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Business Commentary/Bibek Debroy

Decentralisation will improve quality of education, generate demand

Deepak Lal has a piece in a recent issue of the Far Eastern Economic Review. He argues that from the Maurya to the Mughal period, India's per capita income was $ 150 in 1965 dollars. India was thus one of the richest regions of the world.

Post-independence, India is not one of the richest regions of the world. It is among the poorest countries of the world. Admittedly, there have been achievements in the fifty years and more since independence.

Despite quibbling about the right poverty line to use, the percentage of population below the poverty line has come down. But nevertheless, with a present per capita income of between $ 380 and $ 400, India's per capita income rank in the world is around 124th. This is using official exchange rates.

If one uses purchasing power parity exchange rates, India's per capita income goes up. But the rank comes down, since other countries also increase their per capita incomes. Using the international poverty line of one US dollar per day, around 50 per cent of India's population is poor. And using our own poverty line, the figure is around 30 per cent. 30 per cent is more than the populations of most countries of the world.

But there is reason for euphoria in the next fifty years. What will be the rate of growth in real gross domestic product in the next 20 years? Difficult to answer, but seven per cent should be possible. Yes, we might have grown by close to nine per cent had there been consensus on economic reforms.

But we can't wish away the democratic polity, so let us be content with seven per cent. The present rate of population growth is 1.7 per cent and is likely to slow down to 1.5 per cent. So that means an annual increase in real per capita GDP of 5.5 per cent.

Such a figure has never been attained since independence. If you apply this rate to a base figure of $ 400, twenty years down the line you will have a per capita income in today's dollars of somewhere between 1000 and 1500. What is, however, significant is the impact of such growth on poverty.

Typically, income distributions are log normal. There is a thick bulge towards the left and the tail tapers off towards the right. Thus, the initial impact of income growth on poverty is limited. But as one moves towards the bulge, the impact of income growth on poverty is substantial. Arguably, India is now poised to move through the bulge.

Therefore, twenty years down the line, the percentage of population below the poverty line (ours, not the international one) is likely to drop to between 10 per cent and 15 per cent. Such a sharp drop within twenty years has never been witnessed in India, although countries like China and Indonesia have done it.

If this happens, surely the nature of the poverty problem in India will be completely transformed. I do think this can happen. I don't think it will happen in Bihar or Uttar Pradesh. But why shouldn't it happen in the rest of the country?

Income poverty is only one dimension of backwardness. Other phenomena identified with India are low literacy, high infant mortality and low life expectancy. Thus, India also obtains a low Human Development Index and is ranked quite low in UNDP's Human Development Report.

The last formal literacy figures we have are from the 1991 census. This shows a literacy rate of 52.2 per cent and this is the figure that gets quoted everywhere. Forty-eight per cent of the country's population is illiterate. And there are fairly serious gender, caste and regional gaps. Strictly speaking, we have to wait for the census of 2001 to get firm literacy figures.

But rather remarkably, the National Sample Survey has come up with some literacy figures based on the 53rd round. It is fair to mention that the NSS is not geared towards collecting literacy figures and sampling designs don't reflect this objective.

Nonetheless, the NSS figures are truly remarkable. Steadily, the literacy rate has climbed from 52 per cent in 1991, to 56 per cent in 1993, 57 per cent in 1994, 58 per cent in 1995, 59 per cent in 1996, 62 per cent in 1997 and 64 per cent in 1998. In 1997, the urban literacy rate is estimated at 80 per cent, while the rural one is 56 per cent.

There has also been some narrowing of the gender gap. From 1991 to 1997, the male literacy rate increased by nine per cent. But the female literacy rate increased by 11 per cent. Quite understandably, people have questioned the veracity of these figures and we won't know till 2001 whether the NSS is right or wrong. But assuming the NSS is right, the improvement is nothing short of remarkable.

Some of the fastest increases in the literacy rate have taken place in the north-east (Sikkim, Nagaland, Meghalaya, Arunachal Pradesh and Assam). With a literacy rate of 96 per cent, Mizoram is now the most literate state of the country, ahead of Kerala.

But consider what has happened in the traditionally backward and poor BIMARU (Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh). The rate has increased by 10.5 per cent in Bihar, 13.1 per cent in Madhya Pradesh, 16.5 per cent in Rajasthan and 14.4 per cent in Uttar Pradesh.

Consequently, Bihar now has a literacy rate of 49 per cent, Madhya Pradesh of 56 per cent, Rajasthan of 55 per cent and Uttar Pradesh of 56 per cent. Note that there are severe gender gaps in some districts of these states.

For these figures to be believable, something must have changed dramatically since 1991. I do believe there has been a change in the mindset. Before 1991, we used to think that a centralised government operating from Delhi or state headquarters would provide primary education or literacy.

No wonder nothing changed in fifty years. Nor would it have changed for another five hundred years have the mindsets remained unaltered.

Whatever the reforms may have failed to accomplish, I think in primary education it is now recognised that a centralised government is no answer. There has to be decentralisation, the involvement of non-government organisations and local bodies. Lok Jumbish, the Education Guarantee Scheme in Madhya Pradesh, or experiments in Andhra Pradesh and Bombay are all about this.

The centralised government administered system perpetuated a myth that there is no demand for primary education. Rubbish. There is demand if there is quality. And the centralised government administered system has not been able to deliver on quality. If the quality is right, people are prepared to pay.

I hope this lesson now generalises to other areas where the government was supposed to provide public services -- power, roads, irrigation works, ports, telephones, water and sewage disposal. A bloated government that distances itself from the citizen and grants itself higher and higher wages and salaries is not the answer. Expenditure on education can also be increased by hiking salaries of such government teachers.

For fifty years we made that mistake. Let us not make it for another fifty. Provided this lesson is learnt, there will be many more silver linings.

Bibek Debroy

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