THE Bhandari Modern Public School can be approached only by technological downshifting. Full-sized taxis cannot penetrate the narrow, crowded streets, so you have to switch to a tuk-tuk. Soon the streets become alleyways, so you switch to a bicycle-rickshaw.

The Brahmpuri slum in New Delhi is an energetic place, home to migrants, Muslims and other marginals. A barber with a cut-throat razor and a bucket of dirty water shaves clients on the pavement. Factories hum in people’s front rooms. Animals and children are everywhere: buffaloes pulling carts, white ponies doing nothing in particular (they are popular for wedding ceremonies), children hawking bicycle pumps and washing powder.

The school, despite its name, is private, and it is a miracle of compression: floor upon floor of children, 25 to a class, crowded into a narrow concrete block. It is also a miracle of order: the children wear uniforms and stand up to greet visitors. One classroom is decorated with bright pictures and perky slogans such as: “We will get more than 80% in maths.” The teacher worked for Infosys, a giant IT firm, before finding her vocation. Other classrooms are drabber. Dr Bhandari, the school’s owner and headmaster, is clearly a shrewd businessman. He runs a fancier school next door, decorated with images of Mickey Mouse. He has an impressive collection of certificates. He uses an interpreter to explain that one of his school’s strengths is that it is “English medium”.

Dr Bhandari’s school is part of a growing movement to provide private schools for the poor. There are no reliable national figures, but a new report for the India Institute, a think-tank, found that 65% of children in Patna, a fairly representative city, go to private schools. And 70% of parents who send their children to government schools would send them to private schools if they could afford the modest fees of 50-500 rupees ($1-10) a month.

Facilities are basic, but cheap private schools are orderly and often teach English. Dr Bhandari’s is part of a voucher experiment run by a local think-tank: the Centre for Civil Society gives 400 randomly chosen girls a voucher to spend on a private school of their choice. The results are encouraging: “voucher children” read and do sums better than their state-school peers, and have higher aspirations. They also get more family support.

That poor parents will pay for something the state provides free speaks volumes. India’s state schools pay their teachers far more than private ones, yet they are often worse. Surveys suggest that a quarter or more of government teachers are absent at any given time. Unions prevent the authorities from disciplining slackers or rewarding good teachers.

The willingness of poor parents to pay is also a sign of something more positive: ordinary Indians’ passion for education. Slums like Brahmpuri are full of garish advertisements for makeshift computer-training colleges and English schools. (Workers who are fluent in English earn 34% more than those who are not.) Indian companies that depend on brainpower are naturally keen to nurture local brains. Firms such as Infosys have built huge training machines that convert so-so university graduates into world-class computer programmers. And social entrepreneurs are producing interesting experiments: Sugata Mitra, a physicist, put a computer in a hole in the wall of his office, which backed onto a slum, and discovered that illiterate street children could teach themselves to surf the web. “Hole in the Wall” computers are now available at hundreds of sites across the country.

Yet India is much less innovative in education than in health care. Jeff Immelt, General Electric’s boss, enthuses that “every doctor in India is an entrepreneur”. GE has made India its global centre of “low-cost innovation”. Devi Shetty, a surgeon in Bangalore, applies economies of scale to reduce the cost of heart operations by an order of magnitude. Anant Kumar has set up a chain of low-cost maternity hospitals called LifeSpring. It is hard to think of anything comparable going on in education. Private schools are tiny businesses that vary hugely in quality. Companies such as Infosys focus on university-leavers rather than younger children. Social entrepreneurs do not have the resources to spread their innovations across India, let alone globalise them.

A few local governments have tried voucher schemes. Uttarakhand, a northern state, provides vouchers worth 3,000 rupees a year for orphans and dropouts, for example. But many Indian officials view private schools with suspicion. Educational entrepreneurs must obtain dozens of licences and pass endless inspections by bribe-hungry inspectors. Health care is regulated, too, but the rules for private schools (which threaten a public monopoly) seem designed to snuff them out. The 2009 Education Act (which begins to go into effect next year) dictates the minimum size of playgrounds and the minimum level of teachers’ salaries.

Unbinding the bookworms

India’s government is far from the only one to block school reform. But countries that have given educational entrepreneurs room to innovate have benefited. Sweden, for example, allows parents to take the money the state would have spent on their children at a public school and spend it at a private one. Private schools are allowed to make profits, and companies backed by private equity are allowed to create chains of schools. Such reforms force public schools to compete. If applied in India, they would force them to stop cosseting dud teachers or else lose students to academies.

The teachers’ unions would object. But the opportunity cost of doing nothing is immense. More than half of Indians are under 25. The country will reap a colossal demographic dividend if those young brains are well-educated. But if India doesn’t shake up its failing schools, they won’t be.

Economist.com/blogs/schumpeter