Necessary but insufficient condition

he inclusion of a commitment to "raise public spending
in education to at least 6 percent of the GDP with at least half of this amount to be spent on primary schools" in the common minimum programme (CMP) of the recently constituted Congress-led United Progressive Alliance (UPA) government in New Delhi is a matter of particular satisfaction to EducationWorld which has strongly and consistently advocated the fulfillment of this age-old pledge ever since we began publication almost five years ago. The newly inducted coalition government’s CMP proposes a (reportedly 2 percent) cess on all Central taxes "to finance the commitment to universalise access to quality basic education" and a National Commission on Education to allocate resources and monitor programmes.

Given the pathetic condition of the nation’s primary school system — 20 percent of the country’s primary schools don’t have a proper building and offer only one teacher; 58 percent don’t provide drinking water, and 70 percent lack toilet and sanitation facilities — it’s hardly surprising that of the estimated 112 million children who enroll annually in primary classes, only 42 million complete middle school (classes VI-VIII). Quite evidently the annual national outlay for education (Centre plus states) estimated at Rs.70,000 crore is insufficient and/or expended inefficiently.

Against this backdrop no right-thinking citizen endowed with a conscience and minimal awareness of the importance of education as the basic building block of national development, is likely to grudge paying the proposed cess. Provided he/she receives sufficient assurance and mental comfort that the additional amount proposed to be collected will be prudently spent for the stated purpose. There’s the rub, because it’s a matter of common knowledge that a significant percentage of even the current annual outlay for education is siphoned away with impunity by the ubiquitous guardians and servants of a kleptocrat state.

Therefore it is important for the UPA government to publicly acknowledge that the proposed cess is a necessary but insufficient condition for realisation of the Education for All goal by the year 2015 to which it is committed under a United Nations mandate. To receive public backing for the education cess proposal, the government and the Union ministry of human resource development in particular will need to overhaul current accounting and accountability processes to assure the public that it is contributing to the good cause of children’s education rather than lining the pockets of venal malfeasants who have infested the education system.

To this end it’s vitally necessary that all collections of the cess amounts are canalised into and solely vested in the proposed National Commission on Education. Coterminously it’s also necessary to provide the public quick and easy access to the books of accounts of the commission which should be required to publish quarterly progress reports detailing ways and means in which cess collections are expended.

A subcontinental consensus which accepts the primacy of quality elementary education as the foundation block of national development has emerged under the shadow of globalisation. This fair wind blowing across the subcontinent offers the recently constituted UPA government a great opportunity to ride it to enduring electoral success.

Questionable tax-and-spend model

The Union government mandated increase in the price of petroleum products on June 14 — a Rs.2 and Re.1 per litre hike in the administered prices of petrol and diesel respectively and Rs.20 per cooking gas cylinder — has been widely hailed as modest and inevitable given that the price of crude oil which averaged $30 per barrel in the international market in fiscal 2003-04 is nudging the $40 barrier currently.

This justification would have some substance if petroleum products in the Indian marketplace were priced in relation to crude oil prices in the global market in the first instance. Yet the ground-level reality is that the sky-high — and rising — prices of petroleum products in the domestic market are completely out of sync with the price of crude oil imported into the country. According to a devastating expose in the Delhi-based daily, Business Standard (June 9), " Indian customers pay more than four times the cost of production whenever they drive into a gas station to fill up their tanks with petrol or diesel... the state owned oil companies in 2002-03 charged a stupendous $110.25 per barrel from customers, but they bought the oil for an average $26 a barrel."

Unfortunately — and this is a sad indicator of the petty spite and jealousies which characterise Indian media — this sensational expose of the blatant rip-off of Indian consumers by the Union government and cartel of government-owned oil companies was wholly ignored by the media and the issue has been allowed to die out.

According to the Business Standard report, on every barrel of oil imported into India, the Union government levies taxes aggregating $42.38 (Rs.1,907) — $24.73 by way of indirect taxes and $17.65 as direct tax. Moreover after paying refining, marketing and other costs, the net profit of the nationalised oil companies averages $19.50 (Rs.877) per barrel. On the other hand the net profit per barrel of the international oil behemoths (the much-reviled seven sisters) which charge American consumers lower petrol and diesel prices are — this is not a typographical error — between $ 0.62-1.38 (Rs.28-62).

It is vitally important to understand that the burden of high petro product prices — especially diesel — falls most heavily upon the rural farmers for whom the price of transporting their produce to market is unconscionably high, often rising to 25-30 percent of their realisations. The extant development model which permits high taxation of vital economic inputs with most government tax revenue streams disappearing into non-productive salaries, pensions, defence and interest payments black holes, needs careful re-examination. In particular, the pricing of petroleum products which heavily impacts business activity and national development is too important an issue to be denied full disclosure.