The Draft National Education Policy has underlined the importance of public investment to build an equitable and high quality education system. The policy approach on investment in education suggests an increase from the current 10 percent of overall public expenditure of education to 20 percent over a 10-year period. If implemented, it means that the governments would have to allocate one out of every five rupee of public expenditure on education by the end of the ten-year period. Assuming that the growth of public expenditure keeps up with the growth of GDP (both in nominal terms), the share of public expenditure on education to GDP should increase. The impact of according a higher priority to education would be to enhance the resource envelope and release the resource constraint which has been an important roadblock in implementation of Right to Education (RTE) for all children in India. Whether this will translate into reality or remain a pipedream remains a moot question. However, even in its design, the financing issue requires greater clarity and thought, as we argue below.
Any financial estimate of resource requirements needs to be based on a understanding of what is desirable and what it would cost. It implies detailing out the physical norms and financials required for the same, so as create a normative framework. This is a well-established principle and one that has been the basis of most costing models followed worldwide. A clearly defined component-wise norm is necessary for transparency, accountability and feedback. For the estimates provided in the Draft NEP the underlying normative assumptions have not been published/ spelt out. Unless one were to engage and debate with the design and construction of normative that underlies the macro-estimates referred in the draft NEP, the latter will not hold water.
It would be instructive to recall that the trajectory of educational expenditure to GDP in Kothari Commission Report was based on a view of the required per child spending and the components of spending in terms of teacher and non-teacher costs, pupil teacher ratio, assumptions on population growth, priorities to different levels of educations, etc 
. Over the years, the estimates have grown in detail and sophistication, such as to better translate the social vision on educational development (Tapas Majumdar Committee, 1999). The macro-benchmark of an expenditure path laid down in the draft NEP – whether expressed as a proportion of GDP or as a proportion of public expenditure – makes sense when it is derived from the normative estimate of what is desirable and the gaps that it is supposed to meet. These details are missing, even though public discussion and scrutiny of this information, and a feedback is vital.
One may also point out here that the financing of education is an important component of public policy and merits a separate chapter rather than being pushed to a sketchy addendum in this important document.
One of the stated objectives of NEP is to “achieve access and participation in free and compulsory quality school education for all children in the age group of 3-18 years by 2030.” There is a proposal to amend the RTE Act to include “availability of free and compulsory quality pre-primary education”. “Availability of free and compulsory quality education for Grades 9-12 will also be made an integral part of the RTE Act.” The suggestion of the NEP to extend the RTE to secondary as well as pre-school children is a welcome step, if only, it is backed with adequate resources, preparation and planning. The ambit and coverage of justiciable right to education would be extended massively. Has it been provided for? Not really!
In a recent study, we have estimated the requirement for financing the right to education of children between the age group 6-14 years of age (Bose, Ghosh and Sardana, 2019a). This is the elementary school age group. Our objective is to estimate the normative resource requirement for universalization using a set of reasonable norms. Unit level data on schools is the basis for estimation as the RTE norms must apply to every school. The population of out of school children, estimated at roughly 15 million children are included in the calculations. In trying to arrive at normative resource requirement, component-wise financial and physical norms are discussed and evaluated. It may be noted here that the last official estimate of financial requirements for universalization goes back to 2009-10, around the time when the RTE Act came into being. Despite a clear clause in the RTE Act on the responsibilities of the Central government to prepare financial estimates for the implementation of the provisions of the Act[2
], there are no recent estimates of resource requirements. Our study may be seen as an attempt to address this lacuna.
How do our estimates compare with the suggestions of draft NEP? Table 1 puts the two estimates side by side. The additional requirement for elementary education as per our estimates – when normalized with overall public expenditure – stands at 4.9 percent in 2017-18 
. That is, over and above the existing spending on elementary education, an additional 4.9 percent of the overall public expenditure (of 2017-18 level) would be needed to close the various gaps. This would be necessary to fill the teacher gaps, bring about a parity in pay around a decent salary norm, run teacher education institutions and teacher training programmes, provide for an adequate management structure, provide for maintenance of schools, learning resources and students’ entitlements etc. Besides adequately providing for those who are in public and aided schools, the estimates include the cost of inclusion of out of school children. There is substantial progress needed, if the children are to be provided with an education that is worthy of being called so rather than a dysfunctional system 
Compared to the additional requirement of 4.9 percent of expenditure for elementary school level, the draft NEP has proposed the magnitude of 4.1 percent of expenditure (plus one-time expenditure on capital creation of 0.4 percent) on entire school education 
. Thus, a lower quantum of resources than what has been estimated by us as a normative benchmark for elementary level only is now proposed to be spread across a far greater number of pupil and expenditure heads. The allocations per student will be squeezed 
. If we are committed to RTE of equitable quality this appears to be an underestimate at first glance.
Further, given the glide path in allocations suggested – one percent increase every year – even the increased magnitude of 4.1 percent will kick in only by the end of the next decade (2030) as per the proposals of the draft policy. Whereas, the need for raising allocations is imminent and cannot wait for ten more years.
From the resources point of view, the essential idea of the RTE is to ensure the facilities of schooling in a time-bound and complementary manner so that the basic entitlement of every child is upheld. Both in terms of magnitude and timeline, the proposed increase seems inadequate when compared to the lofty objectives.
The Unequal Position of the States
For several states, the size of the overall pie available to them, rather than prioritization of expenditure, is at issue. Take the case of Bihar. Reprioritization of expenditure to 20 percent of the overall budget will not make any significant difference to the expenditure. The pie itself has to be increased substantially, and in an urgent manner. Between 2001-2 and 2015-16, expenditure on education (including art and culture) averaged about 18 to 19 percent of total expenditure (RBI, Study of State Finances) 
. And yet, actual expenditure on elementary education in Bihar is only a fourth of the total resource requirement on it, as per our estimates 
. There is need to spend on multiple fronts which require substantial capital and revenue expenditures. Unlike some the other states, Bihar still has a very high percentage of enrolled children accessing public schools. By strengthening the public school system, there needs to be a conscious attempt to pre-empt the exit to low quality unaffordable private solutions. Besides, there is a very large segment of children who are out of school including children who have dropped out, whose education squarely is the responsibility of the state. Population growth in Bihar is one of the highest indicative of need for further expansion in the future. There is a very stark disparity between needs and the revenues of the state.
Bihar is not alone, though it is certainly the most extreme case. In fact, we have identified 16 states – 8 general category states and 8 special category states – that require special central assistance as the gap between requirement and actual expenditures is large relative to the revenue base (including the present Central transfers). We have argued that for these 16 states, elementary education today requires a special thrust. This is imperative if the objective of universalisation of elementary education is to be fulfilled, as per the RTE mandate. The quantum of the fiscal transfer to the 16 states would need to be substantial, estimated at 1.14 percent of GDP (Bose, Ghosh and Sardana, 2019b).
The new NEP has to engage with the different layers of financing. The sub-national financial issues and center-state distributions are central to the idea of a national policy if it is to forge the long-run development goals. How can there be greater parity such that every child irrespective of where she is born (and to which family she is born) can have good quality education? How can the financing move towards greater equity? Unless the disadvantages and complexities are recognized upfront and addressed, the policy would not be able to usher in any substantial change.
] As a proportion of GDP, additional resource requirement works out to 1.4 percent (all-India estimates) for the year 2017-18. This is inclusive of 7th PC hike on wages of public sector employees. (See Chapter 4, Section 4.5 in Bose, Ghosh and Sardana, 2019a).
] CAG (2017) speaks about the deficits and the non-compliance in the implementation of RTE.
] An additional 1.4 percent of total government expenditure is proposed for early childhood education in draft NEP.
] It may be pointed out that the normative per student recurrent requirement are in a reasonable range (Bose, Ghosh and Sardana, 2019a). For the year 2015-16, it is estimated at around Rs.23,200 for general category states, on an average. Due to underlying differences in size of the schools and the mix of new to existing teachers, among other things, there is variability in normative per student recurrent requirement across states.
] In the recent period there seems to have been a slippage though not large in the priority accorded to education. The 14th Finance Commissions’s recommendations on intergovernmental transfers may have impacted the spending patterns of states, especially vis-à-vis social sector spending.
] Refer to Chapter 3 in Bose, Ghosh and Sardana, 2019a.
GoI. (1966). Education Commission, Education and National Development (Also known as Kothari Commission), New Delhi, Delhi: Ministry of Education.
GoI. (1999). Expert Group Report on Financial Requirements for Making Elementary Education a Fundamental Right (also known as Tapas Majumdar Committee Report of 1999). New Delhi, Delhi: Ministry of Human Resource Development.
The author is Assistant Professor, National Institute of Public Finance and Policy, NIPFP, New Delhi. Click here for detailed profile.
The views expressed in the post are those of the author only. No responsibility for them should be attributed to NIPFP.
This article was published in Confluence, Indian Academy of Sciences on July 11, 2019.