Chapter I

INTRODUCTION

1.0.0 Introduction:
Education is a basic component of human development. It captures the
capability of acquiring knowledge, communicating and holds the key to progress for
any inclusionary society. Various studies show that benefits of education include both
economic and social returns; decline in poverty and income inequality; improved
health outcomes and above all- a better quality of life. Education is also the key to
human and economic development. Education enhances one’s claim to a good quality
life ‘entailed in the concept of capabilities’.1
In this chapter, an attempt has been made to create a background which
includes the global commitment for elementary education, historical perspective with
respect to universalisation of elementary education in India, economics of education
whether education is an investment or consumption, financing of education, policies,
recommendations and sources of financing of elementary education in India,
education expenditure as percentage of national gross domestic product, public
expenditure on education, pattern of public spending, factors influencing public sector
financing of education in India, allocation of resources to education. A brief note on
demographic and economic profile of Uttar Pradesh, status of important indicators of
elementary education in Uttar Pradesh and issues and challenges in elementary
education in the state have been included. This chapter also includes the need and
importance of study, statement of the problem, definitions of key terms used in the
study, objectives of the study and delimitations of the study.
1.1.0. Elementary Education: Global Commitment:
The importance and hence the provision of free and compulsory elementary
education is well recognized in the international and national arena. At the
international level, in Article 26 of Universal Declaration of Human Rights,
(UN,1950); Articles 13 and 14 of the International Covenant on Economic, Social and
Cultural Rights (1966) and Article 28 of the Convention on the Rights of the
Child(1989); Human capital revolution around 1960s, World Conference on
Education For All at Jomtien in 1990 and adoption of World Declaration on Education
for All (EFA) in the same conference and its assessment at Dakar in 2000 have well
established the importance of education in the social, economic and political
development of a nation. According to the Convention on the Rights of the Child, the
state must ensure free primary education to all.
During the 1980s, as a consequence of the changing evidence that primary
schooling provided an important means of reducing poverty, many international aid

1
. E. Unterhalter (2003), ‘Education, Capabilities and Social Justice’.
efareport@unesco. org, p.6
 2

agencies increased resources for primary schooling. A watershed for such attitudes
was the World Conference on Education for All, held at Jomtien, Thailand, in 1990,
jointly convened by the World Bank, UNICEF, UNESCO and UNDP. It proposed the
attainment of universal primary education (UPE) by 2000, and five additional
undertakings on other aspects of access to education and the quality of learning were
affirmed. In response to attaining targets of the conference, both the World Bank and
UNICEF announced ambitious increases in their intended support for primary
schooling, which was necessary for attaining the bold targets 1. DFID also signalled its
intention to put increased emphasis on the primary sector, and on adult literacy and
non-formal education – a trend that was to define its approach in coming years. At
Jomtien, government of developing countries endorsed the global commitment to
achieve the ‘education for all’ targets in their own countries; it paved the way for
newly-pledged aid support. India was going to be prominent aid recipient. Of the
global total of some 145 million children of primary-school age who were out of
school in the late 1980s, some 60 percent were residents in four countries - India,
Bangladesh, Pakistan and Nigeria- and up to half of them (some 30-40 million
children) were estimated to be in India. Accordingly, more than one million new
places were needed every year to avoid retrogression in the proportion of children
enrolled. The task of achieving universalisation of primary education in India was the
most daunting task facing any nation2 .
1.2.0 Elementary Education in India: AHistorical Perspective:
In India, although demand for free and compulsory primary education was put
forward by our national leaders as early as 1881, however access and education policy
could not be converted in reality. The concern for universal elementary education in
India dates back to 1882. The British Parliament in 1870 enacted Compulsory
Education Act and later adopted a resolution for ‘Mass Primary Education’ in England
with no overtures to British governed India. This stirred an agitation among the
natives against the dual policy of the Britishers. Dada Bhai Navoroji leading the
agitation made vociferous demand for extending similar legislation to India also. As
an aftermath, Indian Education Commission (1882) was set up to deliberate over the
issue and, in pursuance of commission's guidelines; the administration of elementary
education was transferred to local bodies but for a brief period only (1884-89). This
arrangement did not work, and the next land mark was achieved in 1921 and
education was once again transferred to Indian control; however this did not
work.Another event which assumes great historical importance is the Hartog
Committee Report (1928) which raised the issue of quality for the first time, in policy
debates. It concluded that 'expansion had been gained at the cost of quality' and that

2
. Christopher Colclough, and Keith Lewin. (1993) ‘Educating all the children: strategies for
primary schooling in the South’. Clarendon Press.
 3

'consolidation should be adopted in preference to diffusion' and local control over

primary education was forthwith withdrawn.
It is easy to understand that disadvantaged and poor were offered a 'low-cost'
and 'low-quality' version of education. It was the post war plan of educational
development (1944) popularly known as Sargent Plan, which put forth proposals to
provide free and compulsory basic education to all children in the age group 6-14
years over a period of 40 years (1944-84). The nationalist opinion did not accept this
long period and a committee under the chairmanship of B.G. Kher proposed that this
goal should be achieved in a period of 16 years (1944-60). It was this
recommendation that was eventually incorporated in the constitution of India as a
Directive Principle of State Policy. The Government of India had recognized the
importance of elementary education and made a resolve in the Constitution of India,
“The state shall endeavour to provide within a period of 10 years from the
commencement of the Constitution for free and compulsory education for all children
until they complete the age of 14 years.”
However, the agenda of universalizing primary education remained an
unfinished promise. The National Policy on Education, 1986 and the Programme of
Action in 1992 reiterated the Constitutional Directive that free and compulsory
education of satisfactory quality be provided to children up to the age of 14 years
before the 21st century. This target period however, had been revised time and again.
In large federal structures like that of India, how efficiently and effectively
services are delivered depends on who provides them. Initially, education was the
responsibility of individual states, however in 1976; education was included in the
concurrent list of the constitution and hence both central and state governments have a
claim on the provision of education services.
Till 1980s, the discourse in elementary education in India was centered on
how to expand access and schooling facilities, especially in rural areas. In 1990s, the
discussion moved mainly to issues related to universal enrollment and retention. It’s
only of late that the issues related to quality, learning outcomes and completing
elementary education cycle have been given focus. In 1993, Hon. Supreme Court of
India passed an order granting all children a fundamental right to “free and
compulsory education until they complete the age of fourteen years” and stated that
this right “flows from Article 21(Right to Life). The Government of India, in 1996,
constituted the Saikia Committee of State Education Ministers 3 which recommended
that the “Constitution of India should be amended to make the right to free elementary
education up to the 14 years of age, a fundamental right.” The bill on Elementary
Education as a Fundamental Right was passed in the parliament in its 93 rd
Amendment, and finally Right to Free and Compulsory Education Act 2009 was

3
. Saikia Committee Report, GOI, (1997) ‘Report on Elementary
Education’, Ministry of Human Resource Development, Government of India.
 4

passed. It is evident from the above discussion that commitment to provide free and
compulsory education expressed at the global level and constitutional commitment
toward elementary education in India has definite financial implications. The
investment policies of the central and state governments have been guided by these
concerns and priorities. In this backdrop, economics of education will be discussed in
the following section.
1.3.0 Economics of Education:
Economists consider education as the precondition for economic growth.Ifput
in the framework of classical economics, education is an investment and if in the
Keynesian analysis it is consumption. Dominant thinking on role of education in
economic development is that it is an investment in human capital and that it is
possible to calculate rates of return from investment in education. Blaugh 4 has
concluded that it is the objective with which education is being pursued which
categorises its consumption or investment value. It is consumption, if it is being
sought for its own sake, and it is investment, if it is being taken as an input to increase
future earnings. Musgrave5, while recognizing the consumption aspect of education,
divides it into two parts:
(i) Current consumption-the delights of attending schools.
(ii) Future consumption-the ability of enjoying a fuller life in future permitted
by education.
Once education is taken as investment, it is the maximization of returns from
this investment that determines its contribution to the development of human
resources and therefore to economic growth. The concept of education here is closely
linked with the idea of expenditure in the expectation of monetary gain and since
expenditure on education brings individual monetary gain and also social economic
benefits in the form of spillover effects, it certainly is an investment.Compelling
evidences can be found that investments in human capital have to be undertaken with
both equity and efficiency for them to successfully realize their potential impact on
incomes.
Idea of education as an investment was reinforced with calculating the returns
to education. According to Psacharopolous6
(i) Returns to education in all levels of education are sizable (well over 10
percent).
(ii) Returns are higher for investment in primary schools.

4
. M. Blaugh (1970) “An Introduction to the Economics of
Education”, Allen Lane and Penguin Press, p 20.
5
. R.A. Musgrave (1966) ‘Financing of Education for Economic
Growth’ OECD, Paris, P 32.
6
. G. Psacharopolous (1983) "Education as an Investment. "In ‘Education and Development.
Washington,’ DC: The World Bank, 1983. (Reprinted from Finance & Development 19, no. 3,
1982: 39-42)
 5

This suggests that top priority should be given to investment in primary

education. Psacharopoloushas calculated returns to investment in education at the
global level; rate of return to investment in education is presented as follows:
Table-1.1
Rates of return to investment in education by levels of education, country type and region
(percent)
Social rate of return Private rate of return
Country type and region
Primary Secondary Higher Primary Secondary Higher
Developing
Sub-Saharan Africa 24 18 11 41 27 28
Asia 20 13 12 39 19 20
Latin America 18 13 12 26 17 20
Developed 14 10 9 22 12 12
Source: George Psacharopoulous. “Returns to investment in education: A global update,” World Development
(September 1993): tab.1.
The first three columns of the above table indicate the social rate of return.
This is found by reducing the benefits by the amount of public subsidy for the
individual’s education, because this is part of the investment from the social point of
view (and also by considering pre-tax rather than after-tax incomes). It should be
noted that these social returns are probably understated, because they do not take into
account the externality that educated people confer on others.
During the 1980s, evidence that primary schooling provided an important
means of reducing poverty began to emerge 7. This showed that primary schooling not
only gave better access to formal sector employment for poor households, but that it
provided skills which brought greater productivity in rural and informal work, and
encouraged behavioural change particularly in the areas of health, nutrition and
fertility which allowed a range of other development objectives to be achieved. This
evidence influenced the investment allocation to education and it led to significant
changes in the practice of aid policy; as a result developing country governments gave
renewed emphasis to primary education in their plans and programmes.
It is widely accepted that development of human capital is responsibility of the
government and public expenditure on education should be treated as public
investment.
1.3.1 Financing of Education:
Human development is vital for the economy and the government which acts
as an instrument in providing education bears an important responsibility. Three
important questions which arise in the context of education are: why education is
made compulsory, who should pay for education, and who should provide education?
Some of the reasons cited for making education compulsory are: protection of
children, income redistribution and positive externalities. It is well believed that no
one should be prevented from gaining a minimum level of education because of lack
7
. C. Colclough (1982). 'The impact of primary schooling on economic
development: a review of the evidence', World Development, 19 (3), 167-185. J. Behrman (1990).
Human Resource Led Development? Review of issues and evidence, ILOARTEP, New Delhi.
 6

of parental income that is, the demand for education with respect to income should be
inelastic. Hence, the amount of resource allocated towards education is independent
of who pays for it. It is important to see that who should provide education, has
definite implication for financing of education. There is no universal agreement on the
question of provision.Many parents opt out of the system and provide private
education for their children. Those who go through the state education system have
dearth of choices. They must go through the local school, accept the current
curriculum and whatever educational inputs and practices are currently being
prescribed. These are the parents who cannot avail, affordor purchase alternative
educational opportunity.
There are several arguments which are put forward in favour of state
provision of education: it creates a uniformity of standards, pay and working
conditions will be the uniform across all the schools, the state with all its educational
experts would know better than the child and its parents what educational experience
is in the child’s best interest. Ministries can research new methods and techniques and
institute them efficiently when they seem to be improvements on current practices. It
entails the monopoly of the state over the provisioning of education.
Opponents of monopoly of the state funded education argue for more market
determination. The state could give every child education vouchers to the value of
what the state is providing; which could be used to purchase education in any
educational establishment that accepts the child. This argument is forwarded on the
basis of certain advantages such as: it would give more choice among schools, parents
and their children usually have a better idea of what kind of education is needed and
whether they are getting it at the school currently being attended. This would penalize
schools with poor academic and discipline record. Salaries would not be uniform
across all schools; instead the earnings of schools and the salaries of teachers would
vary with the success of individual schools in attracting students. Although state
financing of education is prevalent in several countries, the value of a state monopoly
in providing free education has been a debatable issue. Arguments in favour of state
monopoly in financing of education have equally strong counter view that there is a
strong need to inject market competition into the provision of free education.
1.4.0 Financing of Education in India:
Education is an investment and crucial for economic development. Providing
free education to children has been a commitment expressed through various policy
documents in India. Policy guidelines decide the modalities of financingof elementary
education. In India, major changes have been witnessed at the policy level in
financing of education as well. Priorities within the education sector have also been
changing. It would be demonstrated in the following sections that elementary
education occupies a place of priority in five year plans in comparison to higher and
technical education. Implementation of plan strategies, in a federal structure; is
 7

dependent upon the central and state government. The central government plays a key
role in the development and monitoring of educational policies and programmes;
while the state government bears the responsibility of implementation of these
policies. It would be useful to take a note of these developments at the policy level,
regarding elementary level.
1.4.1 Major Policies, Recommendations and Interventions:
A brief overview of constitutional and legal recommendations at the national
level for universalisation of elementary education and education policies related to
financing of education is presented below:
Committee/
Education Main Recommendations
Policy
Kher Committee A fixed percentage of Central (10 percent) and Provincial (20
1948-49 percent) revenues should be earmarked for education and that
around 70 percent of the total expenditure on education should
come from the local bodies and provinces
Constitutional The State shall endeavour to provide, within a period of ten years
mandate 1950 from the commencement of this Constitution, for free and
compulsory education to all children until they complete the age
of'14 years.
Kothari  Public expenditure on education should reach the level of 6
Commission percent of GNP by 1986
1964-66  Vocationalization of secondary education
 Strengthening of centres of advanced study and setting up of
small number of major universities of international standard.
National  Investment on education to be gradually increased to reach a
Education level of six percent of national income as early as possible.
Policy  Focus on science, technology and agriculture
1968  Provision of food and effective education at primary level on a
free and compulsory basis.
 Equality in education for rich and poor: common 10+2+3
education structure throughout India and eventually free
schooling upto class 10th.
Secondary  To assume certain direct responsibility for reorganization of
Education secondary education and give financial aid for the purpose.
Commission  Encourage private contribution through tax exemptions
1972 (income tax, property tax and custom duties)
 Industrial education cess should be levied for furtherance of
Technical and vocational education at secondary stage.
 8

42nd  Education transferred to the concurrent list of the constitution

Constitutional
Amendment
National  It shall be ensured that free and compulsory education of
Education satisfactory quality is provided to all children up to 14 years of
Policy age before we enter the twenty first century.
1986, 1992  Resource support for implementing programmes of
educational transformation, reducing disparities,
universalisation of elementary education, adult literacy,
scientific and technological research, etc. will be provided. For
this actual requirements will be computed at regular intervals
and outlay on education will be stepped up so that more than
six percent of national income is allocated from eighth five
year plan.
 While the role and responsibility of the States in regard to
education will remain essentially unchanged, the Central
Government would accept a larger responsibility to reinforce
the national and integrative character of education, to maintain
quality and standards (including those of the teaching
profession at all levels) and to study and monitor the
educational requirements of the country.
 Additional resources to be raised by mobilizing donations,
asking beneficiary communities to maintain school buildings,
and effecting savings through efficient use of resources.
73rd and 74th  Statutory recognition of local governments, and inclusion of
constitutional school education in the list of its responsibilities. Local bodies
amendment 1992 to play an important role in financing and implementing
education programmes.
Unnikrishnan  Every child/citizen of this country has a right to free education
Judgement, 1993 until he completes the age of fourteen years.

Saikia Committee  Need for an expenditure of 6 percent of GNP on education

1996 with 50 percent of it earmarked for primary education. The
committee recommended additional expenditure of Rs. 40000/
crores over next five years on elementary education.
Education  Universal elementary education should be pursued in the
Ministers’ mission mode. It emphasised the need to pursue a holistic and
 9

Resolve, 1998 convergent approach towards UEE.

Tapas Majumdar  Estimated additional fund requirements for UEE – it was in
Committee1999 the range of 137000 crores over the following 10 years.
National  UEE should be pursued in a mission mode with a holistic and
Committee's convergent approach with emphasis on preparation of District
Report on UEE in Elementary Education Plans for UEE. It supported the
the Mission fundamental right of education and desired quick action
Mode: 1999 towards operationlization of the mission mode towards UEE.
2001  Sarva Shiksha Abhiyan the flagship programme for
universalisation of elementary education launched
86th Constitutional  Provide free and compulsory education of children between
Amendment2002 age 6 to 14 years, and provision of early childhood care and
education for children below six years.
National Common  Raise public spending in education to at least 6 percent of the
Minimum GDP with at least half this amount being spent on primary and
Programme of secondary sectors. This will be done in a phased manner.
UPA Government  A Cess of two percent on all central taxes to finance the
2004 commitment to universalize access to quality basic education.
 A national mid-day-meal scheme, funded mainly by the
Central Government, will be introduced in schools.
 The Integrated Child Development Services (ICDS) scheme
will be universalized to provide a functional Anganwadi in
every settlement and ensure full coverage for all children.
 North eastern States will be given special assistance to
upgrade and expand infrastructure.
 Education cess introduced for raising additional financial
resources needed to fulfil government’s commitment to
universalize elementary education.
2005  National Curriculum Framework for school education
formulated.
CABE Committee  The additional financial requirement for universalising
Report secondary education as percent of GDP works out to be
2006 around 0.18 % in 2003-04 and to 0.86 % in 2019-20.
 With 6 percent of GDP earmarked for education, the shares of
elementary, secondary and higher secondary (as % of GDP)
will be 3, 2 and 1 respectively.
RTE Act 2009  The Right of Children to Free and Compulsory Education Act
 10

enacted. The RTE Act 2009 came into force from 1-4-2010.
Source: From MHRD website: Relevant committee reports. As presented in Public Expenditure on Education in
India: Recent Trends and Outcomes: Anuradha De and Tanuka Endow, RECOUP Working Paper No.18,
Collaborative Research and Dissemination (CORD), India. NCF 2005, RTE Act 2009

1.4.2. Sources of Financing of Elementary Education:

In India, there are various sources of state financing of education, these are:
annual and five year plans, education cess and external aid. Now these sources would
be discussed.
1.4.3 Education in the Scheme of Five Year Plans in India:
Ever since the commencement of economic planning in 1951-52, the
education sector has remained the priority sector of the central as well as the state
governments. However, within the education sector, priorities have been changing. In
the first five year plan, top priority was given to elementary education, keeping the
secondary education at the back burner, the situation changed during the second and
third five year plans, when the higher education and technical education got
prominence, the pattern of public expenditure remained almost same during fourth,
fifth, sixth and seventh Five Year Plan. The primary education again came into
prominence during eighth, ninth, tenth and eleventh Five Year Plans because of high
spending on programmes like the mid-day meal scheme. A brief description of plan
priorities8 with respect to education is as follows:
 The First Five Year Plan (1951-56) emphasized the universalisation of primary
education and strengthening of the secondary. It aimed to achieve 60%
enrollment of those aged up to 11 years - up from 40% in 1950.
 The second Five Year Plan laid stress on basic education, expansion of
elementary education, and diversification of secondary education. The socialist
pattern of society assumes widespread participation of the people in all activities
and constructive leadership at various levels. In a period of intensive
development, however, resources to be allocated for education and the targets to
be achieved are among the difficult issues which have to be faced in drawing up a
plan for economic and social development.”9
 Third Five year Plan: The third plan emphasized the requirements of trained
manpower for the country. It was towards the end of third plan that a need was
felt to review the educational system with a view to initiating a more rational
effort at educational reconstruction. Consequently the education commission
(1964-66) was appointed to advise ‘on the national pattern of education and on

8
. Planning Commission, Government of India, Five Year Plan
Documents.
9
. Planning Commission, Government of India, Second Five year Plan,
P 500.
 11

the general principles for development of education at all stages and in all
respects’.
In the first and subsequent five year plans, the government provided
development finance to the States through the Planning Commission, to help meet the
capital needs of their education systems. However, by the mid-1970s, the education
sector had expanded considerably and the states found it increasingly difficult to meet
even the recurrent expenditures of the sector.
 Fourth Five Year Plan: Incorporating the recommendations of the Education
Commission, the Fourth Five year plan aimed at providing free and compulsory
education up to the age of 14. It was stated that “Facilities for universal
elementary education are pre-requisite for equality of opportunity.”
 The Fifth Five Year Plan laid emphasis on ensuring equality of opportunities as
part of the overall plan of ensuring social justice.
 The Sixth Five Year Plan (1978-83), which was abandoned in 1980, declared a
freeze on higher education. It forcefully argued for higher allocation of resources
to lower levels of education. The sixth five year plan (1980-85) (again launched
in 1980) assigned highest priority to the programme of universalisation of
elementary education and proposed a ten year strategy to realize the
constitutional directive. It was proposed that universalisation of primary
education (for the age group 6-11) would be achieved by the end of the plan
(1985) and universalisation of upper primary level (11-14) by 1990. The plan
stated that the approach was for all the states, which were yet to achieve
universalisation of primary education up to the age of 11 years in the next five
years and in case of other states, to achieve substantial increase in the enrollment
at the upper primary stage (classes 6-8) of children up to 14 years so as to move
towards the goal as fast as possible.
 The Seventh Five Year Plan (1985-90) envisages overriding priority to realising
universalisation of elementary education for children in the age-group 6-14 years
by 1990; which will continue to be part of the Minimum Needs Programme. The
emphasis will shift from mere enrollment to retention of pupils in schools and to
the attainment by them of basic elements of learning. The objective is sought to
be achieved through a combination of formal and non-formal methods, focusing
sharply on the needs of girls and of children belonging to the economically and
socially weaker sections.
 The Eighth Five Year Plan (1992-97): Universalisation of elementary education,
eradication of illiteracy in the age group of 15 to 35 and strengthening of
vocational education so as to relate it to the emerging needs in the urban and rural
settings were the major thrust areas. It stated that within the overall school-age
population, the focus would be on girls, who account for two-thirds of target, and
among adults the focus would be on women's literacy which has a beneficial
 12

impact on children's literacy as well as other national objectives like population

control and family welfare. So far as UEE is concerned, the NPE stress on
retention, participation and achievement, rather than mere enrollment, would be
reinforced. However, special attention would be paid to increase retention,
improvement of quality, specification of minimum levels of learning (MLL) and
their attainment by the learners.
 The Ninth Five Year Plan (1997-2002): Primary education was a major thrust
area during the 9th Plan. It was estimated that there would be an additional
enrollment of 2.5 crore children at the lower primary stage and 1.6 crore children
at the upper primary level. It was targeted that 75000 additional rooms /buildings
will be constructed at the elementary stage. 2, 36,000 teachers will be appointed
additionally at the lower primary level and 1, 75,000 teachers at the upper
primary level. Some other states (like Uttar Pradesh, Bihar, Madhya Pradesh,
Orissa and Rajasthan) had to go a long way. There were equity concerns like low
enrollment of girls, educational requirements of special need groups, like
SCs/STs, OBCs, minorities, disabled children, working children, children from
disadvantaged locations like deserts, hilly, coastal and deep forest areas, children
from migratory families etc.
 The Tenth Five Year Plan (2002-2007): In the elementary education sector, the
Sarva Shiksha Abhiyan was in place with clear focus and medium-term goals.
The Tenth Plan targets in respect to elementary education were: All children in
the 6-14 age groups should have access to primary schools, upper primary
schools or their alternatives within a walking distance of one Km and three Kms.
respectively. There should be one upper primary school for every two primary
schools. All schools should have buildings, toilets, drinking water, electricity,
playgrounds, blackboards and other basic facilities. There must be provision of
one classroom for every teacher at the elementary stage. Enrollment of all
children in schools or alternative arrangements by 2003. All children to complete
five years of primary schooling by 2007, Universal retention in the primary stage
by 2007. Dropout rate to be reduced to less than 10 percent for grades VI-VIII by
2007. Improve the quality of education in all respects (content and process) to
ensure reasonable learning outcomes at the elementary level, especially in
literacy, numeracy and in life skills. Bridge all gender and social gaps in
enrollment, retention and learning achievement in the primary stage by 2007 and
reduce the gap to 5 percent in the upper primary stage by 2007. The plan
document states: “The Central Government has introduced the 93rd Constitution
Amendment Bill, 2001 for enacting the Fundamental Right to Free and
Compulsory Education for children in the age group of 6-14 years. The enactment
of a Central legislation would result in adequate provisioning of public resources
 13

for improving the accessibility of children to schools, quality up-gradation, and

mitigating the costs of school attendance.”
Although the Tenth Five Year Plan recommended that the outlay by the central
government on SSA during 2002-03 to 2006-07 should amount to Rs 17000 crore, it
remained short of funds till 2004-05. The situation eased only when it received
combined external support from the World Bank, DFID and European Commission
committing Rs 4700 crore and a further Rs. 5000 crores arising from the imposition of
two percent Education Cess on all central taxes.
 The Eleventh Five-Year Plan (2007–11): Plan focuses on education with
following objectives: Reduce dropout rates of children from elementary school
from 52.2% in 2003-04 to 20% by 2011-12, Develop minimum standards of
educational attainment in elementary school, and by regular testing monitor
effectiveness of education to ensure quality, increase literacy rate for persons of
age 7 years or above to 85%, lower gender gap in literacy to 10 percentage point,
increase the percentage of each cohort going to higher education from the present
10% to 15% by the end of the plan.
 Twelfth Five Year Plan (2012-17): the twelfth five year plan approach paper
focuses on universalisation of elementary educations: to achieve UEE in a
planned and time bound manner, a much higher level of funding and also better
targeting of uncovered and under covered population will be necessary. Isolated
habitations, educationally backward blocks and districts, reaching out to out of
school children and children with special needs and street children shall require
special attention. Innovative ways would have to be found to address resource
constraints in implementing RTE.
The twelfth five year plan has total gross budgetary support of Rs 3,43,028
crores to school education and literacy, out of this, share for SSA is Rs. 1,92,726
crores, for MDM, Rs. 90,155 crores, for RMSA Rs. 27,466 crores and for other
components is Rs. 32,681 crores. The plan emphasises that quality as mandated under
the RTE shall have to be realised in tangible terms. Ensure that a minimum set of
cognitive skills are acquired by all children. Implementation of the RTE would have
to be monitored in terms of learning outcomes. Thus, quality issues and determinants
thereof such as availability of trained teachers, good curriculum and innovative
pedagogy that impact upon learning outcomes of the children will have to be ensured.
Teacher absenteeism and lack of accountability has to be addressed by greater
community involvement in management and ownership of schools. Ways will have to
be found to incentivise the States for community involvement in school management.
Fill up the vacancies of teachers to meet the RTE norms on pupil-teacher ratio. Pre-
service and in-service training of teachers has to be mounted on a mission mode.
Possibilities will have to be explored for involving private sector more meaningfully
to achieve the objective of expansion and quality improvement. Barriers in entry to
 14

private schools for children from disadvantaged households need to be re-examined.

While expanding the coverage of MDM scheme, fiscal incentives like tax exemptions
may perhaps, be considered to encourage private participation in the scheme. Several
other measures are required to enhance provision and improve quality of elementary
education. These would include -
 Integration of pre-school education into schooling especially in the
government schools. Funding for pre-school children under ECCE,
 Stepping up provision of infrastructure through convergence with schemes
like MGNREGA.
 Strengthening of monitoring and evaluation mechanism including social
audit for SSA and MDM scheme with web-based monitoring for
transparency and periodic and sustained third party evaluation.
Above description shows the focus given to elementary education in five year
plans. The link between policy statements and their implementations can be seen
clearly.
As a result of five year plan priorities, during 1950-51 and 2012-13, the
number of primary schools in India increased from about 210,000 to 853870. Number
of schools imparting primary education is 577832 and elementary education is
1431702 in India.Enrollment at primary and upper primary level has increased: 134.8
million at primary and 64.9 million at upper primary level. Gross enrollment rates in
primary education increased from 81.9 percent in 1993-94 to 105.98percent in 2012-
13 and that in upper primary education, from 54.2 percent to 82.5percent. Major
improvement was in the education of girls, rural and poor children. Not only did
GERs rise overall, but also the gap between rural and urban enrollment narrowed, as
did the gender gap and the expenditure gap. NER at primary and upper primary level
being 90.8 percent and 64.2 percent respectively has been a cause of concern.
In 1966, the Kothari Commission had recommended that the public
expenditure on education should be of 6 percent of GNP by 1986. Subsequently in
1996, the Saikia Committee examined the financialimplications of the proposal to
make free and compulsory education a fundamental right. It reiterated the need for an
 15

expenditure of 6 percent of GNP on education with 50 percent of it earmarked for

primary education (an additional finance of Rs.40000 crores in next five years). In
1999, an Expert Group headed by Tapas Majumdar, made estimates for additional
fund requirements for UEE – it was in the range of 137000 crores over the following
10 years10. National Common Minimum Programme and CABE committee also had
similar recommendations.These recommendations repeatedly emphasize the need for
higher investment in education. However, policy statements could not take shape in
reality; actual expenditures in the education sector have fallen far short of these
targets.
While the central government has been increasing expenditure on elementary
education, the overall fiscal problems of state governments have been severe in
educationally backward states of India, and these states happen to be home of three
fourths of out of school children. The decline in education expenditure in relation to
national GDP that occurred through much of the 1990s was accounted for by the
sharp decline in state expenditure actually more than offsetting the increasing trend in
central expenditure on elementary education.11
Another significant development in the field of financing of elementary
education has been the advent of centrally sponsored schemes in education sector in
particular and in social sector in general. CSSs were a mechanism devised at the
central government level whereby schemes were formulated with monitorable targets
and adequate provision of funds in the union budget. Responsibility of
implementation was that of the state government. Objectives, strategy and
methodology of implementation were prescribed and funds were released to the states
based on their requirements and demand. Some prominent CSSin elementary
education, designed in the nineties were Operation Blackboard (OBB), Non-formal
Education (NFE) and Teacher Education (TE), Midday Meal (MDM), Scheme for
Free education for girls and District Primary Education Programme (DPEP),
Integrated Education of Disabled Children (IEDC) for both elementary and secondary
education. The earlier schemes were targeted towards improving school infrastructure.
The later schemes were incentive based. NFE was launched in 1977-78 and it aimed
at bringing out of school children in the age group 6-14 years into the fold of
education. OBBscheme was launched in 1987-88 for improving human and physical
resources in primary schools of the country and was extended in 1993-94. The
Teacher Education scheme, introduced in 1987 has now been revamped with more
emphasis on improving quality of teacher training institutions in partnership with the
States.
10
. Tapas Majumdar Committee Report, GOI, (1999)
11
. Ranjana Srivastava, (2005) ‘Review of Elementary Education in the Selected
states’ in Mehrotra, S., Panchamukhi, P., Srivastava, R & Srivastava, Ravi (eds.) (2005).
Universalizing Elementary Education in India: Uncaging the Tiger Economy, New Delhi: Oxford
University Press.
 16

1.4.4 Education Cess:

To meet the huge financial resource requirement of UEE, the central
government implemented an education cess of two percent on all central taxes in
2004.The central government established the ‘Prathmik Shiksha Kosh’ for the receipts
from education cess, to be maintained by the Department of Elementary Education
and Literacy (MHRD). The receipts in the fund were to be utilized solely for
elementary education, including Sarva Shiksha Abhiyan and Mid-day Meal Scheme.
The fund is non-lapsable in nature and balances remaining un-utilised in a year will be
available on a rollover basis for the said purposes. So it has the advantage of being an
additional supplementary resource for financing elementary education and does not
cut into existing sources of finance. However, many economists oppose the concept of
earmarking funds. World Bank and IMF are two main international organizations
opposed to using such earmarked extra-budgetary funds as such finds can lead to loss
of control on aggregate expenditure, distort resource allocation, and also pose a risk
that the sector for which the funds are earmarked may not be the final recipient, since
government funds are fungible. But, given that earmarking funds has worked for
many Asian, Latin American and African countries, this measure can be used for India
provided specific safe-guards are built into the spending mechanism12.
Government at central and state level has been under pressure to limit and
reduce the fiscal deficits and it has aggravated resource shortage. The central
government has restricted transfers to the states. The states in turn have a low tax base
and the burden of meeting the non-plan costs. There is little scope in increasing tax
revenue, so the State’s dependence on central government to meet the education
expenditure has been increasing.
1.4.5 External Aid:
In earlier years in India, education was financed primarily by domestic
resources; the limited foreign aid available was focused on technical and vocational
education. External funding in education in India started from the 1990s onwards, and
especially directed towards elementary education. This shift was possibly because of
the global awareness regarding the adverse impacts of structural adjustment policies
on social sectors like education and the launching of a compensatory social safety net
programme funded by loans from World Bank/IMF. Following the internationally
declared objective of achieving “Education for All” in the Jomtien Conference, the
international aid agencies were keen to increase their aid commitments to primary
education13.However, in India external aid as a proportion of aggregate public
expenditure on education appears to be quite low. In 2002-03, when external aid was
12
. Mehrotra, (2005) ‘Governance and Basic Social Services: Ensuring Accountability through
Deep Democratic Decentralisation’, Journal of International Development.
13
. S. Mehrotra., P.R. Panchamukhi, R Srivastava, and Ranjana Srivastava (eds.) (2005).
‘Universalizing elementary education in India: uncaging the tiger economy’, New Delhi: Oxford
University Press.
 17

at its maximum level, it was equivalent only to 1.5 percent of education expenditure
and 3percent of expenditure on elementary education. However, it was even lower in
the pre-1990’s reform period. As pointed out by Tilak 14 foreign aid was felt necessary
only in the case of foreign-exchange-intensive, capital-intensive sectors and for those
sectors in need of foreign expertise. Education in India in general and school
education in particular do not fall in any of these categories.
Budgetary allocation on elementary education under different plan periods and
the external aid during the respective periods are presented in the following table:

Table-1.2
Allocation on Elementary Education during different Plans, (Rs. in crores)
Five Year Plan Total Allocation External Aid
7th Plan (1987-1992) 658.49 8.62
8th Plan (1993-1997) 4006.55 613.62
9th Plan (1998-2002) 14754 4093
10th Plan (2003-2007) 28750 4904*
11th Plan (2008-2012) 1,10,854
th
12 Plan (2013-2017) 3,43,028
Source: Annual Financial Statistics, GOI, relevant years
*billion US Dollars
 Budget of Rs. 3, 43,028 crores to school education and literacy, out of this, share for SSA is Rs. 1,
92,726crores, for MDM, Rs. 90,155 crores, for RMSA Rs. 27,466 crores and for other components is
Rs. 32,681 crores.
Contribution of foreign aid as a proportion of central government plan
expenditure on education increased from 5 percent in 1993-94 to 20 percent in 2000-
01. For elementary education – it had increased from 10 percent to 35 percent. There
is however a dip in the proportion in mid-nineties15. There have been three broad
historical phases with regards to both volume and modes of external assistance
towards education16. These will now be briefly discussed.
1.4.5.1 The First Phase (Up to 1990):
The first phase is marked by the increasing aid to elementary education.
During the fifth five year plan (1974-78), elementary education was given priority,
through the constitutional amendment of 1976; education was included in the
Concurrent List, it enabled the central government to contribute more
towardsfinancing of education in the states. In the seventh plan period, number of
strategic developments in education took place and for the first time, foreign aid
towards elementary education started flowing in. In 1986, the National Policy on
14
. J. B.G. Tilak, (2008). ‘Political Economy of external aid for
education in India’, Journal of Asian Public Policy 1/1, 32-51.
15
. ibid.
16
. Christopher Colclough and Anuradha De (2010) ‘The Impact of Aid
on Education Policy in India RECOUP Working Paper No. 27.
 18

Education (NPE) brought a new emphasis on elementary education, stressing the

needs for universal enrollment, and substantial improvements in the quality of
education. As part of the implementation of NPE, a new centrally sponsored scheme
Operation Blackboard was launched, scheme for Non-Formal Education was revised
and new schemes for teacher education were also begun. These developments
formally signalled a change in the role of GOI in school education, taking “a larger
responsibility to reinforce the national and integrative character of education, to
maintain quality and standards and to study and monitor the educational requirements
of the country.”17External assistance in primary education was accepted for the first
time in India for specific projects which were aimed at extending coverage and
quality of primary education.
Pilot projects, with modest amounts of resources, were initially included in
state plans, but later projects were financed by transfers from GOI as part of the CSS.
The first phase began with Andhra Pradesh Primary Education Project (APEP 1986)
funded by British Overseas Development assistance and some non-formal education
projects funded by UNICEF. The other major externally aided projects were the
Swedish International Development agency (SIDA) assisted Rajasthan Shiksha Karmi
Project (1987), Mahila Samakhya Programme in Uttar Pradesh, Gujarat and
Karnataka states (1988-90) with Dutch International aid agency assistance, Bihar
Education Project (1990) supported by UNICEF. Initial projects were part of state
plans but the later projects were part of the centrally sponsored schemes.
External assistance to education started flowing in before a framework for it
could be formulated. There was no integrated framework for implementing the
external aid coming from several donors for several projects. Thus, District Primary
Education Programme (DPEP) was started as an umbrella programme in 1994, for all
externally aided projects in primary education.
1.4.5.2 Second phase (1990 - 2002):
During this phase, there was a decline in foreign aid to elementary education
and focus was shifted from small projects to large scale programme support. During
the early 1990s, important macroeconomic changes occurred in India: (i) India had
developed an unsustainably large gap between public expenditures and
revenuesby1990-91,which led to sharp reductions in public expenditures over the next
two years, consequently expenditure in the social sector was reduced. (ii) in1992,
through constitutional amendments, decentralization of governance especially school
management responsibilities were transferred to local bodies at district, block and
villagelevels.
The eighth five year plan documentprovided specific conditions for the
acceptability of international aid. In this background, financial resources had to
provide additional capacity beyond what was already being funded, and to support

17
. GOI 1985-90: Vol. II, chapter 10.
 19

innovative projects emphasising community participation, widening access and

improving quality as well.18These developments defined the changing role of aid in
elementary education in India. In the following years, a substantial increase was
witnessed in the volume of external aid to education in India. Some of the important
projects were: Bihar Education Project (1990) supported by UNICEF, the Lok
Jumbish project (1992) in Rajasthan supported by SIDA and the Uttar Pradesh-
BasicEducation Project (1991) supported by the World Bank. In addition, small
amounts of foreign assistance from UNFPA and UNICEF were made available for
specificproject components of different institutions.19
Strategically, the new set of externally aided projects was based upon a more
comprehensive strategy than the earlier generation. It is interesting to note that
although the World Bank was keen to provide funds for primary education since 1987,
at the central level it took some time to accept the Bank as a major donor for
elementary education. The World Bank was clear about IDA support but for only aid
for primary education. In 1991, an IDA loan to support basic education was agreed for
5 districts in Uttar Pradesh. However it took almost two years for the Bank, the GOI
and the Government of UP to agree on the project design.20
Prior to 1992, some states had been identified as educationally backward and
had for that reason received central assistance under CSS. But examination of district-
level data showed that the inter-district variations were more significant than the inter-
state variations. States were too large and varied to serve as homogeneous units for
educational planning purposes, accordingly, in the eighth plan document; districts
were divided into four categories, each with different plan strategies.
The government of India launched the District Primary Education Programme
(DPEP) in 1993-94, the first education project funded from multiple donors (World
Bank, EU, DFID, UNICEF and the Netherlands supporting the GOI contribution).
The central and state governments were to finance DPEP in the ratio 85:15. The
resulting programme, initially covered 42 districts across 7 states. In 1997, under a
second phase of the programme, coverage expanded from 42 to 117 districts and, by
2000 some 219 districts in 15 states were included in the programme. In line with the
directions of the eighth plan, DPEP became the first externally aided project with
requirements for ‘additionality’ being imposed: participating states were required to
maintain expenditures on elementary education at least at 1991-92 real values, in
order to be eligible for foreign funds.21 This condition aimed to ensure that aid would

18
. GOI 1992-97: vol. 2, section 11.5.30
19
. V. Ramchandran (1999) ‘External Aid in Elementary Education: A
double Edged Sword’, Economic and Political Weekly, December 11, New Delhi.
20
Christopher Colclough and Anuradha De (2010) ‘The Impact of Aid on Education Policy in
India’, RECOUP Working Paper No. 27, page 12.
21
. N.V. Varghese, (1994). ‘District Primary Education Programme: The Logic and the Logistics’.
Journal of Educational Planning and Administration, 6 (4), 449-455.
 20

not substitute for state budgetary allocations. During its final phase, DPEP covered
some 219 of 575 Indian districts.
In 2003, India introduced a change in policy by short-listing only six
countries from which it would accept bilateral aid (US, UK, EC, Japan, Russia and
Germany). In addition, it decided not to accept any tied aid. At the same time there
were changes in the international context of foreign aid. The lack of effectiveness of
aid in promoting development in the recipient countries in the “Structural Adjustment
era”22 led to the donor countries rethinking on the aid modalities. “New Aid
Modalities” were advocated, whereby the focus was placed upon the encouragement
of recipient country “ownership,” aided by a sector-wide approach (SWA) rather than
the earlier project-based approach to development. The Fast Track Initiative (FTI), a
new aid modality, had the achievement of the education MDGs (Millennium
Development Goals) as its frame of reference. Countries implementing policy and
institutional reforms, and with the means to prove their performance record, are
rewarded with additional aid and better coordinated external assistance for their
educational plans23. The impact of these developments showed in the reduced number
of donors in Indian elementary education. The World Bank, DFID and European
Commission were the three donors who continued funding education.
1.4.5.3 The third phase (from 2002):
The third phase is characterized by stronger harmonization and fewer donors.
The regular evaluations of projects part-funded by aid, provided many lessons that
informed the design of the GOI’s initiative Sarva Shiksha Abhiyan (SSA), launched in
2001-02, which retained most of the DPEP goals. Coverage, however, was extended
to all districts of India and it aimed to universalize not only primary classes 1-5, but
also elementary education i.e. classes 1-8. Whereas the basic DPEP unit for planning
was the district, in SSA focused on habitation based planning. Thus, notions of
decentralized planning and implementation were central to its design. The SSA
programme was designed subsuming all existing schemes in elementary education,
including not only DPEP but also other externally-aided programmes. It’s financing,
however, was not to prove straightforward. Aid as a share of total education
expenditure peaked in 2001-02 and subsequently decreased.
The GOI launched SSA (with project cost of the $ 3.5 billion) without any
financing from external donors, resources although insufficient, were mobilised from
internal budgetary sources and, in 2004 it requested the World Bank (IDA), DFID and
EC for assistance. Funds thus generated were passed on to the state as a grant, GOI
22
. Gustav Ranis (2006) ‘Ownership, Dutch Disease, and the World
Bank’. In ‘Globalization and the Nation State: The Impact of the IMF and the World Bank’, edited
by G. Ranis, J. R. Vreeland and S. Kosack. London and New York: Routledge.
23
. R. Subrahmanian (2004) ‘The Politics of Resourcing Education: A Review of New Aid
Modalities from a Gender Perspective’. Paper presented at the ‘Beyond Access’ Seminar Series,
Oxford, April 2004.
 21

took responsibility for funding 45% ($1.58 bn.) and the states 25% ($875 m.) of the
programme development and recurrent costs over the tenth plan period. In 2004, an
annual education cess of 2% to be used for elementary education was added as a
supplement to all existing taxes. At the national level, these two sources of finance
proved to be very fruitful for SSA. The funds from the education cess allowed the
GOI to provide much higher allocations than anticipated, and the States contributed
their share. A second phase of support for SSA was agreed in 2007 between GOI and
its three main development partners. The framework for cooperation between them
remained essentially the same.
An account of estimates for foreign aid to elementary education in India is
being presented below-
Table-1.3
Estimates of Foreign Aid to Elementary Education in India
Rs. in Crore
Budget estimates for externally
Year External aid to CSS External aid in
aided education projects in
in elementary education elementary education
central plan
1 2 3 4
1992-93 4.00
1993-94 9.76 37
1994-95 103.33 122
1995-96 215.94 228
1996-97 201.62 219
1997-98 561.89 610
1998-99 585.3 597
1999-00 808.25 729
2000-01 948
2001-02 1210 1212.34
2002-03 1285 1383.09
2003-04 960 939.59
2004-05 683 683.45
2005-06 631 1996.5
2006-07 126 1647
2007-08 114 1677.6
2008-09 1584
Source: Col.(2) Bashir (2000), Col (3) Tilak (2008), Col (4) Expenditure budgets of GOI, as reported in
Anuradha De and Tanuka Endow,RECOUP Working Paper No.18, Public Expenditure on Education in
India: Recent Trends and Outcomes Collaborative Research and Dissemination (CORD), India

It is clear from the above discussion and the above table that this phase (1990 -
2002) of external aid to elementary education was marked with a decline in foreign
aid to elementary education. However, at the central level, launch of SSA provided
additional resources for elementary education to states.
There are various aspects that decide the expenditure levels of education.
Under the pressure to minimise the fiscal deficits, while some of the states in India
have resorted to cost-effective alternatives to teacher appointments,some of the states
continued with appointment of regular teachers. As states have different levels of
revenue generating capacities, it led to a rethinking on the strategies of making more
funds available to the states, especially for education. It was recognised that there is
intense need to transfer substantial funds from central to state governments. In this
 22

background, various Centrally Sponsored Schemes (CSS) were brought in with the
purpose of helping the states with additional funds. It was rooted in NPE 1986 as well
which heralded an era of gradual expansion of education with a targeted assistance to
primary education. The investment in elementary education by the central and state
governments showed a significant increasing trend. Government of India through
various CSS has demonstrated its commitment to elementary education by increasing
its financing ten-fold between 1993 and 2003. State budgets as well as central
government’s spending for elementary education increased manifold post 2002
mainly on account of the allocations for SSA and Mid-day Meal Scheme.
Expenditure on educationincreased during the 1980s at a reasonably high rate
particularly compared to the preceding two decades, both at public and private level.
Public expenditures on education, both as a percentage of GDP and as a percentage of
total government expenditure, have risen since 1950-1951. In the early years, up to
1976, constitutionally, elementary education was a state subject. As a result, the
central government spending on elementary education was under 10 percent of total
education expenditure of the Central government. However, with the shift in focus to
elementary education and the introduction of many centrally sponsored schemes, the
central government expenditure on elementary education has increased to 43 percent.
CSSs have become the driving force behind the elementary education development
reform by the states. Most states increased spending on elementary education between
1990 and 2000, except a few like Gujarat and Kerala, where the expenditure on
elementary education was already quite satisfactory.
Summarily, intra-sectoral resource allocation has shifted in the years in favour
of elementary education, which is pro-poor. Nonetheless, the growth in expenditure
on elementary education took place along with a rise in the expenditures on other
subsectors of education such as secondary and higher education sectors.
Since, studying the trends and its reasons for private spending on education in
India would require a separate thesis in itself; in this study, only public component of
spending on education will be discussed in the forthcoming sub-sections.
1.5.0 Public Expenditure on Education:
In the decade of nineties about 90 percent of enrollment at elementary level
happened in public schools, while private schools (aided and unaided, recognized and
unrecognized), accounted for the rest 10 percent. Government-aided private schools
receive a share of the government expenditure on education through a system of
grants-in-aid whereby the schools are managed by their own boards, be that private
bodies, trusts, missionaries, NGOs and public finance covers teacher salaries and
various operating costs of these private aided institutions. However, private unaided
schools receive no recurrent public assistance. Public expenditure on education,
therefore, covers not only public schools, but also government-aided private schools.
 23

Increasingly in urban areas, the numbers and proportion of children going to private
schools are growing, though as shares of the total, these figures are small.
Financing of education in India is a complex process. The ability of the state
governments to finance education depends heavily on fiscal transfers from the Central
government. In this context, extension of educational facilities is closely related to the
fiscal relationship between the Central Government and the states. In financing of
education, there are many players involved, both in its allocation and in its utilization-
these include several ministries in the central government and the state governments,
local bodies, private agencies and foreign donors. With several players involved in
financing of education and various channels of transfer of funds, estimating total
expenditure becomes quite complicated. Firstly it is difficult to ascertain the
expenditure incurred on education directly because the expenditure on education by
Department of Education is given under several major heads of account which
includes ‘general education’, ‘technical education’, ‘sports and youth services’ and
‘art and culture’. So expenditure on specific heads has to be separated to estimate
expenditure on education department. Secondly, this expenditure does not take into
account expenditure on education by other departments. Both at the central and the
state government’s level, quite a large amount of expenditure on education is incurred
by departments other than the department of education, these departments include
several ministries/ departments like Department of Women and Child Welfare,
Ministry of Tribal Affairs and Ministry of Social Justice and Empowerment.
1.6.0 The pattern of public spending:
There is no systematic pattern across states in the level of resource
mobilization for education24. Srivastava25 has shown that on average, educationally
poor states show a higher level of fiscal effort compared to educationally developed
states. While Government of India has been increasing expenditure on elementary
education, the overall fiscal problems of state governments are severe- especially in
the states that account for three fourths of the country’s children which are out of
school. Since the state governments account for around 90% of total education
expenditure in the country, there is little likelihood of elementary education receiving
the priority it deserves nationally unless the fiscal problem at the state level is
resolved. The decline in education expenditure in relation to national GDP that
occurred through much of the 1990s was accounted for by the sharp decline in state

24
. J.B.G. Tilak, and R.M. Sudarshan, (2000) ‘Private Schooling in
India’ Paper Prepared under the Research Programme in Human Development of the NCAER,
New Delhi.
25
. Srivastava (2005) ‘Public expenditure on Elementary Education’ in Mehrotra, S.,
Panchamukhi, P., R. Srivastava, & Srivastava, Ravi (eds.) (2005). ‘Universalizing Elementary
Education in India: Uncaging the Tiger Economy’, New Delhi: Oxford University Press.
 24

expenditure actually more than offsetting the increasing trend in central expenditure
on elementary education.26
Public expenditure on education in India is marked with low priority of
education during the nineties. In constant price terms, educational expenditure
increased during the second half of the 1990s, but it stagnated from the year 2000-01
onwards. The ratio of education expenditure to GDP had declined from more than 4
percent to 3.5 percent from 1990 to mid-nineties and recovered to over 4 percent
around the year 2000. But since that date it has been decreasing again. So, at the
macro-level, education has been struggling to maintain its importance. Second
important feature of financing of education is changing priorities within education
sector. With declining aggregate investment in education, it is seen that elementary
education has been gaining relative importance since the mid-nineties. Another
relevant feature of financing of education is increasing role of the central government
in planning of elementaryeducation.Although the state governments play a major role
in financing of education in India however the bulk of these expenses are on non-plan
categories like salaries for teachers and repairs and maintenance costs.
Through the analysis of public sector financing of education in India, factors
that influence elementary education emerge. Now, some of these factors would be
discussed.
1.7.0 Factors Influencing Public Sector Financing of Education in India:
Some of the factors that have influenced the financing of education in India
are: underinvestment in education, budgetary imbalance arising from resource sharing
mechanisms and fiscal crisis following structural adjustment. These factors are
discussed as below:
 There has been underinvestment in education. Expenditure on education as a
percentage of GDP has varied between three to four percent over the period 1990-
91 to 2000-01. This is considerably short of the target of six percent of GNP. Since
2000-01, there has been a decline in absolute expenditure in real terms.
 There is an in-built imbalance between revenue and expenditure of the state
governments in the existing resource sharing system. In the revenue sharing
design, most of the residual powers accrue to the central government. Centralized
planning in a mixed economy framework and nationalization of major financial
institutions had led to concentration of financial powers in the hands of the Centre.
So the states have limited options of generating additional revenue and have to
depend on transfers from the Centre for many of its routine expenditures.
 Implementation of the structural adjustment programme and accompanying
economic reforms adopted at that time, amounted for both Centre and the States; a
26
. Ranjana Srivastava (2005) ‘Review of Elementary Education in the Selected
States’ in Mehrotra, S., Panchamukhi, P., Srivastava, R &Srivastava, Ravi (eds.) (2005).
‘Universalizing Elementary Education in India: Uncaging the Tiger Economy’, New Delhi:
Oxford University Press.
 25

fiscal crisis. States were told to curtail expenditure and generate additional
revenue. Despite measures to control the size of the fiscal deficit, after an initial
decline, it started increasing in the later part of the nineties. Implementation of
recommendations of Fifth Pay Commission had adverse effect on this. In addition
to several steps that have been taken by the central and state governments towards
fiscal reforms, to meet fund shortages, both the centre and the states turned to
increased borrowing in the 1990s. Though this worked in meeting short term
shortages, it led to higher interest payment burden.
As mentioned earlier, in order to limit revenue deficits centre and states’
budgets led to limiting of public expenditure on elementary education in the 1990s. As
a result of pay revisions, there were huge hikes in salary bills; from 1995-96 to 1999-
2000 the average annual increase in per employee nominal expenditure, for 21 states,
amounted to 59 percent. Several states subsequently proposed some economy
measures e.g.banning fresh recruitments/creation of new posts and limiting the growth
of administrative expenditure. Institutional reforms were proposed through the FRBM
Act that required the Centre to waive off revenue deficits completely and to reduce
the fiscal deficit to three percent of GDP by 2008-09. FRBM Actpassed by the States
had similar requirements. This development implied that if revenue declines,
government expenditure must also be pruned proportionately and here it is the “soft”
social sectors like health and education that face budget cuts. There have been some
recent arguments indicating that fiscal management need not be an overriding concern
for India since the debt situation has considerably improved27.
1.8.0 Programmes to Finance Elementary Education Sector:
It has been shown that in order to mitigate the effects of revenue deficits at the
central and state levels, to rescue the situation of increasing dependence of state
governments on central government for financial assistance, centrally sponsored
schemes were introduced in education sector as well. District Primary Education
Programme and SarvaShikshaAbhiyan have been such developments in the recent
past that have greatly influenced the financing of elementary education. Now these
two programmes that have long term implications would be discussed in the following
section.
1.8.1. District Primary Education Project (DPEP):
Aimed at providing all children primary education through a formal/ non
formal system, the targets of DPEP included: reducing gender gaps in dropout rate,
learning achievement and enrollment by 5percent, raising achievement by 25percent
over baseline levels and ensuring 40% achievement levels in other competencies by
all primary level children. The schools were provided physical infrastructure facilities,
27
. Praveen Jha, Subrat Das, Siba Sankar Mohanty & Nandan Kumar Jha (2006). “A study on
financing of elementary education by the centre and states in India”. Draft Report, PESLE. New
Delhi: Aga Khan Foundation.
 26

material and equipment, curriculum were restructured to make them contextual and
meaningful, evaluation procedures were refined, classrooms processes were made
activity based to achieve the targets of DPEP.
1.8.2 Sarva Shiksha Abhiyan:
Sarva Shiksha Abhiyan was launched by the government of India in 2001-02,
for achieving universal elementary education by 2010. SSA was builton the
experiences of a series of past CSSs e.g. Operation Blackboard,Mid-day-Meal
Scheme Teacher Education and projects like Lok Jumbish Project, the Mahila
Samakhya programme and the District Primary Education Project. Several new CSSs
were also incorporated into SSA, namely, National Programme for Education of Girls
at the Elementary Level and Kasturba Gandhi Balika Vidyalaya. In SSA, the states
were required to contribute funds in a ratio of 75:25 (centre: state) during the tenth
Plan period (2002-03 to 2006-07) and in a ratio 50:50 subsequently. SSA goal was
consistent with the Millennium Development Goal for education and beyond it,
covering 8 years of elementary education in a timeframe. The SSA paid special
attention to gender and social equity and inclusive education. The project had to
finance state and district annual work plans which supported the above project
development objectives.
Government of India set the targets for SSA as (i) all 6-11 year old children to
be in schools or alternative education centers by 2003; (ii) all 6-11-year-olds to
complete five years of primary schooling by 2007; (iii) all 6-14-year-olds to complete
eight years of elementary schooling by 2010; (iv) elementary education to have
satisfactory quality with emphasis on education for life; (v) to bridge all gender and
social disparities in primary education by 2007 and in elementary education by 2010;
and (vi) to achieve universal retention by 2010.
In SSA, the “special focus groups” (SFGs), notably girls, SCs and STs, and
deprived urban children were specially focused on. In view of the large gaps and less
experience at the upper primary level, special attention had to be paid to meet the
educational needs of socially disadvantaged 11-14 year-olds. Gender and social issues
had to be addressed through efforts to ensure community participation in the
programme and to sensitize administrators to social realities. Equity had to be
enhanced through these efforts.
SSA spanned across several Five-Year Plan periods: from the last year of the
9 Plan (2001), to the 10th Plan (2002-07) and the 11th Plan (2008-12). The SSA
th

programme was already in the process of implementation for the last two years before
the Development Partners were invited to participate in the financing of the
programme. The provision and financing of elementary education is mainly the
responsibility of the states, which account for 85 to 90 percent of the total spending on
elementary education. The center provides the remainder through its CSSs. This
project provides 7.2 to 9.4 percent of additional financing per year to total elementary
 27

education spending in the country. SSA provides for more than 90 percent of the
funds for capital expenditure in elementary education as well as for developmental
activities crucial for improving the efficiency and effectiveness of the school system.
The financing of SSA is designed as an additionality to the state governments’
investments in the elementary education sector that are required to be maintained at
1999-2000 level, thus resulting in an overall increased investment in elementary
education. In this continuation, SSA II was launched, the key thrust areas and
categories of activities financed under SSA II included:
(i) The quality enhancement framework has a clear focus on capacity building,
with the following main components: ensuring basic provisioning to create
enabling learning conditions for all children; capacity building and academic
support to state, district and sub-district structures; and monitoring learning
outcomes and research and evaluation of quality initiatives; and
(ii) To cater the needs of out of school, hard to reach children, a combination of
demand and supply side interventions has been financed. These included the
establishment, construction and extension of primary and upper primary
schools in districts where access remained as an issue, and provision of
teachers. Demand-side interventions included provision of free textbooks.
Overall, there has been an impressive improvement in the school infrastructure
since the inception of SSA in 2001-02. In terms of outcomes of the programme can be
considered the fact that an estimated 320 lakh ‘out-of-school’ children in 2001, in the
6-14 years age group has been steadily declining. The gender gap in enrollment at the
primary stage has also declined.
As an overview, in elementary education, it has been noticed that there have
been many reasons for the limited and uneven progress made during the 1990s.
However, one explanation stands clear: inadequate public finance for primary
education. Insufficient public and household financial resources, social inequality,
uneven capacity and insufficient accountability constrain efforts to improve the
educational system and outcomes in this sector.Later on, with the advent of centrally
sponsored schemes, situation was somewhat eased with regard to financing of
elementary education. While assessing the contribution of centrally sponsored
schemes in the field of elementary education, there have been evaluation studieswhich
claim that the CSS have not only eased the resource constraint, but had a positive
impact on the outcomes in the education sector. In this background, the passage of the
Right to Free and Compulsory Education Act 2009 has significant implications for the
financing of elementary education in India.
1.9.0 Allocation of Resources:
Another important dimension of financing of education is to look at the
allocation of resources to education. There are three important aspects relating to
allocation of resources to education: a) allocation of resources to education vis-à-vis
 28

other sectors, referred as inter-sectoral allocation of resources; b) intra-sectoral

allocation of resources within education, i.e., allocation to different levels of
education; and c) inter-functional allocation of resources to different activities such as
teaching, administration, student welfare, etc.28
(a) Inter-sectoral allocation of resources: Inter-sectoral allocation of resources is
examined by examining indicators, viz., share of education expenditure in total
income of the state and share of education expenditure in total revenue
expenditure in the state. Share of education expenditure as a percent of State
Domestic Product reflects the relative priority given to education in the state
economy.
(b) Intra-sectoral allocation: Allocation of resources within education sectors
reflects the relative priorities assigned to different levels of education. The
educationally backward state needs to allocate a higher share to elementary
education, which is found to be the case of UP under various five year plans.
But the disturbing trend is that it fluctuates a great deal over various plans. In
the first plan, 70 percent of the total expenditure on education was spent on
elementary education which fell to 42 percent in the sixth plan, 60 percent in
the eight plan and 50 percent in the ninth plan. This is against the trend
observed at the national level and in many of the educationally progressing
states.
(c) Inter functional allocation of resources: Trends in salary and non-salary
expenditure in education- teacher salary expenditure as a proportion of total
recurrent education expenditure increased over time in India, progressively
squeezing out non-salary expenditure. Between 1960 and 1982, the share of
non-salary expenditure in total recurrent primary education expenditure fell
from 12% to a mere 3 percent29. Tilak and Bhatt30 had estimated that in some
Indian states by the early 1990s, 99 percent of the total recurrent primary
education expenditure went towards salaries.
Despite increased school education inputs through centrally sponsored
schemes, it is estimated that non-salary recurrent education expenditure is still less
than 5 percent of total recurrent education expenditure on school education. While
teacher salaries have increased greatly, there is no concomitant or commensurate
increase in non-salary education expenditures. This reflects teacher unions’ successful
lobbying for pay increases over decades; there are no pressure groups or lobbies to
demand for increased expenditure on non-salary school items. The National

28
. J.B.G, Tilak, (2002), “Financing of Elementary Education in India”, in India Education
Report, (ed.) by R. Govinda, Oxford University Press, New Delhi.
29
. G.Kingdon (1994) “An Economic Evaluation of School Management-types in India: A Case
Study of Uttar Pradesh”,UnpublishedD.Phil. Thesis, Economics Department, Oxford University.
30
. J.B.G. Tilak and Bhatt (1992) Educational Planning at Grassroots,
New Delhi: Ashish Publishing House, New Delhi.
 29

Commission on Teachers observed that “the main preoccupation of teachers’

organizations particularly since independence has been with the improvement of
salary and service conditions of teachers and in this they have achieved considerable
success” and it drew attention “to the need to promote actively parents’ organizations
all over the country….We feel that such organizations are desperately needed to
promote and safeguard the educational interests of their wards and to counteract the
negative and unhealthy political preoccupations of some of the teachers and their
organizations”31. Apparently, the 6th Pay Commission of the central government held
hearings only with government servants, their associations and unions but not with
other stakeholders of public services e.g. education, health etc. such as parents who
might have stressed the importance of a balance between salary and non-salary
expenditures.
The discussion so far in this chapter has centered around the global and
national commitment for elementary education, historical perspective of
universalisation of elementary education in India, idea of education as an investment
in human development,policies, recommendationsand sources of financing of
elementary education in India, education expenditure as percentage of GDP, public
expenditure on education, pattern of public spending, factors influencing public sector
financing of education in India, allocation of resources to education. Thus an
overview of financing of elementary education in India has been presented. As this
research is focused on financing of elementary education in Uttar Pradesh, a brief note
on socio-economic and educational profile of Uttar Pradesh has also beenincluded in
this chapter. This overview would facilitate in capturing the issues in elementary
education in the state of Uttar Pradesh. In this background, trends, achievements and
challenges with respect to financing of elementary education would be discussed.

1.10.0 Uttar Pradesh- State Profile:

Uttar Pradesh is the second largest state in the country extending over an area
of 2.40 lakh sq.km. As per the Census of India (2011), UP has a population of over
19.9 crores making it the most populous state of the country. It houses about 16
percent of India's population.It is the second largest economy in the country. The
administrative structure comprises of 18 divisions, 75 districts, and 106704 villages.
Regional variation across the spread of five regions has definite implications for area
specific and contextualized interventions in the social sector especially in education.
For three decades from 1971 to 2001, the rate of growth of population was
persistently 2.5 percent per annum, indicating that the state is still in its primitive
stages of demographic transition. This could be mainly on account of low levels of

31
. NCT (1986): The Teacher and the Society–Report of the National
Commission on Teachers – I, Controller of Publications, Government of India, New Delhi.
 30

education and restricted role of women in society besides the poor functioning of
public services32.
For the past few decades, Uttar Pradesh has been classified as India’s lagging
state because of its low growth, high concentration of poor and low human
development indexes. Uttar Pradesh is mainly an agricultural state with a high
proportion of its population living in rural areas. Poverty in UP remains a rural
phenomenon, rural areas are home to 80 percent of the population and 82 percent of
UP’s poor. It is still one of the poorest, despite having once seemed a pace setter for
country’s economic and social development reflecting a rich potential in terms of both
human and natural assets33. “The region is characterized inter alia by exceptionally
high levels of mortality, fertility, morbidity, under-nutrition, illiteracy, and social
inequality and a slow pace of poverty decline.”34
There are regional differences in the distribution and incidence of the rural
poor, particularly their potential for agricultural growth. Rural poverty is higher in
eastern and southern UP, one-quarter of rural households own no land other than their
homesteads. The size of operational holdings continued to decline as well. This angle
of development should be explored in universalization of elementary education in
Uttar Pradesh. Education is a key indicator of human development. Many social and
economic outcomes are linked to rising levels of education, particularly among
women and socially vulnerable groups. Public spending on basic education can help
the poor to avail theelementary education. Improvement in educational outcomes in
UP have started decades ago due to increased demand for education from the
population and the government’s efforts to create infrastructure for the same.
Improvements came in urban and rural areas and across income and social groups.
Following table presents the literacy status in the state:
Table-1.4
Literacy in Uttar Pradesh
2001 2006-07* 2011
Male 68.80% 77% 79.24%
Female 42.20% 57% 59.56%
Total 56.30% 67.30% 69.72%
Source: Census- 2001& 2011, *NSSO- 2006-07

The gender gap in literacy rates exhibits the extent of deprivation of female
education in the state. In the knowledge based era of the 21st century only about half
of the female population is literate.

32
. Jean Dreze, and Harish Gazdar (1997), “Uttar Pradesh: The Burden
of Inertia” in Indian Development: Selected Regional Perspectives, (ed.), Jean Dreze and Amartya
Sen, Oxford University Press, Delhi.
33
. V Kozel and B Parker (2003) “A Profile and Diagnostics of Poverty
in Uttar Pradesh”, Economic and Political Weekly, January 25, 2003, pp. 385-403.
34
. Jean Dreze and H. Gazdar (1997) “Uttar Pradesh: Burden of Inertia”. In Dreze, J. and Sen, A.
(eds.) Indian Development: Selected Regional Perspectives. New Delhi: Oxford University Press.
 31

1.10.1 School Education in Uttar Pradesh:

The school education in Uttar Pradesh is divided into four stages, the primary,
upper primary, secondary and higher secondary. The primary and upper primary levels
have been termed as basic education in Uttar Pradesh, a separate directorate of basic
education and Basic Shiksha Parishad was created in 1972. The school education is
completed on completion of 12 years of schooling referred to as 10+2 pattern at the
national level. In Uttar Pradesh, formal education up to the age of 14 years is regarded
as elementary education. This can further be disaggregated into three sub-sectors:
(i) Pre-basic (Nursery) or pre- primary education which is meant for the children
below the age of 6 years.
(ii) Primary education, classes 1-5 for the age group 6-11 years.
(iii) Upper primary education classes 6-8, for the age group 11-14.
However, formal elementary education system does not include the pre-basic
(nursery) or pre-primary education. It is also to be noted that classes 6-8 are run in
secondary schools as well.
In Uttar Pradesh, availability of schooling facilities and number of schools has
increased manifold. In 1950-51 there were 31979 primary schools, 2854 upper
schools and 987 secondary and higher secondary schools. Status of schools and
students at elementary level in the state is given below.
Table-1.5
Elementary Schools in Uttar Pradesh Disaggregated by Management
Dept. Tribal Pvt. Unreco-
Local All Total
Year of /Welfare Aided Unaided gnized
Body Govt. Schools
Education Dept. (Madrasa)
2013-14 158662 940 1039 160852 9836 67491 3378 239822
2012-13 158394 1030 1630 162038 10998 62633 167 235836
2011-12 150766 1080 1719 154668 8996 56717 195 220576
2010-11 147563 1090 1660 151465 7995 41553 212 201225
2009-10 143050 1070 1524 147042 7739 40280 0 195061
2008-09 136427 1041 1637 140219 7756 38718 0 186693
Source: DISE data Different years, AWPB, SSA

The above table depicts the spread of schools in the state; schools are run by
various managements. It is evident that the department of education is the main
provider of elementary education in the state. The table also reveals that the state has
a large number of schools run by private managements are unaided, sharing almost 27
percent of total schools.
1.10.2 Educational Indicators: Enrollment, Out of School Children, Drop out,
Retention and Transition rate in Uttar Pradesh:
Enrollment rates at primary and upper primary levels have been rising in Uttar
Pradesh. It has been found that enrollment of children in primary schools has a clear
link with the family’s economic status. Although average enrollments have been rising
in the state, comparisons between the NSS 42nd Round (1986-87) and 52nd Round
(1995-96) indicate that rural primary school enrollment rates for 7-12 year old girls
for the poorest 40 percent of households almost doubled over 10 years-from around
 32

20 percent of the relevant age group to an estimated 40 percent. 35 Between 1994 and
2005, rural areas witnessed an increase in enrollment of 6-13 year olds. Enrollments
of girls (6-10 years of age) increased by 70 percent, boys’ enrollment increased by
approximately 20 percent. Still in rural areas, boys’ enrollment was uniformly higher
than girls’ age 6-10 and 11-13. In urban and rural areas, parity exists for the
enrollment of 6-10 year old boys. In urban areas, girls’ enrollment overtook boys
among the 6-10 and 11-13 year old age group. This improvement in enrollment has
been greater in southern and central regions in comparison of other two regions of the
state.
Table-1.6
Enrollment Status According to Income Quintile
(in percent)
Rural Areas Urban Areas
Boys Girls Total Boys Girls Total
Poorest 20 percent 68 51 61 55 51 53
2nd Quintile 74 63 69 71 66 69
3rd Quintile 77 68 74 79 78 78
4th Quintile 78 72 76 81 87 83
Wealthiest 20 percent 85 79 82 92 90 91
Total State 74 63 69 77 77 77
Source: NSS 55th Round, UP State Sample, survey tabulations.

Above table shows that estimates from the NSS 55 th round state sample show
continuing improvements, particularly in education levels of girls and SC/STs (above
table) in the relevant age group. By the end of the 1990s the gap between the boys and
girls enrollments had virtually closed in urban areas and narrowed considerably in the
rural areas. Despite this, less than 60 percent of children from the poorest 20 percent
of the population were enrolled in the schools, and school enrollments for poorest
quintile living in urban areas were even lower than rural enrollments.
Evidences suggest that children from (rural) SC/ST households were less
likely to be enrolled in school than children from majority households, although the
gap has been closing. In 1995-96 ( NSS 52nd Round), 41 percent of SC/ST girls (6-14
years of age) were enrolled in school in rural areas, as compared to 50 percent of girls
from majority households. The gap in boys’ school enrollments was smaller-78
percent of SC/ST boys were enrolled in comparison to 83 percent of boys from other
households. Enrollment gaps were particularly notable for SC/STs from the poorest
households. By 1999-2000 (NSS 55th Round), enrollments for SC/ST girls had risen to
55 percent as compared to 61 percentenrollments for girls from majority households.
Interestingly however, there is a wider gap in enrollments between SC/STs and girls
from majority households in urban areas-67 percent of SC/ST girls in urban areas
were enrolled in schools as compared to 75 percent for girls from majority

35
Angus Deaton (2000)“Adjusted Indian Poverty Estimates for 1999- 2000” Economic and
Political Weekly Vol.38,No.4(Jan.25-31,2003),pp.322-326
 33

households. This issue of children from lower caste households less likely attending
the schools needs further probing.
Evidence from other sources suggests that income is an important factor in a
child’s participation in school36. During 1990-2000, enrollment of boys was higher
than that of girls. Girls’ enrollment came close to that of boys however; gender
difference in enrollment in rural areas was higher for 11-14 age groups.In government
schools, in urban areas, girls’ enrollment overtook boys’ enrollment in the age group
6-10 and 11-14.Another trend was noticed in rural UP that the rate of increase in the
enrollment of the SC/ST population was significantly higher than the general
population for nearly all age and gender groups. Similarly, in urban areas, the
improvements in SC/ST enrollment outpaced that of the general population for the 6-
10 and 11-14 year olds.
In spite of significant improvements in enrollment among the poorest groups,
economic disadvantage manifests itself in lower-income children. In rural UP, in
2005, enrollment of children from the wealthier households was about 30 percent
higher for girls and about 15 percent higher for boys. The gap in enrollment based on
income was higher in urban areas. The gap in enrollment there was more than 40
percent for girls and boys (6-10 age groups) and almost 80 percent for 11-13 year old
boys. These outcomes show a remarkable narrowing of income gap in enrollment
between 1994 and 2005 for allchildren, except for urban boys of 11-13 years age;
actually the income gap has increased in this period. This reflects a decline in
enrollment among 11-13 year old boys in the two lowest income quintiles. The
income gap was more striking in urban UP. Enrollment rates among the wealthiest
group were higher than in rural areas. In fact, they were nearly universal. This gap in
enrollment between the wealthy and the poor occurred among girls as well37.
Status of enrollment at primary and upper primary level has improved under
SSA. In 2013-14, the Gross Enrollment Ratio is around 108 percentand NER is 98
percent at primary level, however the GER is not spread evenly in all the districts. The
GER in some of the districts is quite low which needs special intervention.The GER
and NER have a difference of about 10 percentage points, which means that there are
about 10% underage and overage children at primary level. The GER & NER for
girls’ is better than the boys.The NER at upper primary level is only 53 percent and an
improvement is needed in this regard as covering the remaining 47percent children
will require utmost attention for their retention in the school system.
This section focuses on the significant indicators of elementary education.
These include GER, NER, Gross Completion Ratio, Dropout, retention and transition

36
. GOUP HD Report,2003, NFHS III 2007, PROBE team, 1999 Probe
Team (1999): Public Report on Basic Education in India, Oxford University Press, New Delhi.
37
. World Bank (2008) “Living Conditions and Human Development in
Uttar Pradesh: A Regional Perspective”, Discussion draft, June 2008, page- 71-74.
 34

rates etc. The data presented in the table below is based on the DISE and household
survey.
Table-1.7
Some Indicators of Elementary Education in Uttar Pradesh
2006-07 2012-13 2013-14
Primary schools (Govt.+Aided) 1,02,154 1,15,757 1,14,387
Upper Primary schools (Govt.+Aided) 33,613 57,279 53,091
Total Primary Enrollment (In lakh) 256.49 266.71 259.42
Total Upper Primary Enrollment (In lakh) 65.13 104.27 107.85
Total Elementary Enrollment (In lakh) 321.63 370.98 367.27
GER Primary 100 106 108
NER Primary 92 97 98
GER Upper Primary 56 68 69
NER Upper Primary 56 54 53
Teachers in Govt. Schools 436535 5,51,119 5,20,979
Out of School Children 1,04,087 64,442 78,099
Source: DISE data, different years.

The above table shows that large number of government schools have been
opened in the past few years. As a result, the numbers of government and aided
primary and upper primary schools have been increased. The percentage share of the
government schools is 70percent in the State. Total enrollment at primary level has
decreased marginally. The NER is 98percent at primary level and 53percent at upper
primary level. The upper primary enrollment has increased by 3.4percent during
2013-14.
Enrollment at primary and upper primary levels has been increasing in the
state.However, another important fact is that enrollment in government and aided
schools have been declining at primary level for the past five years. The Percentage of
girls at primary and upper primary level has slightly decreased in the year 2013-14
however, participation of girls is higher at upper primary level. However, large
number of children in the target age groups has been out of school. Children who
dropped out or never enrolled are the ones that are out of school. While investigating
the relationship between work and education of children in two villages of Uttar
Pradesh, Lieten38 found that the drop-out factor is more likely to be associated with
push factors internal to the school than to the pull factors emanating from the labour
market. In addition to the children who dropped out, 1.6 crores children in the age
group 6-14 were never enrolled in school. It was a challenge for the state government
to bring these out-of-school children into schools and retain them in schools. Then
only the unaccomplished goal of universalizing elementary education could become a
reality.
The dropout at primary levels has been another concern. The DISE data shows
that dropout rate was 14.16 percent in 2007-08 which has slightly come down to

38
. G.K, Lieten (2000), “Children, Work and Education II: Field Work in
Two UP Villages”, Economic and Political Weekly, 35 (25), pp.2117-2178.
 35

11.28 percent in 2010-11. This is worth noting that rate of dropout has been higher for
the boys in comparison to girls, although the difference in the rate is narrowing.
Another significant indicator is transition from primary to upper primary level
and from upper primary level to secondary level. However, transition rate of students
from primary to upper primary level will be considered.The transition rate shows the
percentage of children moving to the upper primary level (from grade V to VI). It is
observed that a large number of students drop out from the system during this
transition.
Table-1.8
Transition from Primary to Upper Primary
Year Boys Girls Total
2013-14 79.50 81.33 80.40
2012-13 72.48 75.63 74.03
2011-12 70.56 71.75 71.16
2010-11 63.70 66.16 64.93
2009-10 60.47 62.55 61.50
2008-09 62.87 64.34 63.59
2007-08 62.16 62.75 62.45
Source: DISE, different years.

It is clear from the table that the transition rate is on consistent increase for
past few years, which is increased by 6% in 2013-14 and is also reflected in the
increase in upper primary enrollment.
As per annual work plan and budget39 of SSA, 2013-14, the enrollment in
government and aided schools has been declining at primary level for the past five
years (22percent decline from 2008-09 to 2013-14). The total decline between the
grades is nearly 7.5 lakh (excluding repeaters). There are many districts with retention
rate less than 65. Average annual dropout rate in 22 districts is more than 10 percent.
Transition rate in 12 districts is less than 75 against the state average of 80.There are
about 54 percent primary and 31 percent upper primary schools with adverse pupil
teacher ratio. In 15 districts, the GER is below 60percent at upper primary level. NER
is 53percent at upper primary level. In 23 districts, retention rate is lower than
65percentat primary level which is much below than the state average
(88percent).There are 7percent primary and 19 percent upper primary single teacher
schools in the State.
Summarily it has been shown that government of Uttar Pradesh has
undertaken various programmes for achieving universal elementary education mainly
in terms of CSSs. Major Interventions during the late eighties and nineties were:
Operation Black Board scheme which aimed at improving the school enrollment,
retention and learning achievement by providing minimum essential facilitates in
primary schools. The Uttar Pradesh Basic Education Project, with special focus at
girls’ education was targeted at improving access, quality and building institutional
capacity to manage elementary education. BEP was an externally aided project that
39
. Annual Work Plan and Budget, SSA, 2014-15.
 36

aimed at removing the constraints of location and distance in providing schools. Mid-
Term assessment of BEP and classroom observation study of Uttar Pradesh did not
show any tangible gain in qualitative aspect. District Primary Education
Programmeenabled the creation of infrastructure for schooling and it has been
successful in creating the demand for elementary education in the state. Some of the
outcomes of the programme are: rising of social expectations from schools has
necessitated significant transformation in terms of school governance, redefining of
school quality, role of head teachers, academic supervision and support. A
decentralized three tier management system was introduced for elementary education:
district, block and village. The village education committee (VEC) now school
management committee (SMC), a statuary body and a sub-committee of the Village
Panchayat was made responsible for the management of primary education and
primary school.
The Sarva Shiksha Abhiyan aimed at providing quality elementary education
to all children in the age group of 6-14. Government of UP decided to develop plans
in a phased manner, 16 districts in first phase, 22 districts (DPEP II districts) in
second phase, and 32 districts in the third phase were covered. A sum of 1627.5
million was sanctioned by the GOI for the phase I districts in 2001-02. Sarva Shiksha
Abhiyan paved the way for universalisation of elementary education in the state.
State’s allocation to SSA has been part of the plan account of the state budget, and
SSA contribution has been main source of plan expenditures. DPEP and SSA have
contributed towards access, enrollmennt and retention of children from all
backgrounds and communities. The GER has increased significantly; access has
improved across all social groups.
Details of these programmes of universalisation of elementary education in
Uttar Pradesh would be presented in another chapter. After a brief account of the
programmes of universalisation of education in Uttar Pradesh, significant
developments in the state in financing of elementary education sector would be
discussed.
Within the expenditure on education, there has been improved focus and
priority on elementary educationin Uttar Pradesh and per student expenditure has
been increasing.Primary school enrollment recorded the fastest increase between 2001
and 2010. The ‘pull’ strategies (better infrastructure; toilets, free textbooks, mid-day-
meal, improving pedagogy, revising text books, in-service training of teachers and
‘back to school’camps, bridge courses, NPGEL and KGBV with residential facility
have resulted in tremendous increase in gross enrollment ratio in Uttar Pradesh in 6-
14 age group.
As passage of RTE has very significant implications for financing of
elementary education, now this aspect would be discussed.
 37

1.11.0 Right to Education Act 2009: Implications for Financing of Elementary

Education:
Understanding of provisions regarding sharing of financial responsibilities
under the RTE Act would facilitate in assessing implications for financing of
elementary education. The issue of sharing of financial and other responsibilities has
been defined in section-7 of the Act as follows-
7 (1): The Central Government and the State Governments shall have concurrent
responsibility for providing funds for carrying out the provisions of the Act.
7(2): The Central Government shall prepare the estimates of capital and recurring
expenditure for the implementation of the provisions of the Act.
7(3): The Central Government shall provide to the State Governments, as grants-in-
aid of revenues, such percentage of expenditure referred to in sub section(2) as it may
determine, from time to time, in consultation with the State Governments.
7 (4): The Central Government may make a request to the President to make a
reference to the Finance Commission under sub-clause-(d) of clause –(3) of Article-
280 to examine the need for additional resources to be provided to any State
Government so that the said State Government may provide its share of funds for
carrying out the provisions of the Act.
7(5): Notwithstanding anything contained in sub-section (4), the State Government
shall taking into consideration the sums provided by the CentralGovernment to a
State Government under sub-section(3), and its other resources,be responsible to
provide funds for implementation of the Act.
In this regard, it would not be out of place to mention the relevant portion of
the report of the 13th Finance Commission40 which is as follows: “there is no
unanimity on the financial estimates for the implementation of RTE Act. The MHRD
has projected a requirement of Rs. 1,73,946 crore for the period 2010-15. The
Planning Commission, on the other hand, in their note dated 10 November 2009, has
estimated the cost at Rs. 1,44,871 crore and has further observed that state-wise
estimates need to be worked out.”
The Government of India had notified on 9th April, 2010 for enforcement of
the Right of Children to Free and Compulsory Education Act, 2009. The GOI
circulated the model draft rules vide its letter dated 4.2.2010.SarvaShikshaAbhiyan
has been designated as the vehicle to realize RTE provisions. Accordingly SSA norms
have been revised to harmonize with RTE provisions.
In Uttar Pradesh, the right to free and compulsory education as a fundamental
right and universalisation of primary education have been emphasized. It would be
appropriate to look at the implementation of the Act in the state. Notification of State
Rules was issued on 27-07-2011, notification of academic authority issued on 27-07-
2011, notification on no detention policy was issued on 16-01-2010. Notification

40
. Report of 13th Finance Commission, Government of India, para-12.17, P 207
 38

regarding no corporal punishment issued on 19-08-2010. Policy of No Board

Examination up to elementary level has been implemented vide notification issued on
16-01-2010, regarding banning of screening procedure and capitation fees was
issued on 15-07-2010, a notification regarding minimum working days and
instructional hours was issued on 27-7-2010.
To enforce RTE standards and norms in private schools, revised rules for
granting recognition were issued on 19-05-2011. In the light of National Curriculum
Framework 2005, curriculum for primary and upper primary levels have been revised
in 2008 -09. Regarding constitution of SMCs, Government orders were issued on 28-
06-2011. SMCs have been constituted, and orientated. For recruitment of teachers,
Teachers Eligibility Test has been organized. The RTE Act provides for schools in
neighbourhood. Norms for new schools have been specified in the RTE Rules as
follows:
 Primary School : 1 Km. distance and minimum 300 population
 Upper Primary School: 3 Km. distance and minimum 800
population
Government has issued notification regarding admission of children belonging
to disadvantaged and weaker sections in private schools upto at least 25% of their
total intake capacity in class-I or below. The immediate implication of the Act is in the
following areas: recruitment of additional teachers to maintain the teacher pupil ratio,
opening of new schools, additional classrooms, drinking water, toilets and boundary
walls, reimbursement of fee to the extent of 25percent students to be admitted in
private unaided institutions, enhancing training capacity and training of untrained
teachers.
The Section 7 (1) of the Act provides that the central and the state government
shall have concurrent responsibility for providing funds for carrying out the
provisions of this Act. Section 7 (3) mentions that the central Government shall
provide to the State Governments as grants - in - aid of revenues, such percentage of
expenditure as it may determine from time to time in consultation with the State
Governments. For ensuring the implementation of the Act in Uttar Pradesh, financial
implications would be calculated later. It has to be noted that the present norms and
funding pattern prescribed under the RTE Act have now become inappropriate and in
the context of the provisions of the RTE Act (which firstly sets new norms and
standards and secondly, puts a time limit for completion of these standards within a
time span of 3 years mandatorily), financial requirement has to be reworked.
1.12.0 Private schooling in Uttar Pradesh:
Private schooling has continued to expand in UP. Students are enrolling in
private schools in increasing numbers, particularly those that are without government
 39

aid41. The urban middle class and upper–classes have effectively opted out of the
public education system. Among the wealthiest 40 percent of households, 90 percent
of them have enrolled their 6-10 year old children in private schools. Evidences from
different studies show that the middle class is more capable than the poor of exerting
pressure on authorities to improve the delivery of educational services. It will not be
out of place to mention that worldwide, the most successful interventions have
integrated the poor and the middle class in the same facilities. It is therefore an issue
of concern that UP’s urban middle class has effectively opted out of the public
education system and left the ‘poor’ in poor facilities. Thus improving the quality of
government schools is of prime importance. In elementary education sector, while the
focus has largely been centered on increasing the number of government schools, the
role of privately managed and fee charging schools in this sector has not been
appreciated at large. However as several studies point out that private fee charging
schools are increasingly catering to a substantial fraction of school age population.
1.13.0 Some Other Challenges:
Now, a brief description of other challenges in elementary education inUttar
Pradesh would be presented. Gender issue and rural–urban divided in terms of
enrollments, retention and achievement have already been identified. The majority of
children who are denied their right to quality primary education are female. There is
often a large gender gap in the transition and completion rates. When combined with
structural and other factors such as rural poverty, disability, minority status, violence
against girls and women, malnutrition, rapidly changing social systems, girls are
systematically more disadvantaged than boys.
In addition to the gender issue and rural-urban divide, gaps in retention,
completion and achievement level of children from disadvantaged socio economic
background in comparison to overall trends in the state have been matter of concern.
These gaps are shrinking but still there is need to improve the situation. Regardless of
the progress in enrollment for all categories of children, there are disadvantages for
girls, children from rural and economically weaker sections. In addition to this,
overcrowded classrooms, one teacher handling multi-grade, different levels of
children in the same class, no exposure to the majority of children to the pre-school
experiences and all combined don’t give motivating learning environment for both
children and teachers. Another challenge being faced is learning levels of children; it
has been manifested through different assessment surveys conducted by various
organisations. A detailed status and analysis of learning level of students in different
subjects would be presented in the following chapters as it is major concern with

41
. A De, M Majumdar, M Samson and C Noronha (2002) “Role of
Private Schools in Basic Education” in Govinda, R. (ed.) India Education Report, Oxford
University Press, Delhi.
 40

respect to the quality of elementary schooling being offered to the children in the
state.
1.14.0 Need and Importance of the Study:
Education has a definite correlation with economic growth. Some of the
studies in India42 have shown that investing in basic education of the deprived groups
has a higher return. Rate of return studies (Psacharopoulos 43, 1973; Nalagounden44,
1967 for India) have shown that returns from education are not only positive but also
higher than from other investments. The importance of school education is truly
immense and many sided. First, illiteracy and innumeracy are major deprivations –
profound ‘unfreedoms’-on their own. Not to be able to read, write and count makes a
person less free to have control over one’s own life. 45. However, the question is if
education is good for economy why we have not achieved education for all?
Building on the constitutional commitment to provide free and compulsory
education up to the age of 14 years, the right to education act has been passed ,
making it a binding upon the state to ‘provide free and compulsory education to all
children in the age group 6-14. In India, elementary education is a concurrent subject
making it a shared responsibility of the centre and the state.
It appears that making the education system more equitable e.g. by increasing
the share of spending on primary schooling has no opposition to face. Of late, state
has been funding primary education. The basic education department consumes major
share of the total available budget of the education department. Whether public
expenditure on education in general and elementary in particular has maintained the
pace with the growth of child population: this question needs to be discussed at
length. Salaries have grown rapidly in real terms and teachers have made considerable
salary gains at the expense of other heads of educational expenditure that are thought
to be of educational value.46 If the classical norm of one teacher and one classroom for
every 40 students has to be followed, financial implications of this premise would be
definitely very huge. Nevertheless, there has to be a tradeoff between quality and
quantity. Lowering costs and raising funds for primary education can be one of the
options. In addition to this, universal primary education will require major reforms to
achieve more education for the money (greater cost effectiveness) and more money
for education (additional finance).
42
. Jandhyala B. G. Tilak, (1987) ‘Educational Finances in India’. New
Delhi: NUEPA (Unpublished), 73p.
43
. G. Psacharopolous (1981): ‘Returns to Education: An Updated International Comparison’,
Comparative Education, vol.17, No.3, pp.321-341
44
. A. M. Nalla Gounden “Investment in Education in India”, The
Journal of Human Resources, Vol. 2, No. 3, (Summer, 1967), pp. 347-358
45
. Amartya Sen (2003) ‘Development as Capability Expansion’. In: Fukuda-Parr S, et al Readings
in Human Development. New Delhi and New York: Oxford University Press.
46
. Geeta Kingdon and M. Muzammil (2003): “Political Economy of
Education in India, Teacher Politics in Uttar Pradesh”, Oxford University Press.
 41

In 1990, two global conferences: the Jomtien Conference and the World
Summit for Children-set the target of universal access to basic education by the year
2000. Ten years later, scrutinizing the developments in the basic education sector it is
clear that progress has been too slow in UP during 1990s for the targets to be met. The
passage of The Right to Education Act 2009 has reinforced the need to calculate the
financial requirements to ensure this right of children in the state of Uttar Pradesh.
Cost analysis can contribute significantly to decision-making, planning, and
monitoring in education.
The cost of schooling has been discussed in the literature as being a significant
factor in participation, with many studies illustrating the boom effect that fee abolition
has had on enrolments in several countries. Direct costs of schooling have been found
to negatively affect the attendance of children. It has been found that a very small
increase of Rs. 190 per annum in the cost of primary schooling reduces the likelihood
of a rural Indian child going to school by 3 percentage points, and this cost effect was
much larger for children from SC families and from families in the lowest income
quartile.47
There have been studies that focus on cost and financing of elementary
education but mostly these studies have been done at global, regional and national
level, but for the state level, it has not been the case. Moreover, national averages hide
many disparities. Thus, the study has justifiable reasons. Cost analysis is helpful in48:
 Estimating requirement of resources for education.
 For proper decision making with regard to inter-sectoral and intra-sectoral
allocation of resources.
 For the monitoring and improvement of utilization of resources.
 For institutional planning.
 Measuring the internal and external efficiency of the investment of education,
to measure inequalities in education.
Elementary education is the constitutional right of every child and it is
constitutional commitment as well. Right to Free and Compulsory Education Act
2009 has been passed and implemented. To achieve the goal of universalisation of
elementary education in the state, planning, implementation and evaluation is an
ongoing process. A study of costs and financing of education is important from the
point of view of allocation of resources at the governmental level. In this background,
findings of the study would be useful for educational managers, administrators and
planners at the state and district level, in formulating comprehensive plans for
universalisation of elementary education. In addition to this, study will be of interest

47
. S. Chandrashekhar and A. Mukhopadhyay (2006). “Does cost of primary schooling matter?
Evidence from rural India”.Indian Statistical Institute. Available at: www.isid.ac.in/~planning
/EDNSSRN
48
. J.B.G. Tilak (1997) ‘Analysis of Costs of Education’ NUEPA, New
Delhi.
 42

to researchers in the field of economics of education. Findings of the study can be

used as an advocacy tool for resource generation in elementary education sector in the
state. The study would be useful for policy makers as options for improving cost
effectiveness and improving internal efficiency would mean more education for
money.

1.15.0 Statement of the Problem:

In the light of above background, the topic of the present research is state as
under:
“Cost and Financing of Basic Education in Uttar Pradesh with Special
Reference to Ensuring Equity in Quality”

1.16.0 Definitions of Key Terms in the Study:

Key terms used: Equity, Access, Basic Education, Cost and expenditure,
financing, direct and indirect costs, institutional costs, individual costs, recurring and
non- recurring costs, current costs, capital costs, unit cost, per school/child cost, type
of school.
Equity in the present research is defined as distribution of educational
provisions across the state of Uttar Pradesh, participation of various social groups and
gender categories. Equity is also defined through educational practices that may affect
access and participation of students at the elementary level.
Access in the present research is defined as the availability of schools,
including its various facilities- human resources and physical infrastructure.
Basic education in the present research corresponds to grades I-VIII.
Financing: In most contexts, financing implies monetary provision.
Costs and Expenditures: often both these terms are used synonymously, but
they are different. Expenditure on education can be defined as the money spent on any
item relating to the education process. Costs can be defined as the value of all the
inputs that go into the education process; it includes the value of not only those inputs
on which money is spent, but those inputs also for which no expenditure was incurred.
While expenditure is expressed only in monetary terms, costs can be expressed in
monetary as well as in real or physical terms.
Classification of Costs of Education:Costs can be classified into two types:
(a) Individual or private costs
(b) Institutional or public or social costs
Individual Costs or Private Cost: Individual costs or private costs of
education are those costs of education incurred by a learner or by his/her
parents/guardians or by the family as a whole. Individual costs are of two types: direct
and indirect. Direct costs are those costs that are directly visible. They include all
money expenditure incurred on different items by the student. For example,
expenditure on tuition fees, other fees and charges, purchase of books, stationary,
 43

uniforms, hostel expenses and transport. Indirect costs (opportunity costs) are those
costs which are not directly visible. These costs are sometimes called ‘opportunity
costs or foregone earnings’. Opportunity costs refer to the value of students’ time or
earning forgone to continue the study.
Institutional Costs of Education or Public Costs of Education: Costs
incurred at the institutional level (government, private or mixed) are called
institutional costs or public costs of education. Public costs are those that include
financing by the government on the basis of taxes, loans and other public revenues.
The institutional costs of education are, generally, analysed using the following
variables.
 Variable and fixed costs of education.
 Recurring and non-recurring costs of education.
 Current and capital costs of education.
The real nature of cost could be understood only when we understand the
different concepts related to the ‘costs’ of education. As mentioned earlier, cost is the
actual expenditure of money incurred on, or attributable to, a specific thing or activity.
Taxonomy of Costs of Education49
Institutional Costs Individual costs
Recurring costs Tuition costs Non- tuition costs
Non-recurring costs
(maintenance costs )
Staff salary (Teaching and Books and stationery
Buildings
non-teaching)
Scholarships, Tuition fees, Exam Transport
Furniture
Stipends etc. fee
Depreciation Equipment Hostel
Other Expenditure others Uniforms
Others
Total Cost: The ‘total cost’ is the sum of all fixed costs and all variable costs.
TC = TFC + TVC
Where, TC = total costs, TFC= total fixed costs and TVC= total variable costs
Fixed costs are defined as those that do not change with a change in the
number of learners, e.g., costs on institution’s building. In other words, the costs that
do not increase or decrease with the changes in the level of activity of the institution
are known as the fixed costs. Variable costs vary with every change in number of
learners. e.g., costs on teachers, laboratory materials, stationary items. Therefore, total
cost is an increasing function of enrollments i.e. if enrollments increase, total cost
increases. However, one cannot argue that certain costs are fixed, and others are
variable for all time to time. For example, what will happen if the number of learners
increases to a great extent? In this situation, not only the number of teachers has to be
increased, but an additional number of classrooms may also have to be constructed. If
the number of learners increases by a small amount, the variable costs on teachers
may not change, in which case this may be called fixed cost.

49
. Ibid
 44

While the cost of buildings forms fixed or non-recurring costs, the rent or even
depreciation forms recurring costs. On the other hand, variable or recurring costs may
include (i) salaries and allowances of the teaching and non-teaching staff, (ii)
scholarship and fee concessions, ( iii) purchase of non-durable or consumable material
(like stationary items), (iv) expenditure on maintenance and repairs of buildings,
furniture and equipment, etc.
Current Costs and Capital Costs: Most of the time, capital costs and current
costs are synonymously used with fixed costs and variable costs respectively. For the
purpose of cost analysis, we should be aware whether the expenditure figures being
used include capital outlays or only current operating costs. Current costs are incurred
on consumable items within a given financial year. Capital costs refer to costs
incurred on durable items like land, buildings, equipment and so on that rendered
useful service over a period of years. But expenses on books, which may last for
several years, could be counted as capital equipment and, therefore, capital cost but
these are almost always counted as current costs. In practice, the distinction between
the two is often one of the administrative convenience: expensive and long-lasting
items such as buildings are paid for out of separate budget. But they are necessarily a
part of capital costs.
Opportunity Costs or Foregone Earnings: The concept of opportunity cost
emphasizes the factor of choice. Because the resources are scarce, we are forced to
choose. This type of cost plays a very important role in decision-making. By the
opportunity cost of decision is meant the sacrifice of alternatives required by that
decision. If there are no sacrifices, there is no cost. Opportunity costs can be
calculated in education from an individual’s point of view and, as well as, from an
institution’s point of view. Opportunity costs refer to the earnings that would have
been earned, had the student chosen not to go for education but to the job market.
The reason of this approach is that since any country or community or
individual has only a limited supply of economic resources to use in any given period,
a decision to use some of them for a specific purpose, such as for education, means
sacrificing the opportunity to spend those same resources on something else 50. This is
called transfer earning from society (or institution or from public).
Therefore, the three cost concepts mentioned above, i.e., individual costs i.e.
private costs and institutional costs i.e. public or social and opportunity costs can be
combined for the estimation of the annual cost per student for each level of education.
It can also be used in the cost benefit analysis, provided there is no wastage or
repetition.
i) Individual costs = Household expenditure on education + opportunity costs
ii) Institutional costs = Recurring costs + non-recurring costs

50
. P.H. Coombs and J. Hallak (1988) ‘Cost Analysis in Education, John
Hopkins University Press, Baltimore.
 45

Unit Costs of Education: Unit costs of education mean costs per unit i.e. per
student, per graduate, per credit, etc. Generally, unit in unit costs means the total
number of learners enrolled in a course in a particular year. Sometimes, it is said that
the number of learners actually attending the classes should be taken for the purpose
of calculation of unit costs and not the total number of learners on roll. Alternatively,
unit costs refer to the unit of output i.e. successful learner or graduate. This is called
effective costs of education. This type of cost calculation in education takes care of
wastage in education too. The difference between the effective costs and the normal
costs of education reveals the efficiency of the given level of educational system.
Thus, we can calculate alternative forms of unit costs of education. These are:
Total Expenditure
Cost per learner (unit cost of education) 
Cost per learner (unit cost of education)
Total Expenditure
Cost per learner actually attending the school 
No. of Student Attending Classes
Total Expenditure
Cost per successful learner (Effective unit costs of learner) 
No. of pass - out learners
Total Expenditure
Cost of education per capita 
Total Population
Plan expenditure includes both the recurrent and development expenditures
required to finance additional programmes specified under each five-year plan. At the
end of the plan period, the recurrent parts of plan expenditure remain as an ongoing
commitment, and become part of non-plan expenditure.

1.17.0 Objectives of the Study:

Estimating costs of education, educational sectors and various sub-sectors of
education and then estimating the required resources for it are important for the
planning of resources. They also help in understanding whether resources allocated to
education are sufficient or not. What is currently being financed and what future
needs will be in elementary education sector in the state of Uttar Pradesh? Answer to
this question lies in charting the extent of existing education provisions in the state. It
also examines the recent initiatives of the state government in the state of U.P. and
finally discusses the potential for additional reforms. This research examines the
public expenditure pattern in Uttar Pradesh, recent initiatives of the state government
and discusses the potential for additional reforms.
The present study examines a very specific aspect of public expenditure, viz.,
that of financing basic education in Uttar Pradesh, one of the important determinants
in achieving universal elementary education. There are number of other equally
important factors which also determine the educational progress in a state, however,
the present study attempts to examine major issues in financing of basic in Uttar
Pradesh in the recent two decades.
The present study was carried out with the following objectives:
 46

1. To analyze the financing of elementary education, to capture the extent of plan

and non-plan expenditure on education especially elementary education in Uttar
Pradesh.
2. To analyze the cost of improving access to elementary education in terms of civil
works under different projects: DPEP and SSA in Uttar Pradesh.
3. To analyze and estimate the cost of quality interventions in terms of pedagogical
renewal, teacher training in elementary education in Uttar Pradesh.
4. To estimate the cost of schooling at primary level, per child per year and an
outline of major terms of expenditure in elementary education and its share.
5. To assess the status of equity in quality in Basic Education in Uttar Pradesh.
6. To estimate the financial requirements for achieving universal elementary
education in Uttar Pradesh by 2020 and prepare a blueprint for the future with
reference to ensuring equity in quality.
It may be noted that the RTE Act firstly sets new norms and standards for
universalisation of elementary education and secondly puts a time limit for
completion of these standards (school infrastructure and teachers) within a time span
of three years mandatorily. The purpose of this study is to update the cost estimates
for achieving ‘education for all’ by 2015- the new target date set by the Social Summit
in 1995.

1.18.0 Delimitations of the Study:

If general education is considered as investment and the decision making is to
be guided by the private and social cost benefit analysis, it appears imperative to look
into the manner in which total annual investment in education is allotted to different
levels of education. But in this thesis, expenditure/ financing of different levels of
education has not been considered. Delimitations of this study are presented as
follows:
1. The study will not attempt to find out the cost of schooling in private schools
at primary, upper primary, secondary and tertiary levels.
2. Public spending on secondary and tertiary level will also be out of the purview
of this study.
3. District wise and school wise estimation of costs and financial provisions and
benefits from public education; probing and assessing this issue will be out of
the purview of the study.
4. Income inequality at the household level is linked to the inequality in the
distribution of the benefits from the public education. This issue will be out of
the purview of this study.
In this chapter, discussion has centered mainly on importance of education as
an investment, constitutional commitment to free and compulsory education, priority
assigned to education in different five year plans, financing of education especially
 47

elementary education in India, its trends and challenges. Sources of financing of

elementary education have also been discussed. This gives the idea of constraints
being faced and a picture emerges about the current state of financing of elementary
education in India through various sources. This discussion would also pave the way
for analysis of the current state of financing of elementary education in Uttar Pradesh
through different sources. It will further lead to estimating the financial requirements
to achieve the targets of universalisation of elementary education in the state. To
achieve the goal of universalisation of elementary education; projects and
programmes, strategies and measures entail additional investment in this sector. This
study is an attempt to assess the financial requirements to ensure the rights of children
in Uttar Pradesh.
 48

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