Fund Schooling, Not Schools

From India Uncut Blog published by Amit Varma

20 September, 2007

Fund Schooling, Not Schools

This is the 32nd installment of my weekly column for Mint, Thinking it Through.

I read a news report a couple of days back that amazed me. It was about a small village named Maji in the Yunnan province of China. The nearest school lies across the Nujiang river. There is no bridge, though a steel cable runs across.

How do the 500 children of this village get to school? The report states, "They fasten themselves to the cable with a metal carabiner and a rope and slide across the 200-metre wide canyon." The youngest child, A Qia, is four years old, and makes the crossing by herself. A five-year-old named A Pu has been quoted as saying, "I used to dream of having a bridge, but then I learned that my dream was too expensive."

My column today is not about bridges—not the kind that go across rivers anyway. It is about education. I never had to cross a canyon using a rope and a metal carabiner to get to school, and if the prospect had come up in my privileged home when I was a kid, I would probably have asked my dad if the metal carabiner was chauffeur-driven. I always took education for granted, the same way I took food for granted, and did not have to worry about where my next meal would come from. Much of India is not so lucky.

Poor people want education for their kids desperately and viscerally. They want their children to have a better life than they did, and they know education is the ticket. And for 60 years they have been cheated. The state has promised them quality education, has collected taxes for that purpose, and has failed.

Studies on the state of education in this country confirm what we see around us. A 2005 study of government schools by Pratham, an NGO, found that 35% of schoolkids surveyed between the ages of seven and 14 failed a reading test involving a simple paragraph, and 41% of them could not subtract or divide. A 2006 study found that half the children who enrol in the first standard drop out before reaching the eighth. A 1999 government report stated that just 53% of the accredited public schools in rural North India were engaged in teaching during surprise visits on school days.

The problem here is not one of funding. The government has thrown enormous amounts of money into education, and continues to do so. The problem here is of choice. Most poor parents across the country have no option but to send their kids to government schools, which, because of the way the incentives are aligned, are often dysfunctional.

The way out of this is to put parents in charge of the money that is supposedly being spent on their children's education. Parents have much more at stake than the state, and are better equipped to take the right decisions for their children. Milton Friedman first proposed a method of enabling this: education vouchers. Under this system, the state does not directly fund schools, but gives school vouchers to parents. Parents use the vouchers to send their kids to a school of their choice, and the school exchanges vouchers in return for cash from the government. As in any other sector, competition then ensures that schools lift their standards and minimize wastage.

This will give optimum results if competition is allowed to flourish. Right now, it isn't. A 2001 study by the Centre for Civil Society (CCS) found that it takes 14 licences from four authorities to open a private school in Delhi, a process that can either take years or much under-the-table money. Schools must conform to a number of unnecessary parameters such as government-trained teachers and playgrounds of a specified size. Also, bizarrely, private schools are not allowed to operate for a profit—while many work around this by setting up trusts and suchlike, others are simply scared away.

But won't private schools be expensive? That's what I would have thought, given the posh urban schools where my friends and I were educated, but the reality is different. Entrepreneurs in the poorest parts of India, in slums and villages, have started cheap schools with bare bones facilities to fulfil what is obviously a raging demand. And studies have shown that, with survival at stake, these schools use money twice as efficiently as government ones.

In 2005, James Tooley and Pauline Dixon did a study that found that 65% of schoolchildren in Hyderabad's slums attended private schools instead of free government ones. And last year, CCS conducted a study (pdf link) that revealed that 14% of households in Delhi earning less than Rs5,000 per month chose to send their kids to a private school. Their studies showed that even the poorest of the poor, from maids to autorickshaw-drivers to peons, expressed their preferences clearly, even when they could barely afford it.

There is one clear reason for the miserable state of education in this country: the state has funded schools, not schooling. For India's sake, that must change.

* * *

I had covered much of this territory in my January Op-Ed in the Wall Street Journal Asia, Why India needs school vouchers. For more on school choice, check out Andrew Coulson's paper, How Markets Affect Quality (pdf link).

Also, my thanks to Shrek for pointing me via email to the China story. I've also received many insights about school choice from chatting with Raj Cherubal of CCS and my friend Gautam Bastian. I hope to continue those conversations.

* * *