Approaches to Educational Planning

and their Applications in India

JandhqoJa B, Q. THak

Reprinted from Indian Economic Journal,

Vol. 24, No. 3, January-March 1977
 APPROACHES TO EDUCATIONAli PLANNING
AND TBTEIR APPLICATIONS-IN INDIA-
I '*
Jandhyala B. G. Tilak ^

(Institute of Economic Growth, Delhi)

1. Introduction:'

There is a widespread agreement today that educational

planning in India is not well coordinated with economic plan­
ning, and this lack pf coordination results in prpblems of im­
balances in Indian educational planning. Just as national
planning is necessary for balanced development of the economy,
planning of education is also necessary for the smooth progress
of education. In thi^ paper an attempt is made to evaluate criti-.
callysome of the very important approaches to’educational plan-,
nirig, »to make a review of the research done in India injthis
growing field of stvdy, arid “finally to see -whether an integrated
apprbach to educational planning can be fruitfully adopted.
Section 2 is devoted to the review of approaches. ‘In Section 3
the experience of research work in Indian contfext is described.-
The integrated approach is attempted in Section 4.

2. Principal' Approaches :
‘‘ ♦. j
Various'kinds of planning, models, have been, developed and
applied in the recent ’past M, the field of education. A ll those
approaches can be, broadly grouped under two main heads:
1. Traditional approaches, and'
2. Modern apptoaches.
The latter bunc^ consists of important approaches to edubational
planning, like Social Rate of Return approach, Manpower ^'ore-
Casting Approach, Income Shares ApptOach etc., while the
former one consists of Social Demand Approach and Cultural
a^prqach, 'Though in this paper we ^mainly concentrate our
attention on ^he modern approaches, v/e also make a blrief ap­
praisal of the other ^approaches.'*

** The author owes his interest in the subject to B. Sarveswara Rao.

The author is extremely grateful to S. N. Mishrd, Raghav Gaiha, J. N.
Sinha, Mrinal Datta Chaudhuri,' and Dharmakumar for their very -help­
ful comments and suggestions, a^d to K. Krishnam\irthy a^d H. N.
Pandit for their help and encouragement. Needless to say, the author
alone is responsible for the opinions expressed in this paper.
2.1 Traditional Approaches:

Now let us .start with the traditional approaches otherwise

known as consumption approaches which did not recognise the
investment component in. the educational expenditure. The
theorists of the approach strongly feel that education is purely a
consumption activity.
The social demand theory or the private demand theory of
education is a consumption approacht to education. The adminis­
trators of education simply set the terms on which education
shall be available in the future and then plan to provide educa­
tion for the number of students who using their own foresight
demand it on these terms. The main problem with the consump­
tion approach, or cultural approach as Fames calls it is speci­
fication of “the criterion in terms of which educational needs
are to be defined” (Parnes; 1962:63). The only thing one can
say is educate everyone upto his abilities (both economic and
academic) Having gathered data regarding composition of the
existing population and future trends in it by age and sex, and
about the educational system, projections are made on the basis
of past trends in enrolment ratios. This is almost extrapolation
of the past trends into future.

We generally see that people who get education have never

decided to do so; once they are on a certain escalator, they get
carried on upwards even without choosing. This is true parti­
cularly with respect to higher education, therefore explaining
their behaviour by a theory of choice is both ridiculous and
practically irtipossible. The .individual or private demand for
education can be influenced by several factors like educational
levels of the parents, neighbours etc.,® in which case education
can be called a ‘snowball’ model; some may demand it for social
status, and some for several other things, in which case it be­
comes a “Hobbesion snowball model.”'* If we find a private cost
benefit analysis behind private demand for education, this ap­
proach converges with the cost benefit approach, (See
Blaug 1966; Fields 1974) and if we find forecasts about future
manpower situation behind individual demand this converges
with the fore casting approach. That is the approach Robbins
exactly followed.® The important fallacy of the approach is it
is not desirable to project the past into the future, because the
‘unevenness’ of the past is not what is expected in the future.
The planjiing mechanism should correct the unevenness and that
is where this approach severely suffers with.
 Basically the approach clearly and wholly considers educa­
tion as a consumption activity, the returns or the^utility of which
cannot be calculated in money terms! Th^ decision lies with
the value judgements and‘ subjective attitudes of the decision­
makers. So the difficulty with the consumption approaches lies
in having no sharply defined set of criteria nor a specified set of
priorities in allocating the scarce resources. ’As Blaug (1967a)
comments, it cioes not tell the educational planner what to do,
rather it tells hiin “what will happen if he does exactly what
he has been doing in the past” (p. 265).

2 .2 Modern Approaches:

The investment approaches to educational planning -^hich

can be called modem, brought about as if a revolution in jeco-
nomic thought. Thiey put education in the list of productive
economic factors, and gave altogether a new attitude to the
theory of capital, considering thus the expenditure on educatioii
as investment and educated man as human capital.®

2.2.1 Rato of Return Approach:

* J

Th6 most prominent approach among the modern approaches

is the'Hate of Return Approach. This approach is widelj^ used
in decision making of investmfent both in educational sector as
well aS'in other sectoi^.^ • .

The rate of return analysis involves the calculation of ,the

Stream of costs of education (PrivatC'Cost and Public'Cost) and
the stream of future earnings. After arriving at the stream of
riet’behefits of education, we'calculate the fate of retut^, which
is nothing but that tate which equates the net benefits' to zerd.
The rate of return approach simply says that expanci the educa­
tional sytsem to the point where, taking into account' all social
costs and benefits, the net present value of the education of the
last man educated falls to zero or until social rate of return
becomes equal to social discount rate. ‘

The rate of return approach is widely challenged for its

severe pit-falls,® like its assumptions against reliance on tradi­
tion-bound wage structure, failure to capture non-monetary
benefits *of education, job-satisfaction, indirect benefits etc.
Specifically th^ approach makes an important assumption that
wages and sfikries are equal to marginal productivity; in other
words differences ’ in the productivity of ^people are reflected in
the earning differentials of the people; and existing differential
rate of earnings will not change in the future.. Apart from this
the approach also assumes that non-monetary benefits and in­
direct monetary benefits can be ignored; the influence of various
factors^ like native ability, education, social class, achievement
drive, ethnic origins, parental education etc., can be separated
and the opportunity cost of education can be accurately
calculated.

Most critics of the approach deny the marginal productivitj^

hypothesis. Several of them argue that the concept of social
rate -of return is not an appropriate:fterm in educational plan­
ning, for social rate of return analysis must include all external
effects and psychic benefits as well as should all(5w for diver­
gences between the wages and the marginal private product, and
for the effects on 'Wages of determinants other than education.
(Layard: 1972,128);

There is no doubt much substance in all this criticism. But

it should be remembered that the followers of this approach do
not claim their estimates to be accurate. For example (Blaug:
196?s 266) admits that these calculatioris represent “something
close to maximum likelihood estimates of the average yields of
additional expenditures on education. In any case, they are
merely a summary statistic expressing the prevailing relation­
ship between the costs *of more schooling and the earnings that
may be more or less^confidently expected result from it.”

t Secondly, one cannot easily separate the influence of various

factors on earnings. But then we need not dismiss the esti­
mates simply as “ Coefficients of ignorance.”^ It is extremely
difficult no doubt, to. isolate the influence of education on earn­
ings’®. But of the several factors-that exercise influence 9n earn­
ings, education alone, it should be noted emerges as “the single
most powerful determinant of family income” (Blaug: 1965, 214).
Yet we can attribute some percentage of income to factors other
than education and arrive at near realistic estimates.

Again, the direct and indirect nonr-monetary benefits are no

doubt large in size'^ from social and cultural point of view, but
while we are evaluating an economic project, we should: as
Pandit (1970:17) observes, “confine ourselves to^he economic
aspects only.” The problem- with indirect monetary benefits is
merely operational.

Several problems rise with respect to -opportunity cost or-

the foregone earning.^^ While economists like Schultz (1963:
4-5), Bowman (1966) etc., strongly argue for tiie inclusion of
foregone earnings of the students^ in the costs of education,,
economist like Vaizey (1962) favBur exclusion of it; “ inclusion
of income foregone opens the ga^e of a flood of approximations
which would take the concept of national income away from its
origin as an estimation of the measurable flows of the economy
.. .'.it is doubtful whether any more useful purjiose is served by
a statistical exercise of this kind, then- could be achieved
merely by observing the numbers of people engaged in
education” (p. 43).

Other kind of arguments against opportunity cost particular­

ly in developing economies are based' on the existence of sur­
plus labour. It is often argued that opj^rtunity cpst equals
zero, because of incidence of massive unemployment.^ ^But this
argument is not agreeable to many. Some suggest that one
should calculate the opportu^nity cost .taking into account tbe
entire life span of the individual, not merely the period of
school or college education. Some economists argue that we
should calculate the opportunity .cost of the, factor of produc­
tion, irrespective oi the 'failure on the' part o^^the ‘economy in
using it 'or misusing it. Hovjever* when it constitutes 50 to 80
per cent of total costs of'education, it is too su’Sstantial to be
ignored.^® If we accept the inclusion of foregone earnings of
the stucfents in the private rate of return ^analysis, we should
also consider it in the social returns analysis. But in the social
returns analysis^ we should rather consider the net social for­
gone earnings, since the private forgone earnings and the spcial
foregone earnings of the students differ frofn each other.

Thus the rate of return techniqueJs attacked'p;i,the ground

that this approach has a substantial margin of arbitrariness,
apart from subsidiarising the_ instrinsic cultural virtue of edu­
cation considerably.

The interesting point to be noted is that inspite of all these

drawbacks, it is extensively used for it provides us with “a
signal of direction: invest more or less” (Blaug: 1967a: 268)^
though “not statements of Actual amounts to aim at”
(Blaug:1975, 469).

2.2.2 Manpower Forecasting Approach:

Manpower Requirements Approach, also known as man­

power forecasting approach is altogether different from the ap­
proach just discussed. Given some targets of Gross National
Product, manpower planning takes the form of identifying the
manpower required in some detail in respect of the skills in­
volved, the numbers needed, and their distribution overtime.
The success of this approach lies in the transformation of un­
skilled into skilled labour and the conversion of raw human
material into the types and nimibers needed for economic
development.

The procedure for determining the manpower requirements

involves three following steps:

1. Critical analysis of the existing situation is necessary in

respect of the existing -employment structure i.e., structural dis­
tribution of the nianpower, educational system i.e., distribution
of students at various levels and types of education, rate of
growth of population, and actuai training level.

2. Fixation of targets is the second step. Targets of output

at aggregate and disaggregate leyels (national and sectoral)
including service sectors should also be fixed.

3. At tiie third stage lies the actual method of forecasting.^®

Forecasting is made based on the recent past experiences, esti­
mating the employment coefficients as Fames (1965) did, or using
the input output coefficients as Tinbergen and Bose did, and then
applying it to the product-targets of the national economy or
sectors. Thus we arrive at employment targets at various sec­
tors and in various occupations. The occupational structure is
then translated into educational system in the form of enrol­
ment targets in various segments of the system in the light of
the projected occupational structure.^^

The approach has its own limitations. Firstly, it -rules out

the possibility of substitution between different layers of educa­
tion. It afso rules out any improvement in the productivity of
labour required in an occupation, as it relies on fixed" employ-
ihent coefficients.^® Secondly, the assumption^ of the possibility
to have output structure completely broken down into every*
single commodity i§ also questioned.^®

Another important point to be noted is that this approach

totally ignores costs of and returns from education. ^Any plan­
ning exercise shall be* incomplete without reference to costs and
benefits of a project. It also ignores and assumes away quanti­
tative improvement in education.^® ^
f

The estimation of output trends per unit of labour in the

economy or in different sectors is very difficult. Concepts of
total factor productivity and labour productivity overtime are
irregular. At the same time the problem gets aggravated when­
ever there is a change in the coefficient, for manpower forecasts
are highly and basically sensitive even to small changes in
labour-output relation. For the same reason, these forecasts
are called ‘single valued’ and depend on ‘inter temporal stabi­
lity’ of rigid technological coefficients (Pandit: 1970,47).

Finally assumptions about magnitude of wastage and stag­

nation in education, number of withdrawls of labour from occu­
pation, number of separations from occupations and accession
to others etc.,^ invariably introduce substantial arbitrariness into
the analysis, which leads to the margin of error, and this ‘margin
widens as we forecast farther and farther into future’ (Blaug:
1967,284).

Seeing this bundle of weaknesses, one may be tempted to

conclude with Anderson and Bowman (1967), that any other
approach to educational planning would be better than man­
power requirements approach. However we cannot reject ati
approach on the ground that the estimates are inaccurate and
uncertain which is unavoidable with a.ny’ technique of economic
planning.^^ The basic drawback of the approach is that 'in a
market economy the employment of the educated is not deter­
mined by the technological norms specified in the approach, but
by economic factors mainly and by other socio-political aspects
secondarily*^^ However this approach can be*made successful
in controlled 'or centrally planned economies.^®'

2.2.3 Production Function Approach:

The contribution of education to economic growth can be

estimated with the help of the production function, either by
introducing education as an explicit exogenous variable or as an
implicit variable. When education is introduced as an implicit
variable, the residual is considered as the coefficient of educa­
tion^^ A slightly extended version of the .production function
approach to education, known as Income Shares Approach,
which we summarise here briefly, is based on the often-question-.
ed marginal productivity theory of distribution, where th^
price of any factor i is given b y the product of marginal
product of the resource i to the price'of the output j. Then the
relative share of the resource i in the total value of the output is
simply the ratio between price of the resource and the price of
the output.®® Accordingly if the factor i, say education, receives
X percent of national income, then it is assumed that 1 percent
expansion in education will raise national income by x* percent.
The cost of 1 percent expansion of education 'can be compared
with the benefits from it, and a decision can be taken whether
to make marginal investment in education or not.

The production function approach is adopted by very few

researchers.*® It is mainly questioned on its assumption of
equality between factor price and marginal productivity. It is
also criticised for ignoring the marginal social product which
includes externalities. And like the forecasting approach it also
ignores the cost side of the problem.

2.2 .4 Other Approaches:

2.2.4.1 .1

Economic contribution of education is often assessed, by

correlation method, though we cannot label it as a specifically
different approach as Bowen did, wherein coefficient of correla­
tion is found between indicators of educational ;development, and
those of economic development either- at a point of time or over
a time period. Whether it is an inter-temporal analysis or
atemporal an a lysis,th e correlation analysis suffers with severe
drawbacks, except its merit of highly simple nature of calcula­
tion. The correlation analysis does not bring out the cause and
effect relationship. We cannot say whether education pushes up
economic growth or economic growth gives an opportunity to
increase the educational efforts. * The correlations also do not
speak about the magnitudes of educational contribution to
economic, growth. Then what is the use of correlation method?
and why several researchers^® adopted this technique? The
answer is simple. Thg correlation analysis provides us with
some broad conclusions. A cross section study provides for
making international comparisons and for getting a broad idea
of how much forward or backward is an economy in its educa­
tional development.’*® Analysis with tini^ series d^ta takes car6
of time lag nature of educational project. However, the main
drawback it has regarding causal relationship cannot be
ignored.®®

2.2A2

Programming approach, a phrase used by Sen (1970) is not

infact altogether a different approach. Programming is merely
a technique. A planning model can be translated into an exer­
cise in programming. In the retent literature in educational
planning w e find applications of programming and consistency
models. In Linear programming technique used in educations^
planning, We maximize a linear function of enrolments and/op
national income accruing due to education as Bowles (1967)®' did
or maximize a function of national income as Adelman (1966)
and'Benard (1967) did, and/6r any other such welfare functions
subject to some constraints like that of human resources, educa­
tional constraints etc.

Input-output model is another interesting technique in

educational planning. The economic inputs used in educational
sector needs a conventional input-output model with fixed co­
efficients, while the concern of human inputs needs an allocation
model with output coefficients fixed. Sone (1965)®^ presents
these two models to construct an educational model. He builds
up an input-output accounting matrix with the number of
students as inputs, and graduates leaving th6 whole system as
outputs. He makes allowances for wastage, dropouts, techno­
logical change etc. Stone’s demand determined model does not
speak of the costs of education nor evfen the returns. It irtiplicity
assumes that private returns to education are higher than private
costs, or simply the rate of return is always positive.

Empirical application has not yet been made of the input-

output model of Stone’s type to educational plaAniiig so far^ As
has already been noted the programming approach is not
altogether a different approach from the other investment
approaches. For example Adelman’s model is based.,on the man­
power requirements approach, Bowles’ -model on the returns
approach, while Benard’s model imbibes elements of both the
approaches.

3. Applications in India:

There is a considerable amount of research done in India and

abroad in the field of economics of Indian educational planning.
However we restrict our study to some of the very important
and representative contributions in the light of various
approaches we have discussed in the foregoing section.
V

3.r Nallagounden' (1965)^^, Harberger (1965), Blaug, Layard,

and Woodhall (1969), Pandit (1972), Kothari (1967), Husain
(1967, 1969), Panchamukhi and-Panchamukhi (1969) etc., tried
to look at the problem of educational planning in India with the
help of rate of return analysis. Using data mostly provided by
the NCAER Surveys these authors calculated rates of return to
different levels of education for -different reference periods.®"*

The main results of these studies are briefly presented in

Table I.

It can be seen that irrespective of quantitative differences

that- we observe in Table I, the explanation for which can- be
found in Table II in the form of differing assumptions and
-adjustments, we can make a note of some unanimous conclusions.

Almost all the authors unanimously concluded that invest­

ment in education in India is not economically as profitable as
investment in physical capital.^® But all of them, except Nalla-
gounden who argued for diversion of resources from educational
activity to physical capital activities, argued in some way or
other for reduction in the costs of education and for making
education more productive.

Secondly, the high private rates of return, higher than social

rates, give us a misleading conclusion that investment in educa­
tion is privately efficient and socially not. This is misleading
because, even while calculating the social rate of return we are
considering only the private benefits (but for the income taxes)
and the social costs, ignoring the social benefits, which we are nqt
able to quantity and even identify in some cases. This is a
serious weakness of the social rate of return calculations.

Again it is, unanimously concluded that -the rates of return

decline as one moves from lower ladder of education to a higher
one. When we match this result with the scene of Indian cam­
puses where there is maddening scramble for higher education,
does it not strike that neither the public nor the private Indivi­
duals are responsive to the rates of return.^* Why is it so?

We can find two explantions for this: one, since we expect

equivalent rates of return for all levels of education in an equili­
brium situation, the lower rates for higher .education suggest
that the resource allocatipnal policy is prejudiced in favour of
higher education.^^ The second answer we can give is that the
returns approach is not adequate to provide satisfactory explana­
tion to this phenomenon and here perhaps we can find the ex­
planation in the consumption approaches to a great extent, and
in the private returns approach to some extent.^®
3.2 An important study using manpower forecasting approach
to educational planning in India is^ by a group of economists of
Indian Statistical Institute and London School of Economics
(ISI-f-LSE), the prominent members of which are Burges,
Layard and Pant. The study by the group formed the basis for
the Report of the Education Commission.®® Using the 1961
census, the group brought out a clear picture, of the employment
structure in India by levels of education and by.industry. Then
they estimated the manpower requirements of various educa­
tional categories of higher level, making several important
assumptions about aggregate and sectoral growth rates. They
assumed that the economy will grow at an annual average rate
of 6.6 percent during 1961-76 and 7.0 percent during 1961-86.
They divided the entire economy into about fifteen sectors and
fixed the sectoral targets which varied from 11.85 percent
(factory establishments) to 3.86 percent (agriculture in the
period 1961-76), and 10.9 percent to 3.9 percent (in the same sec­
tors respectively) during 1961-86. The sectoral targets are pre­
sented in Table III. In non-service sectors the group ^assumed
that “ as net output in each sector and in each branch of manu­
facturing industries increase, so proportionately will be the
employment of educated manpower” (Report: 1966, 170). They
did not make any assumption about labour output ratio. They
assumed that the number of workers with matriculation and
above will grow at the same rate as net output in each sector of
the economy.

In service 'sectors, having fixed, arbitrary norms about

teacher-pupil r a t io ,a n d doctor-population ratio*^ and assuming
a growth rate of 3 percent per anum in other service-sectors upto
1976, and 5 percent thereafter, they estimated the requirem^ents.
Accordingly they concluded that in service sectors (other than
trade and-transport) half of the matriculates and above and two
—thirds of all graduates will be employed/®

While makixlg these forecasts, adjustments have been made

for non-participation’ in the working force (e.g., unemployed,
housewives with no employment etc.,), for wastage in schools
arid colleges (1 percent a year) etc. For the former, the same
proportion of unemployment of the total educated as in 1961 is
assumed; and for the latter exponential growth paths of enrol­
ments have been- made. Their forecasts are summarised in
Table IV.

It can be seen from our experience that the estimates by the

group are undoubtedly over estimates. While they found the
rate of growth of national income to be 4.1' during 1951-61, they
expected an ambitious growth rate of 6 to 7 percent in the imme­
diate succeeding period.

Similarly the expected sectoral growth rates are very much

higher than the growth rates observed during 1956-61, except in
three sectors—organised banking and insurance, government
services, and professional liberal arts and domestic services,
where the expected growth rates are little less than the
experienced ones.

Secondly, the assumption about employment in the non­

service sectors, though is supported by the evidence from some
cross section studies abroad as they claim, do not leave us with­
out doubt, unless we get some evidence from our own experience.
If it is not realistic, the estimates shall turn to be over estimates.
But the authors point out “in manpower forecasting, which is
inevitably uncertain, it is better to overestimate than to under
estimate the needs of the’future” (Burgess et al; 1968, 50-51). But
if these overestimates are fulfilled, while the ambitious growth
rates are not, it will certairdy magnify the problem of educated
unemployment. However, it appears that they had ignored the
issue of chronic unemployment of various kinds of skilled labour
in the economy. Their estimates are beyond doubt, “peculiarly
high.”

The general criticism against the assumption of fixed input-

output coefficients also applies to thi^ model. Further in an
economy like ours where there is observed educated unemploy­
ment, persons with higher educational qualifications, higher than
required by the job in which they are employed, become the part
of the input-output coefficient and such a situation might mislead
the forecasts.

Another important study, wherein a more or less similar

approach is used, is by Ramanujam (1973). Based on the labour-
output relation in the year 1964-65, and assuming an annual com­
pound rate of growth of 8 percen.t of the aggregate output during
the period 1970-71 and 1980-81, Ramanujam estimated the
requirements of manpower with different educational levels for
the period 1975-76 and 1980-81. 'He made projections one on the
basis of the Manne Rudra Tables and another on the basis' of 77
factor tables. This study covers the wage employment only;
self employment, and employment paid in kind are not
considered, thereby making the projections under estimates. The
growth rates he assumed, both sectoral and aggregate, seem to
be realistic when compared with the "recent past experience.

Similar studies using input-output model worth mentioning

are by Veena (1974), who did at the state level (Gujarat’s eco­
nomy) , wherein forecasts of the manpo;wer requirements of the
state have been made for the target periods of 1979-80 and
1984-85, and another by Prakash (1971a) for two public sector,
industries.

3.3 Chaudhuri’s doctoral dissertation (1968)” ' is an important

study wherein he used the production function approach. He
made a cross section analysis to find the impact of education on
agricultural productivity in 256 districtsjlS states of India. Using
the multiple linear regression model of the log-linear form, he
fitted a production function of an unrestricted Cobb-Dougl^
form.
X = f(L , I, F, N, E)
Where X stands for agricultural productivity, L for the area of
land cultivated, I for irrigation facilities, F for fertilisers, N for
total agricultural labour force, and E for the educational level of
the farm workers.^* He also introduced weather as a controlled
variable.

When he regressed yield per acre on education, regression

co-efiicient were statistically significant in both inter-district and
inter-state analyses. But when he used Cobb-Doiiglas produc­
tion function, the multiple regression analysis (with States) gave
physically and statistically insignificant coefficients to education.
But in the inter-district analysis the coefficients were significant
at 1 percent level.

There is a choice of the use of modern inputs like fertilisers,

motor pumps etc., being influenced by education. With a simple
linear regression he also estimated the influence of education on
the use of modern inputs and arrived at significant results. His
main results are summarised in Table V.

Briefly his main findings are: i) productivity in Indian agri­

culture is positively related with education of farm workersj- and
(ii) the use of modern inputs is also related positively with
farmers’ education. It can .be noted that in the case of fertiliser
use the relation is very strong with secondary education and
above of the farmers. Apart from these two important conclu­
sions, he also found that socio-cultural factors and the caste
system substantially influence the impact of education on agri­
cultural productivity.^®

Chaudhuri’s has the merit of being the first study in India

to use education as a factor in production function of agricul­
ture.^® Other studies'of similar type using regression analysis
include Mukherji and Rao (1967), Tilak (1975), and Goel (1975).

3.4 A mention should be made of Harbison and Myers’ Study

(1964) of 75 countries, wherein they constructed a composite
index of human resource development. Ranked by the compo­
site index, India came into 'the list of level III (semi-advanced)
.countries with a rank of 37 with the index figure being 35.2,
while the composite index ranged from 0.3 for Niger to 261.3 for
United States. It is to be noted that India is very much below
the mean level of the level III countries, which implies that
there is a lot to be done for the human resource development in
India.
 It is difficult to understand why this couple of researchers
ignored several other quantitative and, on more' important^ side,
qualitative indicators of human resource development,

A similar attempt has been made by the present author

(Tilak 1976) in a different study with respect to Indian states.
Studies by Rudolph and Rudolph (1969)^^, Goel (1975), Pancha-
mukhi (1965) also come under the same category.

3.5 Very recently an effort has been made by a group of eco­

nomists (Biswas et al: 1975) in a joint paper to apply linear
programming technique to Indian education. Enrolments at
various levels of education are maximized for the year 1963-64,
subject to natural constraints, budget constraints, teacher-student
constraints etc. The last one is a constraint on the quality of
education, while the others are quantitative in nature.

As can be seen from Table VI the actual enrolment level in

1963-64 is below (estimated) optimum if all stages of education
are taken together. In professional education, it appears the
actual levels are more than optimjam, which implies that there
is over investment in professional education.

But it should be noted that their estimates are not perfect.

They were have to include constraints on the. relation between
human resources and physical resources which give an idea of
the employment potential of the economy. However, theirs
should be called a good attempt in using the programming
technique.

Very few authors have so far followed the consumption

approaches in India. Further theirs are not purely consumption
approaches. Some elements of manpower requirement approach
have also been introduced. Important studies to be^ noted are
Pandit (1966), who used a more or less social demand approach
without relating much to productivity coefficients or the input-
output coefficients and made projections into the future. A
study by Tilak (1963), another by Bagai (1968) also come under
the same category.

4. Conclusion

Each of the authors, we have so far discussed, used a parti­

cular approach in his or her study—either the returns approach,
or forecasting approach, or production function approach. Each
study has its own merits and its own deficiences. One important
point to be noted which is generally ignored is that a single
investment criterion may not be adequate to make a decision
regarding investment in education. For example, the returns
approach is inadequate and not a completely reliable approach,
for it ignores several important indirect benefits which some
authors prefer to call ‘primary’ and ‘dynamic’ benefits/* The
■forecasting approach ignores one important aspect of th^
problem: Uie costs of production; and the social demand approach
belongs to the ages of laissez'faire. The returns approach may
be used to evaluate capital costs in education, and "hot educational
project as a whole; forecasting technique combined with socio­
cultural approaches,^® may be used for the educational outlays
and for fixing the targets of enrolments. Above all this, it is
mainly the private demand that determines the investment in
education. But in a developing economy like ours one cannot
depend completely upon the private demand signals for two
reasons; first, privately determined level of educational develop­
ment may not be socially optimum; it might lead either to over
expansion of a particular level or type of education, and/or it
might lead to regional inequality. Second, with very low per-
capita incomes, we cannot depend upon private demand signals
in educational planning. The social demand argument may find
its best place in the advanced countries because “with their
higher living standard they attach less importance to satisfying
incremental material needs” (Vaizey et al; 1972:79). But at the
same time even in developing economies we cannot altogether
ignore the social demand aspects for education. Behind this
entire net work, the production function approach or the worker-
output relation should have its own place. Thus it can be
possible to workout an integrated approach, reconciling all the
approaches.

To have an integrated approach of this kind to educational

planning programming model appears to be the most promising
one, for it permits ^^o have a^good number of objective functions
which can be optimised, subject to a wide variety of constraints
which take care of both manpower requirements and the rates of
return. In short, the several goals that the several approaches
aim at individually, can be met at a time with the programming
technique.
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 Table III

r. Sectoral and Aggres:ate Targets

Sectors Annual GrototJ? in Percentage

1956-61 1961-7£ 1961-86

(Actual)

1. Agriculture • 3.3 3.9 ' ^ 3.9

2. Mining 2.7. 10.2

3i Small Enterprises ,-(non-factory) 6,9 7.3

4. •Factoryt'Establishinents H
(with >power supplj^) 4.5 11,9 iO.9
5. '.Construpt^op 6.4 11.2 10.2
6. X>rganised'Banking' &nd Insurance 12.2 10.5 ’ 10.7
(^ther Commerce ^ 3.5 6.6 > 6.6
L Transport &A' 9.2 ■’ 8.-T
" 9. Communications i 5* " “ 3.6“" * ^.7 . ii.r
10. Professions, Liberal Arts and
Domestic Services 5.5 6.6 6.8
n. Government Services 9A 7.6 7.4
12. House Property ^2.4 5.5 6.1
Aggregate 4.-1 -6.6 e.8

Source: Burgess et al (1968), p. 7,

Not^: • includes animal hust>andry| fishing an^ lorestiy.
 TaBle IV
Manpower Forecasts

ReQuireznent of Workers with Different Levels Types of Education

(In thousands)

1960-61 1975-76 1985-86

(Actual)

Graduates

Engineering ’ ' ' 60 " 350 870

' Agriculture ~ - "1 0 , - ^ 0 * * ^ ' V iO '
Medicine 70 180 360
Teaching 240 790 1450
Others * 770 1890 3560
Total’ 1150 3300 6540

Intermediates & Matriculates •

(»
Engineering (Dip)’ 80 ^ 530 1310
Medical Personnel lOff^ 460 . 1390
Teaching 590 2580 3710
•' Others 3250 9750 19610
Total j; 4020 13310 20010
Grand Total 5170 - 16610- 26580
Total Population (M iiU o^) 439.2 630.2 743.9

Source: 'Budgess'et'al (1968), pp. 51, 52.

Table V

■Eesression Coefficients

Jnter State Study - Inter Bistrict -Study-

•T* ^ Case I Case II Cage I Case 11

El .4550* -.028 .3660* .07351
E. .2797* -.094 .1824* .0500*
.2917* ,112 ,2071* .0819*
.4365* -.027 .3256* .0823*

Source'. Chaudhuri (1968) Pages 33, 35, 43 and 47.

Note; • Significant at 1% level,
t Significant at 5% level.
Case I refers to the analysis where education is the only expla­
natory variable; Case II refers to the analysis where education
is one o f the explanatory variables.
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 NOTES

1. For a comprehensive survey o f some of the important approaches

to educational planning, readers’ attention is drawn to Blaug (1967a),
Sen (1966, 1970b), Bowen (1963), Layard (1972), Pandit (1970), Eckaus
(1964), Fox and Sengupta (1968), Rilvin (1962), and Okigbo. (1966).
See also .Onimode (1975).
2. To quote Robbins Committee (1963), “ higher education should
be available for all those who are qualified by ability and attainment
to pursue them ,who wish to do so.”
3. For example, see Prakash & Radhakrishnan (1973), Sinha
(J972) who analysed the factors iieliindl private deinand; see also Blaug
(1966).
4. See Layard (1972).
5. With given levels of provision o f secondary education, standards
of admission into higher education, monetary costs and benefits o f educa­
tion, Robbins made social demand proje9tions for U.K^
6. Today there is little doubt among the econcJmists about the
capital nature of education. Interested readers may refer to Schultz
(1960, 1961a, 1961b), Shaffer (1961), Walsh (19351^, and Debeauviais
(1962).
7. Important studies in educational planning t?tat us^d this tech­
nique are BeckW (l9B4), iBlaug .(1967b), Hansen (1963), Rliller (1960),
Henderson-Stewart (1965), Woodhall and Blaug (1965), Smyth (1967)
etc. The prominent studies in Indian edu,cational planning are discussed
in Section 3.
8. For an excellent critique o f the analysis s^e Merrett (1966).
See also Blaug, (1965) who answers to the “ Omnibus of objections” .
See also Bowman (1962).
9. See Balogh and Streeten (1963), and also Vaizey (1962:45).
10. See-Sen (1970a, Lecture 1:3-5).
11. As we ban *se.e in the next section, several researches attribute
35 to 50 per qent of the earnings to other factors.
12. See Weisbrod (1964), and Hirscli (1968).
13. See Schultz (1964), Bowman (1966), Weisbrod (1963), Machlup
(1962), Blitz (1962), and Vaizey (1962).
14. Adelman considered opportunity cost o f even the teacher time,
and that of school buildings (1966: 409); of course the latter was zero.
15. See Bowman (1968:253).
16. Manpower forecasts and social demand projections differ from
each other in the sense that forecasts are predictions made subject to
achievement of certain targets of economic growth, while projections
are purely o f spontan6ous nature. See Blaug (1967a).
 17. The "OECD group of economists.used this technique in fore­
casting the manpower requirements in half a dozen countries. See
Fames (1962) for the exact method follow ed-by them. See also OECD
(1965) for different country Reports. Results of all the country reports
are summarised in Fames (1965). Tinbergen's -approach is slightly
different. It is a balanced input-output growth model. See Tinbergen
and Correa (1962), and Tinbergen and Boss (1964). For the criticism
of the latter approach see Bonbach (1964), Balogh (1964), and Sen
(1964). ^"or the applications of Tinbergen’s approach, see OECD
(1965c). See. also Bandbach (1964.). Other important studies to be
mentioned are Widerman (1967), Folgar (1967) etc.
18. Even though ‘in the literature, we find both the terms—^man­
power forecasting^ approach, and the fixed requirements approach—syno-
nimously .used, there is a slight distinction between the Jwo: in the
former one, the assumptions o f zero elasticity of substitution between
different levels of education and fixed coefficients need not be maintain­
ed, w hile the latter maintains both of them. Adelman (1966), and Tin-
bergen'& Boss (1964) represent the two approaches respectively.
19. Sdn (1970), gives an e:^ample o f metal minipg and manufactur­
ing industries both o f which comprise a number of very different com­
modities in common.
20. See'Folgar (1964).
21. See Fames (1967) and Hollister (1967) for a spphisticated
defence o f this" approach. •
^2. Sen 1970b)‘ gives an example o r doctors and sa^s that noHhs
like oije doctor per 300Q population w ill be irrelevant to- the medical
graduates and the-rate of yields guide thejr behaviour.
23. For a powerful defence of the forecasting approach, see
Bombach (1965),
,24. This, is the approach, th^t Denison (1964) followed. See also
Denison (1962,‘1974).
25. If wi is the price of the factor i, Pj the price of the factor j
mij the'marginal product o f \ to produce'], xj the amount of output ri the
productive resource, and si the share of the resource then
Wi = Pj mji

and Si = 'W i n / Xj Pj = mtj / - ^

1

26. Solow (1957), and Kendrick (1961) assuming* production»funcr

Aion to be lir^early homogeneous and neutral technical change estimated
the contributiqn ,of education to economic growth.
27. Bowen (1964) divides the correlation studies into three'types;
inter-country comparisons, inter-temporal comparisons, and inter­
industry and inter-firm correlations.
28. For example see Edding (1958), Blot and Debeauvais (1965),
Anderson and Bowman (1962), S v^ n ilson et al (1961), Correa (1963)
Bieda (1970), Schultz (1961), etc.
29. For example see Harbisan and Myers (1964); theirs is also
known as inter-country comparisons approach.
 30. The^reader may refer to Blaug (1972) for significance of correla­
tion coefficients between education and earnings.
31. See also Bowles (1969)'
‘32. See also Stone (1966).
33. See also Nallagounden ’(IQBT), where he presented his main
results.
34. For a detailed evaluation o f the works of Blaug and his collea­
gues, Harberger.tand Nallagounden, see Woodhall (1972).
35. Harberger calculated the-rates of return to investment in physi­
cal capi!al in India which are in tHe range o f 17-28 perceM. Blaug
assume'd private rate to be 8 pei’cent, and social rate^l'2 percent' OtH^r
researchers compared their educational returns With alternative rates of
return of either o f these two studies. ^
36.ofi,It is not an exclusive feature o f India alone. Both in advanced
countries as w elh as in developing countries the rates of return are
declining as one moves^on to a higher escalator ^n ed^cationrte.g., see
Psacharopoulos (1973"). ,^ t the same^ tim e, w e’ find cr^ze for-highe^^
education in all the campuses. ^ ‘ ^
37. See Bhagavati (1973), who makes a similap, observation,
though-not exactly the same. ,
38. But Sen (1970a, Lecture 1, 24) observes the social ivalues to be
"rather shallow” and finds the solution in the private rate o f returns.
39. See Ministry o f Education, Government o f India (1966). The
study fay Burgess, La^ard, and. Pant was published afterwards. See
Burges’s et-al (1968).
40. ^1:8 in the postgraduate classes, 1:15 in under graduate classes,
1:20 in intermediate classes, 1:25-30 in secondary schools, and 1:'40 in
Primary Schools during 1976-86.
41. One doctor per 3000 population in 1975-76, and .one per 2000
population in, 1985-86.,
42. e.g., In public administration and defence services, the number
o f matriculates and graduates will grow at the rate o f 4 percent per
annum. Legal and business services grow as fast* as the economy as a
whole; recreational and personal services perhaps less fast.
•Sen (1970a, Lecture 1:19-21) condemns such discrimin'atory treatment
fot the service and non-service sectors; while-'in the latter case target
growth rates were taken as the basis, in the forme’r arbitrariness is
openly allowed. See also Sen (1970a Lecture 2, 16).
43. Chaudhuri subsequently sumjnarise^ his results in various
papers. For example see Chaudhuri (1969, 1972, 1973).
I v'4 , }
44. The variable E is divided into el, e3, e3, and e4 which represent
literacy, primary education, secondary education and above, and the
number of years of education respectively.
 45. In arriving at these conclusions he made a case study of Punjab
and Uttar Pradesh.
46. For further appreciation of Chaudhuri’s work, see Sen (1970a'
Lecture 2, 17-21).
47. See also Rudolph and Rudolph (1972).
48. For example, see Dasgupta (1974; 100).
49. For a logical way o f combining both the approaches, see Blaug
(1967a: 267-9). ^
r

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