The World Bank’s Human Capital Index, 2018 ranks India at 115 out of 157 nations. While there has been progress towards universalisation of elementary education and gains in broad indicators such as enrolment rates and student-teacher ratios, the quality of education continues to remain a black box. In this post, Bandyopadhyay and Agarwal discuss the key factors behind the deteriorating learning outcomes, with an emphasis on per-pupil expenditure, school infrastructure, and teaching.

The recently released Human Capital Index of the World Bank ranks India at 115 out of 157 nations under study. An interesting component of the Index is the ‘Harmonized Test Scores’ where India scores 355, well below the world average of 431. While the introduction of Sarva Shiksha Abhiyan1 (SSA) and Right to Education (RTE) Act, 2009 have contributed immensely to universalisation of elementary education, improvements in quality continue to remain a black box. With gains in broad indicators like enrolment rates and student-teacher ratios being well documented, we discuss the key factors behind the deteriorating learning outcomes, with an emphasis on per-pupil expenditure (PPE), school infrastructure, and teaching2.

According to the Annual Status of Education Report (ASER) (2015), learning outcomes – as measured by grade 3 and 5 reading- and mathematics abilities – have deteriorated for most states for over a decade until 2014. The possible underlying causes behind this worrisome phenomenon deserve fair attention.

State-level expenditure on education

Firstly, we look at the spending on education. Most of the expenditure on school education in India is undertaken by state governments. In Figure 1, using data from Reserve Bank of India’s Database on Indian Economy (DBIE), we compare state-level expenditure on education as a share of the state’s total expenditure in 2000-01 and 2016-17. Despite India’s growing young population, it is evident that, the share for most states fall below the 45-degree line reflecting a reduction in education expenditure.

Figure 1. State-wise share of education expenditure in total expenditure in 2000 and 2016

Source: DBIE. Note: AP – Andhra Pradesh, AS – Assam, BR – Bihar, CG – Chhattisgarh, GJ – Gujarat, HR – Haryana, KA – Karnataka, KL – Kerala , MH – Maharashtra, MP – Madhya Pradesh, OD – Odisha, PB – Punjab, RJ – Rajasthan, TN – Tamil Nadu, UP – Uttar Pradesh, WB – West Bengal.

More importantly, we calculate the real per-pupil expenditure (RPPE) on education across states, using state-level CPI (consumer price index) data, available from 2010-11 to 2015-16 from the Ministry of Statistics and Programme Implementation. We deflate the nominal expenditure on education to get the real expenditures (base year 2010) and divide by the state-level enrolment in government primary schools available from DISE (District Information System for Education) state report cards 2010-2015. The average RPPE over the six-year period demonstrates considerable variation across states as shown in Figure 2: The figure for Kerala is more than 17 times that of Bihar.

Figure 2. Variation across states in average real per-pupil expenditure (2010–2015)