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The following OECD assessment and recommendations summarise chapter 8 of the Economic survey of India survey of India published on 9 October 2007.
How can the education system be improved?
There is an urgent need to improve education in India. Public expenditure on primary and secondary education is somewhat lower than in other emerging economies, but substantial private outlays result in overall spending being similar to that in developed OECD countries. Nonetheless, despite recent gains, the level of literacy is low and children receive on average only ten years of education, three years less than in many emerging countries. There are also marked differences in educational attainment across gender and social backgrounds. Here, it might be possible to draw on the positive experiences in countries such as Mexico and Brazil of giving the poor cash grants that are linked to the continued education of their children, hence helping to reduce poverty through the accumulation of human capital. Such a policy would, though, require a strong local administration to implement the programme. Poor educational performance also affects labour market outcomes, with illiterate people finding it difficult to obtain regular employment. The government is attempting to implement free and compulsory education for children between the ages of 6 and 14, and has banned the employment of children under the age of 14. However, higher enrolment is just a first step to better outcomes. More needs to be done to raise the quality of education, including providing stronger incentives for teachers to work and improving both the attendance and completion rates of students and teachers’ training. Education reforms at the state-level and in OECD countries suggest that decentralisation helps to raise efficiency and should be encouraged. Private-sector schools are expanding and typically cost less than public schools as a result of more market-based teacher salaries and better attendance of teachers. The government should experiment with vouchers which might allow further growth in private education.
In contrast to spending on primary and secondary education, outlays on tertiary education are low even after accounting for private spending. Total outlays are 0.8% of GDP, almost half the level in a large number of other emerging and developed countries. Moreover, a smaller proportion of younger age groups graduates from higher education than in many emerging countries. This shortfall appears to occur because of low private expenditure – even if it is high relative to that in continental European countries. Given the limited room for increased public spending and the high private return to tertiary education, one option would be to allow public universities to expand by charging higher fees and to permit more, appropriately regulated, private universities (including from abroad) to enter the market. One way to encourage higher private outlays would be to significantly expand the provision of loans with repayment contingent on income, so that all students are able to finance their studies, independent of their family background. The current loan programme is too small, overly complex and reaches only 2 3% of students.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations. The complete edition of the Economic survey of India 2007 is available from:
For further information please contact the India Desk at the OECD Economics Department at email@example.com. The OECD Secretariat’s report was prepared in the Economics Department by Richard Herd, Paul Conway and Sean Dougherty, under the supervision of Willi Leibfritz. Research assistance was provided by Thomas Chalaux.