Education

Economic Survey of India

Session 1
What is the main argument of the paper?

• Even an allocation of 6% of the GDP to education

budget would not be sufficient to fund universal
school education until the very distant future if the
government school system is used as the only
instrument.
From where do authors get the target of
6% of GDP to be devoted to education?
• Tapas Majumdar Committee (1999)
• National Education Policy (1986)
• Kothari Commission (1966)

• Typical worldwide practice, though China and

Singapore have provided universal government
funded schooling by spending less than 4% of the
GDP on their education budget
 What is the estimation framework used by authors?

S. No. Variable Symbol Assumed Justification

INR 35.8
1 GDP (2006) GDP trillion Actual data
Growth rate (2006 to 2021: constant Target of the 5 year
2 prices CAGR) 9% plan
Target by Kothari
3 Share of education b 0.06 Commission

Share of school education in total Observed share over

4 education a 0.67 the years is 60 %
244 Population
5 Student Population SP million projections by RGI

 
Total money available for school (b*a*GDP)
I education/ year  
(b*a*GD
II Total education spending per child (A) P)/ SP
S. No. Variable Symbol Assumed Justification
Based on previous studies,
government estimates are
similar to this. Covers
spending on capital,
administration, material,
Share of education teacher's training, school
spending excluding inspectors, free books and
6 teachers c 0.35 uniforms, etc.

Share of education
7 spending on teachers 1-c 0.65 Residual
Recommended by various
8 Student teacher ratio STR 30 committees
 
III Annual Spending per teacher (B1) A*(1-c)* STR
 Assume
S. No. Variable Symbol d Justification

Teachers salary as % of total Sixth Pay

9 spending on teacher d 0.71Commission

At 20 years of work
experience real
Ratio of beginning salary to average wages goes up by 80
10 salary e 0.56%

Average Monthly career start salary

IV of teachers (B) (B1/12)*d*e
 Budget availability at 2006 prices per child
with education budget at 6% of GDP (Table
1 ): A
Total Estimated
% of pop in 5 to 9 yr. % of pop. in 10 to 14
Year Population in India
age group yr. age group
(in Cr)
2006 112 10.72 11.01
2011 120 9.52 9.94
2016 127 8.9 8.9
2021 134 8.4 8.4

Education Fund
Year Total no. of children School Education
GDP (Rs. in Lakhs available/ child/ yr. in
in 5-14 yr. age group Budget available/
Crores) with 9% p.a. Rs. (80% Coverage)
2006 (in Cr) child/ yr. Rs. #2
real growth #1 #3
2011 24.37 35.8 5,874 7,342
2016 23.38 55.58 9,508 11,885
2021 22.74 85.53 15,042 18,803
22.64 131.59 23,249 29,061

# 1: GDP growth is considered on actual basis till 2006-07 and then @9% pa.
#2: Total School Education budget is taken as = 2/3rd of 6% of GDP (while 1/3rd is left for higher school and university education), which
is divided by total number of children in 5-14 year age group and assuming 100% coverage of children.
#3: This column gives budget per child by assuming that only 80% children would be covered with full budgetary support of 6% of GDP
Feasible monthly salary for the primary and
secondary school with 100% children coverage and
average student-teacher ratio of 30:1 (Table 2A)
Available Education Gross Av. monthly
Gross Average salary
Year Fund/ child/ Yr. (in emolument feasible/
of teachers /month
Rs.) teacher (in Rs.): B1
2006 5,874 9,545 6,818
2011 9,508 14,045 10,032
2016 15,042 22,221 15,872
2021 23,249 34,345 24,532

Feasible
Career start Feasible Career Pay Comm. Recom.
Year Pay. Comm. Career start
Av. salary start salary for for secondary
Recom. for Primary salary for SS @
feasible primary @ B school
B
2006
2011 3,788 3,443 13,042 4,132 15,996
2016 5,574 5,067 13,042 6,080 15,996
8,818 8,016 13,042 9,620 15,996
2021
13,629 12,390 13,042 14,868 15,996

@Salary of secondary school teachers is taken 20% higher than the primary school teacher on an
average.
 With 100% children coverage and average
student- teacher ratio of 40:1 (Table 2 B )
Available Education Gross Av. monthly
Gross Average salary
Year Fund/ child/ Yr. (in emolument feasible/
of teachers /month
Rs.) teacher (in Rs.)
2006 5,874 12,727 9,091
2011 9,508 20,600 14,714
2016 15,042 32,591 23,280
2021 23,249 50,372 35,980

Pay Comm.
Year Feasible Career Feasible Career
Career start Av. Pay. Comm. Recom. for
start salary for start salary for
salary feasible Recom. for Primary secondary
2006 primary @ B SS @
school
2011 5,050 4,591 13,042 5,509 15,996
2016 8,175 7,431 13,042 8,918 15,996
2021 12,933 11,757 13,042 14,109 15,996
19,989 18,172 13,042 21,806 15,996

@Salary of secondary school teachers is taken 20% higher than the primary school
teacher on an average.
 With 80% children coverage and average
Student- teacher ratio of 30:1 (Table 2 C )
Available Education Gross Av. monthly
Gross Average salary
Year Fund/ child/ Yr. (in emolument feasible/
of teachers /month
Rs.) teacher (in Rs.)
2006 7,342 11,931 8,522
2011 11,885 19,312 13,795
2016 18,803 30,554 21,825
2021 29,061 47,224 33,731

Feasible Career Feasible Pay Comm.

Year Career start Av. start salary for Pay. Comm. Career start Recom. for
salary feasible primary B Recom. for Primary salary for SS secondary
2006 @ @ school
2011 4,735 4,304 13,042 5,165 15,996
2016 7,664 6,967 13,042 8,360 15,996
2021 12,125 11,023 13,042 13,227 15,996
18,740 17,036 13,042 20,443 15,996

@Salary of secondary school teachers is taken 20% higher than the primary school
teacher on an average.
 With 80% children coverage and average
Student-teacher ratio of 40:1 (Table 2D)
Available Education Gross Av. monthly Gross Average
Year Fund/ child/ Yr. (in emolument feasible/ salary of teachers
Rs.) teacher (in Rs.) /month
2006 7,342 15,908 11,363
2011 11,885 25,750 18,393
2016 18,803 40,739 29,099
2021 29,061 62,965 44,975

Feasible Career Pay Comm.

Year Feasible Career
Career start Av. start salary for Pay. Comm. Recom. for
start salary for
salary feasible primary B Recom. for Primary secondary
SS @
@ school
2006
2011 6,313 5,739 13,042 6,887 15,996
2016 10,218 9,289 13,042 11,147 15,996
2021 16,166 14,697 13,042 17,636 15,996
24,986 22,715 13,042 27,258 15,996

@Salary of secondary school teachers is taken 20% higher than the primary school
teacher on an average.
• Ability to provide for RTE through government
schools will increase over time, with growth and
declining child-population ratio

• But…….there will be new Pay Commissions

• Could the laid-back attitude of many schoolteachers have
something to do with their salaries being too low? The salaries
used to be low (and one of us recollects joining protest marches
on the streets of Calcutta, as a college student in the early 1950s,
voicing demands for ‘a decent salary for our teachers’). But that
was a long time ago. It is difficult to defend that line of
explanation today, given the steep rise in the salaries of
schoolteachers, based on the recommendations of successive Pay
Commissions, which have boosted the salaries of teachers (and
other government employees) beyond levels that could have
been reasonably imagined only a few decades ago. In fact, the
salaries of government teachers in India are now well out of line
with private-sector norms as well as with international patterns.
• There is also, it appears, little evidence to suggest that high salaries
are of particular help in raising teaching standards. High salaries
make it possible to select teachers from a larger pool of applicants,
or to raise the minimum qualifications. On the other hand, they
also transform teaching posts into plum jobs that attract anyone
with the required qualifications – including those who have no
interest whatsoever in teaching. But perhaps more importantly,
high salaries also increase the social distance between teachers
and parents. In many Indian states today, the salary of a primary
schoolteacher is more than ten times what an agricultural
labourer would earn, even if he or she were successful in finding
employment every day at the statutory minimum wage. This social
distance that has grown over the years, partly related to huge
earning gaps, does not help to foster mutual cooperation between
teachers and parents from most rural families, which could have
been very important for the success of school education
• The relatively high salaries of school teachers have also had the
effect of making the expansion of school education immensely
more expensive in a country with a large pool of people qualified
to teach and eager to do so. It is important to recognize that the
problem of comparatively high salaries of teachers is part of the
general problem of public sector salaries in India. The country
has an odd system of pay fixation based on periodic reviews by
appointed Pay Commissions that recommend salary scales for
public sector employees without bearing any specific
responsibility to offer enlightenment on how the financial burden
of the wage structure would be financed, and more importantly,
what the implications of the salary increases would be on the
lives of those whose wages are not determined by Pay
Commissions
From “An Uncertain Glory: India and its Contradictions”
Jean Drèze and Amartya Sen (2013)
 Evolution of Public Sector Wages in India

Ratio (Salary to PC
Salary (₹)/Month GDP)
Per
Capita
Compress GDP
Central Pay ion Number of Current
Commission Ratio Pay Prices
(CPC) Minimum Maximum (Max/Min) Scales (annual) Minimum Maximum
I CPC (1946-47) 55 2000 36.4150 to 30 280.9 2.35 85.4
II CPC (1957-59) 80 3000 37.5500 to 140 329.2 2.92 109.4
III CPC (1972-73) 196 3500 17.9500 to 80 961.3 2.45 43.7
IV CPC (1983-86) 750 8000 10.7153 to 36 2882.3 3.12 33.3
V CPC (1994-97) 2550 26000 10.251 to 34 10415.1 2.94 30.0
VI CPC (2006-08) 7000 80000 11.435 to 19 34747.0 2.42 27.6
VII CPC 2016 18000 250000 13.9 18 98565.2 2.19 36.02
Author’s compilation based on 7th Pay Commission Report. GDP data taken from the Back series
released by CSO
Why India’s Public Sector Wages are High ??

• British Legacy

• Inherent social inequalities

• Regional inequalities
 Good Government Jobs for Europeans
• Initially, only Europeans permitted to take higher
paying jobs
• Only one Indian among 916 members of ICS (Indian Civil
Services) in 1870, which improved to 1 in 20 by 1915 (cadre
size 1260)
  European Soldiers Indian Soldiers
Total Per Total
Annual Month Annual
Per Month Pay (Rs Salary Pay (Rs
  Number Salary (Rs) Cr) Number (Rs) Cr)
1875 64500 24 1.86 134000 6.6 1.06
1895 66500 31 2.47 141000 7.6 1.29

Source: Habib (2007, p.28)

Army accounted for nearly half of the government expenditure

Till nearly the end of the 19th century, the Superior Services in
British India were manned almost exclusively by Europeans
most of whom belonged to what were known as the
"Covenanted Services". Public opinion was then pressing for the
Indianisation of these Services and not much attention was paid
to the Uncovenanted or Subordinate Services. Indianisation of
the higher Services was desired for two reasons, (i) political,
,and (ii) financial. It was felt that the proper thing was for the
nationals of the country to have an increasing share in its
administration. It was also considered that the scales of salaries
fixed on the assumption that high scales were required to
attract Europeans to service in India imposed an unnecessarily
heavy burden on the finances of the country.
The First Pay Commission’s Observations on
Islington Commission (1912-15)
"The advantages of equal pay for all officers who do the same work are obvious.
Under such a system there can be no suspicion that Europeans are favored at the
expense of Indians, whilst the danger of racial friction in the services is reduced to a
minimum. On the other hand, to set in India for the public services a standard of
remuneration which is in excess of what is required to obtain suitable Indian officers
is to impose for all time on the country a burden which she ought not to bear. If
young men who are statutory natives of India are paid at European rates owing to the
accident of their electing for a service in which a certain number of Europeans are
required, then young men who elect for other services like the Post Office for which
Europeans are not imported will need to be paid similarly if recruits of the same class
are to be obtained as at present. The circle of financial obligation will thus go on
widening and will finally touch the private market, particularly in the engineering and
educational fields. The choice is thus between the two evils of inequality on the one
hand and disregard of economy on the other.'' They seem to have thought that their
recommendations were calculated to avoid both these evils as far as possible. So far
however as the Indian Civil Service, the Indian Medical Service and certain other
Services were concerned, the Commission felt that they should take "existing facts''
into account and they accordingly allowed that the members of these services should
draw the same pay, whether they were Europeans or Indians. For the services to be
recruited for in India, they drew up separate scales of pay for Europeans and Indians
respectively. Page 5, Report of the First Pay Commission
 Education in Low Income
Countries (1980)
% of Age Group in School
Public
Expenditure
on
Per capita Education Higher
Country Income USD Literates (% of GDP) Primary Secondary Education
Bangladesh 160 33.1 2.1 60 15 4
India 300 40.8 3.6 79 30 9
Nepal 160 20.7 3 73 21 3
Pakistan 350 25.6 2.1 44 14 2
Sri Lanka 400 86.1 3.5 103 54 4
China 290 72.6 2.7 110 35 1
Burma 200 78.5 1.6 84 20 1
Vietnam 330 94 3 113 48 3
Indonesia 450 74.1 2 120 33 4
Egypt 680 44.9 5.5 78 54 15
Source: Weiner, M. (1992). The Child and the State in India, Table 7.2
 Exit, Voice, Loyalty: Albert
Hirschman
• Three options: Good government schools, medium level
government schools, and low level government schools
• One may rank: Good> Low > Medium
• Double-Peaked Preferences
Pub. School High Medium Low
Spending
Public 10,000 5,000 1,000
Private 0 10,000 10,000
Total 10,000 15,000 11,000

Availability of private substitutes

• There is also, it appears, little evidence to suggest that high salaries are
of particular help in raising teaching standards. High salaries make it
possible to select teachers from a larger pool of applicants, or to raise
the minimum qualifications. On the other hand, they also transform
teaching posts into plum jobs that attract anyone with the required
qualifications – including those who have no interest whatsoever in
teaching. But perhaps more importantly, high salaries also increase the
social distance between teachers and parents. In many Indian states
today, the salary of a primary schoolteacher is more than ten times
what an agricultural labourer would earn, even if he or she were
successful in finding employment every day at the statutory minimum
wage. This social distance that has grown over the years, partly related
to huge earning gaps, does not help to foster mutual cooperation
between teachers and parents from most rural families, which could
have been very important for the success of school education
From “An Uncertain Glory: India and its Contradictions”
Jean Drèze and Amartya Sen (2013)