Free Market

Fund schools, not parents

According to this author, a major problem in Indian School education is the unorganized nature of the industry. There is a supply problem in quality school education. This problem is not going to go away either by sending less privileged children to private schools on state funds (RTE) or by directly handing out vouchers to parents of children.

Given the widespread abuse of targeted public welfare programs (PDS, LPG subsidy), school vouchers are again susceptible to inclusion and exclusion errors. But thats a different discussion.

Consider the case of retail stores or rental homes. The unorganized nature of these industries prevent them from either reducing prices or improving the quality of their products. In a similar vein, lack of volume in sales and very high capital costs prevent companies running schools (mostly family owned) from improving quality or making education affordable.

The major premises in both RTE and school vouchers are that,

a) public schools are not good enough and/or cannot accommodate more children,
b) private schools are better but poor parents cannot afford their fees.

So both RTE and school vouchers try to send children from public schools towards private schools.

If the number of parents seeking public school education continues to increase, the strain on Public school system is not going to decrease. India’s population is very young and they will have children of their own in the next few decades. With this continuous large demand for public education, is there scope for improving quality?

Besides, if part of the population is state funded to go to private schools, a large population will still be left in public schools. This is going to only widen the inequality in society, not to mention the rural-urban divide in quality school education. Most public schools do not have higher secondary classes which will create another demographic problem — of children of poor parents abandoning schools in higher classes.

Further, if public policy is aimed at sending more consumers to private schools, (which for the most part are Mom & Pop ventures or charities), they can accommodate state funded children only at the expense of quality and by increasing school fees for other parents.

Instead, does it not make more sense to solve basic problems identified by both RTE and School Voucher proponents?

1. Improving public schools:

There are about 30 managements (school education departments of States and Kendriya Vidayalaya) running the entire Public school system. Improving the management structure, either by letting private managements run parts of the public school system or by corporatising the school departments into multiple small companies, will have long term benefits. After addressing management issues, a one time large investment in public education to improve capacity (teachers, buildings, labs) is likely to be effective.

2. Making private education affordable:

Like in any industry, volumes of scale can bring down prices. If public policy encourages large firms to start chains of schools, or the consolidation of existing family/charity owned schools, there will be enough competition to bring down prices. Government letting large private firms run public schools (higher fees for additional capacity) will help with this consolidation process.

The author intends to make concrete proposals on the above two strategies, in a later post, based on the responses to this post.

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