchboardsareestablishedbytheState Government. 2. There is a provision for a recognized school whose financial resources are made available by the management of such schools in accordance with the standard as specified by the board. 3. Any person related to the management cannot be appointed as Headmaster or assistant teacher of a recognized school. 4. Separate Rules for Gratuity Fund for the teachers of aided school. "$ References Consultant reports New Concept Consultancy Services (2002). 1. National Overview 2. Review of Legal and Regulatory Framework 3. Report on Kerala James Tooley (2003). Grant-in-aid Schools and Colleges in Karnataka Other References Bashir, Sajitha. 1997. The cost effectiveness of The Case of Utter Pradesh. Parts I and II. public and private schools: knowledge gaps, new Economic and Political Weekly. 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