Policy Reforms and Financing of Elementary Education in India: A Study of the Quality of Service and Outcome

Even as a case can be made out for public spending on elementary education, its link with enrolment rates does not appear strong. However, once efficiency and demand-side factors are accounted for, public spending is seen to make an impact on the rate of enrolment and quality of education as measured by teacher-pupil ratio. Teacher-pupil ratio and the number of schools, in turn, are seen to have a stronger impact on the rate of enrolment in efficient states. Literacy rates as well as state domestic product were seen to have a positive influence on education. The share of public expenditure on elementary education in GDP peaked in 1990-91 but never achieved the targeted level of 6 per cent of GDP. The reforms brought a break in the growth rate of public expenditure on elementary education, from which not all the states could recover even over an extended period of time. [Working Paper No. 93]