india failedeconomicgiant nov13

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http://www.rediff.com/business/slide-show/slide-show-1-special-worlds-best-talent-

competitive-countries-india-lags/20131129.htm

http://www.rediff.com/business/slide-show/slide-show-1-column-why-india-failed-to-

become-an-economic-giant/20131129.htm

Why India failed to become an economic giant

November 29! 2013 12:20 "#$

Investment in human capital is likely to fail to translate into effective growth if

incentives for entrepreneurs are missing, says Arvind Panagariya.

"t has been asserted that "ndia neglected education! especially at the elementary level!investing too little in it in the early post-"ndependence decades.

"t is additionally claimed that the low investment in education was the reason "ndia grew
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slowly during those decades. %re these critics right&

'ne way to highlight the difficulty of achieving high per capita e(penditures oneducation during the early decades is to as) what it would have ta)en to achieve the

current level of per capita e(penditures on education.

"n 200*-09! the latest year for which such an estimate is readily available +see graph in

slide 2,! e(penditure on education by all departments in the central and state governments

amounted to 3.* per cent of gross domestic product +,.

%ssuming the same proportionate e(penditure in 2012-13 and recognising that per capita

income that year was .* times that in 190-1! it would have ta)en a whopping 22 per

cent +.* times 3.*, of in the latter year to reach the current per capita e(penditureon education.

$he situation did not get significantly better three decades later. #low growth meant thatper capita income in 19*0-*1 rose to only 1. times that in 190-1. $his meant that percapita income in 2012-13 remained 3.* times that in 19*0-*1.

$herefore! achieving the 2012-13 level of per capita e(penditure on education in even19*0-*1 would have reuired spending 1. per cent of on education! a virtualimpossibility.

$he actual e(penditure on education in "ndia in 19*0-*1 was three per cent of . $hisis perhaps on the low side when compared with other countries! but not dramatically so.

%s an e(ample! government e(penditure on education in #outh orea was 4ust 2.2 per


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cent of in 195! although it rose to . per cent in 19*6.

"n view of the low initial per capita income and slow growth! "ndia could have spent! atbest! marginally more on education in per capita terms than it actually did in the first

three decades.

$hose arguing otherwise must point out the cuts in other e(penditures that were

politically feasible as well as economically defensible. "ndeed! given the high fiscal

deficits and competing demands for public e(penditure! even today! our best bet forraising education e(penditure remains rapid growth.

7ising per capita incomes yield a double dividend when we consider the total e(penditure

on education. 'n the one hand! they bring the government larger per capita revenues! andon the other they bring higher incomes to households to increase private e(penditure on

education.

8ven by official count! 30 per cent of children in the first to fifth grades were in private

schools across rural and urban "ndia in 2010. ithout these private e(penditures! which

show a rapidly rising trend! "ndia would not be anywhere near achieving the goal of


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universal elementary education today.

$urning to the second claim by the critics! while education certainly plays an enablingrole in faster growth! it is far from sufficient. $wo dramatic e(amples illustrating the

point are uba and the #oviet ;nion.


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#econd! the failure of "ndia has been not so much in mobilising e(penditures in education

as in using those e(penditures effectively and efficiently. $he e(penditures on education

in #outh orea in the 190s and 1960s were uite modest. @et these countries were ableto e(pand literacy rapidly.

#adly! our civil society groups! 4ournalists and politicians insist on more and more publice(penditures and public delivery of education but not on superior educational outcomes.

"ronically! however! nearly all of them rush to private schools when it comes to educatingtheir own children and grandchildren.

8ven the 7ight to 8ducation %ct that they have pushed through a spineless abinet and

arliament only see)s to ma(imise input without demanding even minimal educationalachievements.

The writer is a professor at Columbia niversity.

#ource:
http://www.business-standard.com/

india failedeconomicgiant nov13

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