There is a strong relationship between economic growth and the level and quality of education. This is evident from the state of Kerala, the most literate state which is 3rd affluent state in the country and the 5th in terms of infrastructure penetration and investment attractiveness. There is a ready and steady supply of educated and skilled personnel for domestic and international markets.

According to the Finance Minister, P. Chidamparam, education and health continue to enjoy primacy in the budget. In this budget, allocation for education has been enhanced by 31% from Rs.18, 337 crores to Rs.24, 115 crores ($5.4 billion) and for health by 22% from Rs.10, 280 crores to 12, 000 crores ($2.8 billion).

Like, last year when he gave Rs.100 crore to the Indian Institute of Science (IISc), Bangalore, in this year’s budget, as a welcome move, he has allocated Rs.50 crore each to the University of Calcutta, University of Mumbai and University of Madras as research grant this year. All the three universities are celebrating their 150th anniversary. The universities will get an additional Rs.50 crore each at the end of the year as well.

For sustainable growth in future, sectors like education, IT, BPO, Healthcare and Financial services hold the promise. In the last year’s budget, several large schemes were introduced in health, education, employment, infrastructure etc. FM spoke of outcomes rather than inputs. This year’s budget does not sufficiently highlight the outcomes of these schemes.

Outcomes speak about the way the projects have been implemented, which in turn points to the quality of governance. Projects like Sarva Shiksha Abhiyan have been quite successful in some states. The allocations in the budgets were Rs. 3, 057 crores in 2004-05 which was increased to Rs.4754 crores and Rs. 7,156 crores in 2005-06. It is reported that the number of out-of-school children has dramatically reduced from 12 million in 2003 to 3 million in 2005. The teacher-pupil ratio has also reportedly improved in many states.

Our economic growth rates are high, but not explosive enough. There is not much trickle-down effects of our growth to the rural sector or to the poor. There seems to be a dichotomy of high growth rates on the one hand and increasing poverty and unemployment on the other. In India 65% of people are engaged in the agricultural sector; 26-30% are below the poverty line and 36-40% not literate. Out of every 100 children joining primary school, only 60 complete Class V; 40 complete VIII; 25 complete X; 15 complete XII and only 8 reach to college.

Economic growth is necessary, but not a sufficient condition to eliminate poverty. Education is important, necessary for sustained and rapid economic growth. Education gives empowerment and employability. It is as important a strategy as military or police for national interests and security.

Today there is a shortage of skilled employable force – professionals and graduates. Demand is on the increase – both at the internal and external markets for high quality employment from our schools, colleges, universities and professional institutes. This calls for a radical rethinking in the educational policy; a sufficient rise in investments and a more effective and innovative role of the Government.

Privatisation of education is sweeping through as a result of globalization. Global investment banks and firms are setting up large research establishments. Many Indian experts are being hired by other countries. Poor may be sidelined in the process, as education will become costlier. Government has to ensure quality education for the poor.

USA spends 10-13% of the budget on education; France 6.5%; Indonesia’s 8.1 per cent or more; Philippines spends 17%; Malaysia spends 20% and Thailand 27%. OECD (organization of economic cooperation & Development.) country average expenditure on education is 5.5%.

India spends only 3% even though the National Policy on education suggested 6% of GDP way back in 1986. Prior to the announcement of the budget, the trade union leaders had, in their discussion with the FM, suggested an Allocation of at least 10 per cent of budget on education. Investment on education must be increased by 25% every year. Investment on science, technology, R & D, if increased, if doubled, will lay a firm foundation for growth.

FM has said in this budget that the Education Cess has been widely applauded. As a consequence, he has introduced a similar treatment to health sector by taxing the items of health hazards – cigarettes, tobacco, pan masala etc.

Education Cess was introduced in the 2004-05 budget. The FM had said, “The whole of the amount collected as cess would be earmarked for education”. This includes the mid-day meal scheme. Budgets of the last three years fails to give an idea of how the Cess was used to further the objectives laid down. The methods of utilization are not clear.

For mid-day meal scheme, the allocation in 04-05 and in 05-06 budgets were Rs.1, 675 crore and Rs.3,010 crore respectively. But the actual expenditures were below the budgeted amounts. Cess collection for 2004-05 was Rs.5,010 crore. But expenditures were much lower, to around Rs.2000 crore. The 2006-07 budget proposes an allocation of Rs.218.94 crores for promotion of Siksha Kosh this year from revenues raised through the education cess. Cess collections need to be used efficiently and creatively.

We need to introduce innovative models for educational revolution. All we desire is a drastic reduction in people living in poverty, better health, education, equity, harmony and overall well-being. To quote the FM’s budget speech: “India is not a poor country, yet a significant proportion of our people are poor. Poverty is not only income poverty. Other indicators of poverty are illiteracy, disease, infant mortality, malnutrition, absence of skills and unemployment. The whole purpose of democratic government is to eliminate poverty and give to every citizen the opportunity to be educated, to learn a skill and to be gainfully employed. The Government holds that it is its sacred duty to empower the poor and eliminate the scourge of poverty.”

 

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