Cover Story

UNION BUDGET 2008-09

Blueprint of a supplementary budget for primary education

With a supplementary budget of Rs.47,725 crore — a mere 1.06 percent of GDP — the UPA government could equip every government elementary school countrywide with lab-lib-lav facilities. And sweep the next general election. Dilip Thakore presents a road map

Now that the clouds of dust raised by the somewhat forced celebrations following the presentation of Union Budget 2008-09 to Parliament and the nation by finance minister P. Chidambaram on February 29 have settled, it is becoming increasingly clear that the latest annual tax and spend proposals of the Congress-led 17-party United Progressive Alliance (UPA) coalition government at the Centre aren’t as earth-shattering as made out by party spokespersons and the pink newspapers. Clearly enthused by over budget direct tax collections and the tax-GDP ratio steadily rising from 9.2 percent of GDP in 2003-04 to 12.7 percent last year (2007-08), which ballooned New Delhi’s revenue receipts to a humun-gous Rs.602,935 crore, and with more than an eye on the general election scheduled to be called early next year if not earlier, Chidambaram announced a massive government spending spree in the new fiscal year beginning April 1.

The centrepiece of the pre-election year Budget 2008-09 is undoubtedly the unprecedented farm loan waiver of Rs.60,000 crore decreed by Chidambaram amid loud cheers and thumping of treasury desks in the Lok Sabha. Under the farm debt waiver scheme, all agricultural loans disbursed by commercial banks, regional rural banks and cooperative credit institutions to marginal (owning up to 1 hectare of land) and small farmers (1-2 hectares) overdue on December 31, 2007 and still outstanding on budget day (February 29), are assumed by the Union government which will settle them by way of cash payments over the next four years to creditor banks. The number of marginal and small farmers eligible for debt waiver is estimated by the finance ministry at 30 million countrywide.

Nor is the largesse restricted to small and marginal farmers. Any other farmer repaying 75 percent of his outstanding loans to commercial and other banks before June 30 will be forgiven 25 percent of the total amount due. The number of farmers owning larger tracts of agriculture land expected by the minister to avail this OTS (one time settlement) scheme is 10 million. "The total value of the overdue loans being waived is estimated at Rs.50,000 crore and the OTS relief on the overdue loans is estimated at Rs.10,000 crore. I appeal to Honourable Members (of Parliament) — as well as the people of India — to give their unqualified support to the scheme and help government implement this momentous decision," said Chidambaram while presenting his fifth consecutive budget for the UPA government.

Unquestionably there is widespread sympathy within right-thinking members of society for the country’s estimated 140 million farming dependent households which seem to have been almost completely bypassed by the development boom which followed the historic economic liberalisation and deregulation Union budget presented to Parliament in July 1991 (by incumbent prime minister Manmohan Singh) with over 150,000 heavily indebted farmers having taken their own lives during the period 1995-2006. However not a few monitors of India’s economic scene have wondered aloud in print and on the electronic media whether this massive loan waiver scheme is the best way to help the nation’s 700 million agriculture-dependent citizens make a new start.

For one, only scheduled commercial, regional, rural and cooperative banks are obliged to fully and/or partially write off agricultural loans with the hope of recovering them from government. Loans availed from the ubiquitous village moneylender who according to estimates accounts for 40-60 percent of agriculture credit because government-owned and private banks are unwilling to lend to small farmers, are not covered by the Budget 2008-09 rural debt forgiveness scheme.

By decreeing a populist debt waiver scheme instead of addressing the structural problems of rural India, the finance minister has made it plain that Budget 2008-09 is a pre-election year initiative framed with the objective of winning friends and influence — and most important votes — within the country’s 670 million strong electorate. That’s also why 40 million farmers apart, Budget 2008-09 contains provisions which will also please the nation’s influential middle class and Indian industry.

In this give-away populist melee, development spending — particularly on education — has become a casualty. Although in his 90 minute budget speech Chidambaram acknowledged that "education and health are the twin pillars on which rests the edifice of social sector reforms", and took great pride in announcing that the Central government’s expenditure in the education sector will be 20 percent higher at Rs.34,400 crore in fiscal 2008-09, of which Rs.13,100 crore is for the Sarva Shiksha Abhiyan (elementary education for all) programme; Rs.8,000 crore for the mid-day meal scheme (to cover a massive 139 million children); Rs.4,554 crore for upgrading secondary education and several other commendable but under-funded schemes (see box p.30), it is pertinent to note that the total provision of Rs.34,400 crore for education aggregates to less than 1 percent of GDP (Rs.4693,000 crore) in 2007-08. In the circumstances the UPA government’s promise made in the National Common Minimum Programme four years ago, to raise the annual outlay for education (Centre plus states) to 6 percent of GDP seems a distant mirage given that India’s 28 state governments put together have never provided more than 2 percent of GDP for education.

In particular for the past few years EducationWorld has been pressing for ascertaining the needs of India’s moribund education sector and sugges-ting ways and means to the Union government to upgrade India’s rapidly obsolescing 1.05 million government primaries and 62,400 secondary schools as also the country’s 400 universities and 20,000 colleges to near global standards. On several occasions (April 2006 and February 2007) we published detailed cover stories suggesting redrawn priorities and switched funding to provide a new deal to Indian education and the world’s largest child population. But typically, despite our one million strong national readership base, neither the Union government, the Union human resource development ministry, nor any leaders of Indian industry always whinging about shortages of skilled workers and professionals, nor any members of the apathetic and myopic Indian middle class (who indulge in a crazy annual scramble to get their children admitted into the country’s 146,310 private primaries) have responded to our call for needs-based budgeting in the vital education sector.

"It’s somewhat unfair to say that the government budget-making process is not needs-based," says Dr. Narendra Pani, an economics alumnus of Delhi’s showpiece Jawaharlal Nehru University, Centre for Development Studies, Trivandrum, former professor of economics at IIM-Bangalore, hitherto senior editor of the Economic Times (1987-2007) and currently professor at the School of Social Sciences, National Institute for Advanced Studies, Bangalore. "There is more than an element of needs-based allocation of available resources in Budget 2008-09. Quite clearly the needs of the agriculture sector were more urgent and immediate than of education development, which anyway is a long-term proposition. The first duty of the finance minister is to stimulate economic growth through formulation of enabling fiscal policy. This he has done quite successfully last year as evidenced by the 7 percent increase in the Union government’s tax revenue. The plain truth is that every sector of the Indian economy is under-funded. Within this reality the 20 percent higher allocation made in Budget 2008-09 and particularly the larger provision made for Sarva Shiksha Abhiyan and the mid-day meal scheme are steps in the right direction. The point to note is that there is a greater obligation upon state governments to live up to the Central government’s education expansion and development promises. Moreover government outlays for education need to be augmented by societal initiatives with NGOs, non-profit societies, industry and business also pitching in to expand and multiply institutions of elementary education in particular. This isn’t happening, hence the crisis in Indian education," explains Pani.

But while it’s incontestable that state governments, NGOs and Indian industry can — and need to — engage to a greater extent with the national imperative to develop the country’s abundant and hugely wasted human resource, there’s no gainsaying that the lead should be provided by the Union government which should prove its seriousness of intent about educating India’s 450 million children by, at the very least, assessing their educational needs. Perhaps the most ardent proponent of needs-based budgeting for Indian education is Dr. A.S. Seetharamu, an alumnus of the University of Mysore and hitherto professor of education at the Institute of Social and Economic Change (ISEC — estb.1972). Not only does Seetharamu advocate needs-based budgeting for the vital education sector "because India’s large child population offers the country an opportunity to dominate the global economy in the latter half of the 21st century", he goes a step further and advocates micro-level planning for each school on the presumption that they are "national assets" which require nurturing and continuous growth and development.

In an interview granted to EducationWorld recently (EW September 2007), Dr. Seetharamu said: "A major drawback of the Indian education system is that there is negligible review of teacher and school performance. It’s important for governments at the Centre and states and for local communities to value every school and institution of learning as a national asset. This mindset change will encourage school-based planning for institutional development with the involvement of local communities. The funding of government schools should be needs-based and linked with school-site performance to be assessed by local communities and independent organisations. That’s the formula for attracting children to school, retaining them, and improving learning outcomes."

Intrigued and inspired by this innovative proposal and also by the easily accessible data pertaining to India’s 1.20 million primary and upper primary schools following the excellent district-level elementary education data gathering initiative of the DISE programme of the National University for Educational Planning and Administration (see EW September 2007 cover story), EducationWorld commissioned Dr. Seetharamu to draw up an estimate of the expenditure involved to provide every government primary and upper primary school (1,050,353) countrywide with a functional laboratory, a 200-250 volume library and toilet and sanitation facilities.

While this writer is respectful of educationists and intellectuals (such as Swaminathan Aiyar of the Economic Times) who argue that expenditure efficiency and stricter supervision rather than larger outlays is the top priority of Indian education, in EducationWorld it is an article of faith that the glaring infrastructure deficiencies of the country’s 1.05 million government primaries are the prime cause of 53 percent of children dropping out of school before completion of class VIII, and the poor learning outcomes which characterise Indian education. Of course, it’s incontrovertible that expenditure efficiency is a necessary condition of upgrading and contemporising Indian education, but it’s not a sufficient condition.

This EducationWorld-Seetharamu budgetary exercise for elementary schools was also inspired by a unique nascent initiative undertaken by the Chennai-based NGO Innovative Network for School Evolution — Intellectual Development thro’L (INFORSE-IDL) which proposes to equip all municipal schools in Chennai with a functional laboratory, library and lavatories.

"It’s perfectly accurate that the major infrastructure deficiency of the country’s 1.05 million government elementary schools — primaries and upper primaries — is the conspicuous lack of lavatories, laboratories and libraries. I completely agree with Ananth Narayan of INFORSE-IDL that if these facilities are provided to all government schools countrywide, student retention and learning outcomes will improve dramatically. The provision of school lavatories will improve retention, especially of girl children and improve their health and the hygiene of entire local communities. Similarly the provision of modest laboratories and libraries will develop the scientific temper of children, enable them to supplement classroom teaching, and infuse the joy of learning into the elementary education system," says Seetharamu.

To determine the additional one-time capital expenditure required to implement the lab-lib-lav project in all government elementaries countrywide — it is assumed that India’s 146,310 independent private primary schools are sufficiently provided with these facilities — Dr. Seetharamu ascertained and applied standard unit construction costs approved by the Union ministry of human resource development under the SSA elementary education for all programme. With the flash statistics for the year 2007-08 of the Delhi-based NUEPA (National University of Educational and Administrative Planning) indicating that elementary schools (classes I-VIII) countrywide number 1.20 million, of which 1.05 million are government and aided schools with a total enrollment of 165 million children, Seetharamu calculates the one-time cost of equipping them with adequate lab-lib-lav facilities at Rs.47,725 crore (see box).

Be that as it may, Dr. Seetharamu’s costing of a national lab-lib-lav project has the endorsement of Chennai-based businessman Ananth Narayan, managing director of Cryo Scientific Systems Pvt Ltd and promoter of INFORSE-IDL (an advocacy/consultancy NGO) which has already begun initiating the pilot lab-lib-lav programme in Chennai’s municipal schools. "For a school the unit construction cost of an easy to maintain single toilet is about Rs.25,000. Therefore a set of five dry toilets with soak pits can be constructed in every school with a one-time expenditure outlay of a mere Rs.1.25 lakh. Moreover separating urinals from toilets for boys is an excellent idea to help improve maintenance of toilet blocks and create additional facilities such as sanitary napkins and disposal incinerators for girl children. While providing libraries we have found that it’s cost-effective to set up common libraries with a minimum stock of 1,000 books for two-three schools in a contiguous neighbourhood. Moreover to develop a scientific temper in children from an early age, INFORSE-IDL is also committed to establishing functional laboratories in all local government schools in Chennai. We estimate that such labs can be equipped at a modest cost of Rs.2-2.5 lakh each," confirms Narayan.

But although the micro-level expenditure estimates based on the Union HRD ministry’s SSA guidelines and endorsed by Ananth Narayan of INFORSE-IDL for the proposed national lab-lib-lav rollout are sound, the aggregate sum of Rs.47,725 crore recommended as one-time capital expenditure to revolutionise elementary education in India is certain to elicit plaintive wails of inadequacy of investable resources of this magnitude. For one, within a nation which has practised and celebrated precedent oriented rote learning for centuries, even edge of the box — let alone out of the box — thinking is almost impossible.

Therefore the incremental, needs-blind system of budgeting under which available resources are spread across a wide variety of sectors and projects, is unquestioningly accepted by an acquiescent intelligentsia and the public. Yet as has often been argued in EducationWorld, there is sufficient hidden wealth and slack within the economy to release resources for investment in the vital education sector.

A road map detailing ways and means to raise resources for investment in education was presented in this publication (EW February 2007). The major heads under which resources can be raised for larger education outlays are by way of reducing indiscriminate middle class subsidies (higher education, urban electricity, water supply, cooking gas etc); steady disinvestment of government-held equity in public sector enterprises (estimated market capitalisation Rs.1000,000 crore); tightening tax exemption and concession loopholes (inflicting an annual revenue loss of Rs.100,000 crore to the Union government according to economist Bibek Debroy); revoking the income tax exempt status of IT (information technology) companies with annual revenue exceeding Rs.50 crore (see table p.34). By exercising modest economies and redrawing development priorities, the corpus of Rs.47,725 crore required to implement the lab-lib-lav on a nationwide scale in the country’s 1.05 million government and aided elementary schools can be easily accumulated in short time — perhaps through a supplementary budget presented before the start of the new academic year — to completely transform and upgrade elementary education in India. And help the incumbent UPA government alliance sweep the next general election.