 FINANCING THE PROGRAMME

Past Trends

4.1 Adequate financial resources constitute the backbone of all developmental activities. For major programmes like universalisation of elementary education and adult education which are gigantic in terms of numerical targets, India requires massive financial inputs. It has been observed that when funding is not commensurate with the magnitude of the mobilizational tasks and size of the numerical targets to be covered, the programme falters. All along, insufficient funds even to open and run the schools, apart from the tasks of parental cooperation and societal mobilization, have been the main reasons for-the obstruction of universalisation of elementary education in India. The problem has been exacerbated by the ever- increasing backlog caused partly by demographic growth but more so by the high drop-out rates caused by systemic deficiencies along with socioeconomic factors.

4.2 The view putforth by the Education Commission (1964-66) that the public expenditure on education should be 6 per cent of the GNP, has been reiterated time and again by various committees and commissions and has become a national resolve. The National Policy on Education (1986) states that during the Eighth Five Year Plan and onwards it will uniformaly exceed 6 per cent of the National Income. Over the years, the percentage of GNP spent on education has been increasing. At the inception of planning

(1950-51) India was spending 1.2 per cent of the GNP on education, and this increased approximately to 3.9 per cent i. 1989-90. (Table 4.1)

4.3 Education is now funded by various sources - Central and State Governments, local bodies and private contributors. Data on sourcewise financing of education in India show that the Central, State and local Governments accounted for 87.13 per cent of the expenditure on education in the year 1983-84 (see table No 4. 2)

4.4 The allocation to education in the successive five year plans has, however, shown a declining trend in percentage terms. In the first Plan, 8.62 per cent of the total plan outlay was devoted to education which declined to 2.59 per cent in the sixth Plan. It has shown a marginal increase to 3. 55 per cent in the seventh Plan. In the eighth Plan, however, the percentage of educational outlay to total plan outlay is 4.89 (Table 4.3). This position indicates that as investment in the infrastructural expenditure of the States got stepped up, education sector's percentage went down; but with renewed emphasis on human resource development, the percentage has increased.

4.5 However, the percentages need to be seen against the background of allocations in absolute terms. Thus, the outlay for education increased from Rs. 169 crores in the first Plan to Rs. 1285 in the fifth Plan and to Rs. 6385 in the seventh Plan in which the actual expenditure was much higher at Rs. 8540. The increase in the outlay during the eighth Plan at Rs. 21217 is

more than three times the outlay of the seventh Plan and more than two times the expenditure of the seventh Plan (Table 4.4).

Allocation for Elementary Education :

4.6 The pattern of allocation of resources for elementary education has been quite favourable though there are ups & downs. During 1951-56, nearly three-fifths of the outlay of the education sector was allocated to elementary education. During 1956-74, the share of resources allocated to elementary education declined from 56 per cent to 30 per cent. After 1974, however, there is a steady increase in the share of resources allocated to elementary education from 31% in the seventh Plan, to 43% in the Eighth Plan (Table 4.4).

4.7 Much of the growth in expenditure on elementary education is offset by an increase in prices, rapid increase in population and increasing enrolments, in particular. In terms of real prices, the increase in expenditure on elementary education would appear quite modest. With regard to expenditure per student, the system is perhaps managing with more or less the same amount of money in real terms in 1980-81 as in 1950-51. This clearly implies that there is need to step up the level of total. resources to be allocated for elementary education, not only to take care of the increase in the enrolment and on account for inflation but also for improving the quality of education.

Allocation for Adult Education

4.8 The outlay on adult education during the first to fourth

Plans ranged between Rs. 5 crores to Rs. 8 crores. But there was a step up during the fifth Plan when the expenditure rose to Rs. 23 crores as against the outlay of Rs. 18 crores. From the sixth to eighth Plan, the outlay for adult education registered an increase from Rs. 128 crores to Rs. 1807 crores. Although the outlay for adult education nearly trebled from the sixth Plan to seventh Plan, i.e. from Rs. 128 to Rs. 360 crores, the increase from seventh to eighth Plan was five-fold, i.e. Rs. 360 crores to Rs. 1807 crores (Table 4.4).

Combined Allocation for EE/AE

4.9 Elementary Education and Adult Education have been two MNP components in the education Sector. Their combined allocations since the first Plan have also shown corresponding shifts. in percentage terms, the allocation which was 58% in the First Plan fell to its lowest viz. 32% with the fourth Plan but further rose to 41% in the sixth Plan. After falling to 37% in the seventh Plan, (but 39% in expenditure terms), it has ripen to 51% in the eighth Plan. The Committee feels that the outlay for these two subsectors should in successive Annual & Five Year Plans be not less than 50% of Education sector outlays till the goals of UEE and eradication of adult illiteracy are achieved.

4.10 In absolute terms, the allocation for MNP component has increased from Rs. 2324 crores in the seventh Plan (Rs. 3297 crores in terms of expenditure) to Rs. 11009.06 crores, i.e. an increase of more than 3 times in expenditure terms.

Methodology of Calculating Financial Requirements and the Funding Gap

4.11 The Committee is of the view that for achieving UEE, statewise targets need to be fixed, based on the population projections of children in the age group 6 - 14. However, since the latest age-specific data of population based on the 1991 census are not yet available, the Committee has confined itself to making estimates at the national level for the eighth Plan. When the age- specific data of 1991 census become available, the states can undertake this exercise by following the method suggested by the Committee.

4.12 The requirement of financial. resources needs to be estimated on the basis of cost per student with addition for the non- recurring component. Student expenditures at primary and middle level education for the year 1983-84, the latest year for which such data are available, are taken from Education in India and the same for 1992-93 are estimated by adjusting them for inflation. Accordingly, the per student expenditure at primary level has been assumed to be Rs. 500 and at middle level Rs. 550. For non-formal education the per student expenditure is taken as 50 per cent of the expenditure per student in formal education For open learning, the estimated per student expenditure has been assumed to be less than that for non- formal i.e. Rs. 200. It has been assumed that between 20 - 25% of target will be covered by the non-formal model (including open education).

4.13 For estimating the financial requirement of elementary education, the Committee made two sets of calculations. The

first alternative (A) is based on observed per student costs. The second alternative (B) takes account of the need for increasing expenditure per student especially to build in quality inputs. Accordingly, cost per student is assumed to be Rs. 800 upper primary, Rs. 700 - primary, Rs. 350 - non-formal and Rs. 250 - open learning. The proposed targets to be covered through formal, non-formal and open learning during the eighth Plan are given in Statement No. 1.

        
                                   Statement No. 1
        
                           TARGETS OF ELEMENTARY EDUCATION
        
                                          
        
        Sl.              Enrolment by 1996-97 (by the end of 8th Plan)
        No.    Stages    Stream-Formal    Non-formal    Open      Total
                                                      Learning
        
                                          
        
        1.       2.           3.              4.          5.         6. 
        
                                          
        
        1. Primary Stage    2.02              -           -        2.02
        
        2. Upper Primary
           stage            2.36            1.00        0.23       3.59 
        
                                          
        
        Elementary          4.38            1.00        0.23       5.61 
                                          
        
        Source:   Eighth Plan (1992-97), New Delhi, Planning commission,
                  1992, Vol.II, pp 386. and calculations in Education
                  Division.

4.14 Accordingly, the alternative "A" gives the total recurring cost by the end of Eighth Plan as Rs. 3658 crores including cost on account of operation blackboard. The non-recurring cost would. include the provision for setting up new primary schools (Rs. 1050 crores) , upgradation of schools (Rs. 3000 crores)and construction of additional class-rooms (Rs.3438 crores). Adding the total non- recurring cost of Rs. 7488.00 crores, the total estimate for elementary education by the end of the Eighth Plan works out to Rs. 11146.00 crores.

4.15 In the second alternative (B) the total recurring cost by the end of Eighth Plan will be Rs. 4763.50 crores. Adding the total non-recurring cost of Rs. 7488 crores by the end of the eighth Plan, the estimated cost for elementary education will be Rs. 12251.50 crores. (Table No.4.5)

Financial Estimates for Adult Education

4.16 As stated in the eighth Plan, the target to be covered is 10.58 crore adults. The cost estimates are based on the two alternatives of adult education programmes viz. IPCL method and RFLP method (Centre-based) of which the former corresponds to TLC. Keeping in view the number of districts to be covered under different strategies, the cost per learner under TLC is taken to be Rs. 125 and under RFLP - Rs. 200 per learner JSN's are assumed for every 800 learners and the cost norm of Rs. 7000 nonrecurring cost and Rs. 7000 recurring cost is assumed. The financial requirements work out to Rs. 1891 crore as below -

        
                  Through TLC         Rs. 992.00 crores 
                  Through RFLP        Rs. 529.00   "
                          JSNs        Rs. 370.00   "
        
                       Total:         Rs.1891.00 crores

Furding Gap for EE

4.17 While the requirement under conservative estimates (A) will be Rs 11146 crores for elementary education it would increase to Rs. 12251 crores under estimates (B) as against the eighth Plan allocation of Rs. 8936.46 crores. The shortfall ranges between Rs.2209.90 and 3314.54 crores according to the two estimates. During the Seventh Plan, the expenditure in the State Sector was nearly three times that of the Central Sector and accordingly estimated requirement for State sector in the eighth Plan will be Rs. 8359.50 crores as against the present allocation of Rs. 6056.46 crores. Thus the shortfall in the State sector will be Rs. 2303.40 crores.

Combined Funding Gap for EE / AE

4.18 Funding Gap for AE As against requirement of Rs. 1891 crores the eighth Plan outlay for AE is Rs. 1794.44 crores. During the seventh Plan, expenditure on AE in the State sector was 50% of the Central sector; under TLC, the pattern of assistance is 2/3rd Centre & 1/3rd State. Hence, we may have to make a provision of Rs. 630.33 crores in the State Sector as against the present outlay of Rs. 384.44 crores. Therefore, there is a shortfall of Rs. 235.89 crores in State sector. There is a marginal excess provision under Central Sector which may be more apparent than real in view of the conservative nature of the estimates. In any case, there is an overall shortfall of Rs. 139.33 crores. (Table No.4.6).

4.19 In all, for adult and elementary education, the requirements will range from Rs. 13037.00 crores to Rs,14142.00 crores as against the eighth Plan outlay of Rs. 10730.90 crores. Thus, the shortfall will range from Rs. 2349.23 crores to Rs. 3453.87 crores for the eighth Plan. It is mainly in the State sector & marginally in Central Sector under Alternative "A" but substantially so in the State Sector under Alternative "B". if the objectives of AE and UEE by the year 2000 are to be realized the additional resources for adult and elementary education will be unavoidable and special measures may be required to close the resource gap.

4.20 The Committee has considered the matter of resources very carefully. It recommends that resources must be raised from

various avenues. As a part of such effort, the Central & State Governments should explore the possibility of levying an education cess on urban rural revenues, incomes, and properties in such a manner that the proceeds of the cess are 100% earmarked and utilised for the promotion of literacy including elementary education, and are available both to Centre States for this purpose.