Report No.

3
South Asia Human Development Sector
A Policy Note on The Grant-in-Aid
Systemin Indian Education
November, 2003
Discussion Paper Series
37834
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lNDlA
A Policy Nolo on
Tho Grunl-in-Aid Syslom
in
lndiun Educulion
MAlN lSSUES AND CPTlCNS FCP PEFCPM
Humun Dovolopmonl Soclor
Soulh Asiu Pogion
Tho World 8unk

!
CCNTENTS
Acknowledgments
Lxecutie Summary
Chapter I. Background and Objecties 1 1
Chapter II. 1he Grant-in-Aid System in India - An listorical Perspectie 1 2
Chapter III. Size o the Priate Aided Sector in India - School Lducation 1 3
Chapter IV. Size o the Priate Aided Sector in India - ligher Lducation 1
Chapter V. Public Lxpenditure on Grants-in-Aid 1
Chapter VI. Perormance and Costs o Aided Institutions 1 8
Chapter VII. Issues or Reorm in the GIA Sector 2 3
Chapter VIII. Recent attempts at Reorm 2
Chapter IX. Grant-in-Aid Mechanism and Public Subsidization o
Priate Sector - an International Perspectie 3 0
Chapter X. Recommendations or Reorm 3 3
Chapter XI. 1he Reorm Program Requires Management and 1echnical
Capacity Building and Additional linancing in the Short Run 4 0
Reerences 4
1ables
1able 1 Distribution o schools by management, 1995-96 1 4
1able 2 Distribution o schools by management, 2000-01 - selected states 1 5
1able 3 Lnrolment Shares in Priate Institutions at Primary and
Secondary Leel by State ,1993-94, 1 5
1able 4 Urban Areas: Lnrolment Shares in Priate Institutions at
Primary and Secondary Leel ,1993-94, 1 6
1able 5 ligher Lducation: Institutions and Lnrolment by 1ype o
Management, 2000-01 1
1able 6 Share o Grant-in-Aid Lxpenditure in Public Lducation Budgets 1 8
1able Distribution o GIA Across Leels , o row totals,, 2000-01 1 9
"
1able 8 Gross Lnrolment Ratio ,6-11 year age group, and Lnrolment
In Aided Institutions 1 9
1able 9a SC,S1 Lnrolment at Percentage o 1otal Lnrolment - By Leel
and 1ype o Institution ,1995-96, 2 0
1able 9b Rural Lnrolment as Percentage o 1otal Lnrolment - By Leel
and 1ype o Institution ,1995-96, 2 1
1able 9c Lnrolment o Poor as Percentage o 1otal Lnrolment - By Leel
and 1ype o Institution ,1995-96, 2 1
1able 10 Cross-Country Comparison o Priate Sector in Lducation, 1998 3 1
1able 11 Comparison o Public-lunded Priate Schools: India and
Netherlands 3 5
Charts
Chart 1 India: Costs and Perormance o Goernment and Priate Schools 2 3
Annexes
Annex 1 Kerala 4 2
Annex 2 Comparison o Grant-in-Aid Code o Dierent States 4 5
Annex 1able 1 Key leatures o the Legislatie lramework or GIA in Kerala 4 2
#
ACKNCWLEDGMENTS
1his Policy Note was written by Sajitha Bashir in the South Asia luman Deelopment Sector Unit
,SASlD, o the \orld Bank, and is part o the analytic work on Critical Issues in Reorming
State Lducation Systems`. It draws on specially commissioned consultancy reports on particular
aspects o the system o public subsidization o the priate education sector in India and abroad.
Najmi Nais, consultant, collected and analyzed data rom state goernment education budgets.
1abulations o household surey data on participation in public and priate education were prepared
by Indicus Analytics, as part o a broader analysis o education data rom the National Sample
Surey, 1995,96. New Concept Consultancy Serices, New Delhi, undertook a reiew o the
Grant-in-Aid system in India, under three heads: ,i, National Oeriew, with basic educational
statistics by stages, ,ii, Legal lramework, which reiewed the GIA codes in arious states, and ,iii,
a case study o the GIA system in Kerala, based on secondary data and interiews with policy
makers, administrators, teachers and parents. James 1ooley ,Proessor o Lducation Policy,
Uniersity o Newcastle upon 1yne, prepared a detailed analysis o the GIA system in Karnataka,
which used secondary data and inormation collected rom ield isits to schools and colleges in
arious districts. 1his analysis also examined the possibilities o reorming the existing GIA system,
including the inancial and managerial implications o moing to a dierent system. Ayesha Vawda
,MNSlD, \orld Bank, prepared a reiew o international experiences in granting public subsidies
to the priate sector.
1he report beneited rom comments receied rom Manuela V. lerro ,peer reiewer and Lead
Lconomist, SASPR,, Charles Griin ,Sector Director, SASlD,, Lmmanuel Jimenez ,Sector
Director, LASlD, and Michelle Riboud ,Sector Manager, SASlD,.
$
%
Muin Findings und
Pocommondulions
1he system o proiding public subsidies to the
priate education sector in India, called grant-in-
aid` ,GIA,, originated in the colonial times and
initially consisted o inancial support to priate non-
proit institutions or a part o the recurrent and
capital costs o proiding education. 1he priate
sector, in general, inanced the major part o the
capital costs. A signiicant change occurred in the
early 1960s, when many states, ollowing the
example o Kerala, tied the subsidy to teachers`
salaries, which were placed on a par with those o
teachers in goernment institutions. New priate
institutions could request GIA - which was usually
granted - by operating or a minimum number o
years without aid, ensuring minimum standards and
acilities as required by the GIA code and obtaining
recognition rom the regulatory bodies. 1he GIA
mechanism inoles supply-side inancing, with
grants linked to teacher salaries and considerable
regulation o priate institutions by the goernment.
1he experience with demand-side interentions
,scholarships and stipends, has neither been on a
large-scale nor ery salutary.
Most Indian states hae made extensie use o the
priate sector to expand access to secondary and higher
education by proiding public subsidies. 1he grant-in-
aid institutions are signiicant proiders o education,
particularly secondary education and aboe, in many
large states o India. At the primary leel, oer 80
percent o enrolment is in goernment schools in most
states but our states hae made moderate to extensie
use o aided schools at the primary leel. In other
states, priate unaided schools, rather than aided
schools, are more prominent at the primary leel. At
the secondary leel, in seen states, oer two thirds o
enrolment is in priate institutions, most o them aided.
At the tertiary leel, nationally, one-third o total
enrolment is in priate aided institutions, but the share
is signiicantly higher in states with as larger number o
colleges.
1he GIA mechanism seems to hae expanded access
at the primary leel, it has also sered the poor and
EXECUTl\E SUMMAPY
the disadantaged in many states but its perormance
in terms o equity goals has been mixed. Using the
state as an unit o analysis, the Gross Lnrolment
Ratio ,GLR, or the 6-11 year olds is positiely
associated with the extent o use o aided institutions
at the primary leel, een ater controlling or per
capita state income. 1he relationship does not hold
or the enrolment ratio or the 11-14 or 15-1 year
age groups. Although it is impossible to iner causality
rom this association due to the limited number o
obserations ,states,, the result does raise the question
whether subsidization o the priate sector is an
eectie means o expanding access especially at
the primary leel. 1he participation o the poor
and disadantaged groups in aided institutions aries
by state and leel o education. At the primary leel,
in most states, they sere a greater proportion o
SC,S1, rural and poor st udent s t han t he
unsubsidized priate schools, but not as much as
the goernment schools. In some states ,most o
them with small GIA sectors,, howeer, the
unsulsidized schools sere a greater proportion o
the poor. At leels beyond primary, the subsidy to
priate institutions greatly aors the richer groups
because relatiely ew o the poor reach the higher
stages o education. An extreme case is that o Orissa
where subsidies to the priate sector are highly
inequitable, because the state proides public aid
almost entirely or priate colleges while it has relied
exclusiely on goernment proision at the primary
leel where access is still relatiely restricted due to
oerall constraints on goernment expenditures.
Six broad sets o issues which aect the present
system are discussed in urther detail: ,i, rigidities in
the GIA system or higher education including
inability to adjust the subsidy to changes in student
demand, ,ii, teacher issues, including inlexibility in
teacher deployment, delays in appointments, delays
in disbursement o salaries, linking teachers` salaries
to goernment pay scales and lack o accountability,
,iii, weak legal ramework and,or inability to
implement laws, in addition, many states hae tens
o thousands o pending court cases inoling aided
institutions, ,i, limited resource mobilization by
priate sector, ,, lack o monitoring, leading to
gross abuse o the subsidy in some states, and lack
&
o quality assurance o proiders, and ,i, lack o
competition and a holistic ramework or priate
sector deelopment.
Attempts at reorm in arious states hae been ad-
hoc and piecemeal with requent reersals in policy,
leading to disruptions in education. 1he primary
motiation or reorm has been to contain public
expenditures rather than to improe the system o
public subsidies to the priate sector so that they
contribute to the educational goals o improing access,
equity, quality and eiciency. Many states tried to cut
back on the subsidy bill by preenting new institutions
rom becoming eligible or aid, withdrawing support
to teacher posts that ell acant in aided institutions
and or speciic courses in higher education. 1he result
has been oten to lock in existing ineiciencies and the
inequitable distribution o public spending, with older
aided institutions, which oten sere the richer groups,
continuing to receie high leels o subsidy per student,
while new priate institutions, oten operating at lower
cost and in poor areas, get no subsidy at all. Since
institutions are sometimes allowed to hire unsubsidized
teachers, there are oten two streams o teachers at
astly dierent salary leels, creating problems o
morale and management.
Due to the problems in using the current system o
proiding subsidies to the priate sector, and aced
with the challenges o haing to expand access to
education, state goernments hae by deault allen
back on either using direct goernment proision
or using the priate unaided ,sel-inancing, sector.
\here budgets are constrained, which is the case in
the poorer states, states hae relied on direct
goernment proision to expand access to primary
education in rural areas but tried to cut costs by
using community supported schools, lower-paid
parateachers, alternatie schools and so on. In urban
areas and in secondary and higher leels, they tend
to rely on the unaided sector. \hile both strategies
minimize the burden on the state`s iscal resources,
they raise issues o equity, since the poor tend to
receie education o a lower quality or at a higher
cost ,and sometimes both,.
Should the goernment cut back or eliminate
subsidies to the priate sector I expanding access,
improing equity and quality are the goals o
education sector policy, the question is whether the
goernment can better achiee these goals by using
direct goernment proision or by using the priate
unaided sector. Comparing the educational
outcomes and costs o the goernment, aided and
unaided sectors can proide some guidance in
answering this question. 1here are relatiely ew
studies comparing the sectors on these attributes,
especially on the eectieness or alue added by
institutions o dierent types. It is clear, howeer,
that the costs in goernment institutions are at least
as high as in aided institutions, and much higher
than in unaided institutions. Under current cost
conditions, expansion through the goernment
sector alone seems a iscally uniable option.
Lxpansion through the priate unaided sector, on
the other hand, poses serious equity issues since poor
students will be unable to pay the required ees,
especially at higher leels.
T/is evidence in t/is study suggests t/at continued
use of t/e systew of pul/ic sulsidies for t/e private
sector is a vial/e option for epanding access for t/e
poor and woli/izing additiona/ resources for education
and is preferal/e to e/iwinating t/ese sulsidies. 1hre e
main approaches in continuing the system o
public subsidization o the priate sector can be
delineated: ,i, retain the main eatures o the
pr e s e nt GI A s y s t e m but i mpr oe i t s
administration to ensure it achiees educational
goals, or ,ii, reorm the system to moe to a
system o perormance-based grants or schools,
or ,iii, moe to a student-based subsidy system
allowing students to choose between public and
priate schools.
1he choice o strategy will need to be state-
speciic, determined by state priorities regarding
sub-sectors, and will need to take into account
the political and social easibility o implementing
reorms. Honever. for a// states. it is desiral/e to
wove anay frow t/e present ad/oc revisions to t/e
GI. po/icy tonards a /o/istic reforw effort t/at is
grounded in t/e states vision for t/e education systew
1he relatie priorities or dierent states are
discussed in the study. Reorm o the higher
education sub-sector is probably a priority or
al l st at es because equi t y i ssues are most
pronounced here and ei ci ency l osses are
greatest, but it is also more diicult because o
the inolement o Uniersities, consequently, it
'
needs a dierent approach rom that in other
leels. Oerall, the reorm process shoul d be
guided by educational goals and priorities and
not short-term iscal stress. Reorms are most
likely to succeed when they are situated within a
ramework and strategy or the entire sector.
For wany states. retaining t/e present GI. systew
and iwproving its adwinistration is t/e wost vial/e
s/ortterw strategy. Internati onal experi ence
suggests that moing to a student-based subsidy
system or a perormance-based grant system or
schools requires considerable deelopment o
institutional capacity to deelop criteria or releasing
unds and or deeloping systems to ensure that the
unds reach the targeted students or schools. lor
perormance-based systems, an independent quality
assurance organization that proides inormation on
school quality and learning outcomes is also required.
1he inolement o proessional and,or competent
non-goernmental organizations is oten a pre-
requisite or implementing such systems.
Improving the efficacy of the current GIA
system:
Immediate steps can be taken to improe eiciency,
reduce corruption and abuse and ensure ease o
compliance by managements, such as:
,a, Improe targeting o the aid or higher
education by phasing out courses at the college
leel that ace low demand and oering aid to
newer courses, introducing equity criteria or
colleges or continuation o the grant.
,b, Create and regularly update a computerized
database on institutions, students, teachers, and
perormance indicators. 1he database should
hae two parts, ,i, a public set o outputs
that is aailable in hard copy and on a website
could be used by parents, teachers, legislators
and local bodies and ,ii, an internal database
that seres as MIS to improe inancial
management and perormance monitoring.
!ince wany state governwents /ac/ interna/
t ec/ni ca/ capaci t y. t /e creat i on and
wai nt enance of t /i s dat alase cou/ d le
outsourced to cowpetent private parties.
,c, Publish a comprehensie update o all rules
and regulations applicable to schools and
c ol l e ge s , ne a t l y s umma r i ze d i n
comprehensible language to be accessible to
all.
,d, Strengthen inancial management and do
independent audits with elaborate parameters
on a sample basis to carry out physical
eriication, auditing o accounts and
ealuations o learner achieement.
,e, Reiew all existing rules and regulations to
simpliy and delete potentially conlicting
proisions. Undertake computerization,
consolidation and classiication o pending
legal cases to promote speedy disposal. Initiate
penalties against institutions that are engaged
in open raud ,or instance, with no students
or teachers,.
Additional steps within the existing system
which, howeer, require careul planning and
implementation, could help to mobilize
resources rom the priate sector and enorce
accountability or results:
,, Introduce greater lexibility in ees or richer
students and make resource mobilization by
priate managements a condition or
continuing the grant.
,g, Create independent quality assurance
organizations,mechanisms to monitor quality
and learning outcomes and exert external
pressure on institutions to upgrade quality and
improe accountability.
Moving to an alternative system of providing
subsidies to the private sector.
T/e tno a/ternatives are to wove to a perforwance
/in/ed grant systew for sc/oo/s or to wove to a student
lased grant systew. In the irst case, the school
receies a grant conditional on achieing certain
perormance standards ,equi ty, enrol ment,
learning outcomes,. In the second case, the grant
is calculated per pupil and can be gien either to
the institution or directly to the students. In both
cases, the major reorm is to delink the grant
rom teachers` salaries and gie greater discretion
to priate institutions in using the grant within
broad guidelines. A perormance-linked grant
system requires establishing systems or setting

standards and monitoring quality. At the school

leel, this may require establishing an independent
body to do this, at the college leel, this requires
reitalizing the Uniersities. A student-based grant
system is theoretically better in terms o targeting
o poor students, but requires considerable
administratie capacity ,especially i the number
o students is large and hence may not be easible
immediately or states with large GIA systems,.
Since both these are major reorms, and may
encounter resistance rom existing beneiciaries, the
reorm program needs to be spelt out in detail or
each state. 1he main steps inoled are discussed in
the study, some o which are:
,a, At the uniersity leel, create a und to enable
institutions to opt out o GIA is probably
best to jump start the process and promote
oluntary buy-in to the reorm. It is best to
link this reorm to other measures to promote
quality and releance, such as curriculum
renewal, pedagogical innoation and greater
autonomy.
,b, At the secondary leel, both an incremental
approach ,allowing schools to moe rom
the teacher-linked grant to a per-pupil based
grant as aided teachers retire or leae, and an
institutional opt-out approach can be
considered.
,c, Both approaches will require reorms in
regulations enabling priate institutions to
mobilize additional resources through ees
and other sources.
,d, In both cases, inolement o reputable
groups outside the goernment ,proessional
groups or credible priate organizations with
no direct conlict o interest, is required to
make the reorm transparent and successul.
Eot/ approac/es ni// require additiona/ financing in
t/e s/ortterw and consideral/e tec/nica/ capacity
lui/ding of governwent officia/s to design and wonitor
t/e nen grant sc/ewe and partner nit/ outside groups
in adwinistering it - and hence, may not be easible
or states with weak administratie capacity. 1he
willingness o the state goernment to undertake
appropriate preparatory actions and creating
organizational homes or this task will need to be
assessed.
Reorm o the GIA system is best situated within a
coherent strategy or the sector as a whole,
encompassing the goernment system as well as the
priate unaided system. In particu/ar. reforws in
teac/er wanagewent and sc/oo/ wanagewent are
required in governwent institutions, and a consistent
po/ i cy regardi ng curri cu/ uw and / anguage of
instruction is required to a//on cowpetition letneen
t/e governwent. aided and unaided institutions.
Fina//y. t/e ris/ of woving to a grant systew de/in/ed
frow teac/ers sa/aries. is t/at annua/ grants can le
/ig//y susceptil/e to s/ortterw ludgetary constraints.
creating potentia//y serious dis/ocations for students.
1his is because, typically, non-salary expenditure
i n educati on i s not protected when there are
reenue shortalls. Measures to protect the grants
rom annual luctuations will be required to make
the reorm process credible and acceptable.
Irrespectie o the approach to reorm adopted in
indiidual states, indiidual state goernment
education departments may ind it diicult to start
the process and deelop a well-thought out program
o reorm without additional technical inputs or
inancial incenties. !tate fisca/ adjustwent prograws
can offer financia/ incentives or state goernments
to opt or change and to achiee educational goals
through more eicient use o their resources.
.not/er strategy is for t/e Centra/ governwent to
provide financia/ and tec/nica/ assistance for states
to deve/op and iwp/ewent reforw pac/ages t/at weet
centra//y /aid donn criteria and guide/ines n/i/e
a//oning for diversity in statespecific educationa/
needs and goa/s. 1hese interentions can also help to
monitor progress in the reorm program, to
i ntroduce changes wi th the experi ence o
implementation and to expose states to experience
o similar reorms elsewhere.

8uckground und Cb|oclivos

1he aim o this Policy Note is to contribute to the
broader discussion on how the priate sector can
be best used to achiee priority educational goals in
India. 1hese goals include expanding access to
elementary education, and increasingly to secondary
and tertiary education, ensuring equity in participation
and completion rates, as well as improing quality
and releance at all leels o education. Achieing
these goals will require signiicantly higher resources
and also more eicient use o existing resources.
Many countries are trying to use the priate sector
to mobilize additional unds and to promote
competition and greater eiciency in the use o
public unds or education.
1his study ocuses speciically on the publicly aided
priate education sector in India. India has a ery
large priate sector in education, much o it operating
under a oucher-like` system. Lducational
institutions receiing Grant-in-Aid ,GIA, rom the
state goernment budget receie subsidies or
teachers` salaries, in proportion to the number o
students they enroll. Despite the challenges o inding
additional resources to expand access and improe
quality, during the nineties, many state goernments
in India hae been trying to restrict public subsidies
to the priate sector in education. In order to deal
with the pressures o enrolment expansion, while
containing iscal costs, goernments hae usually
opted or utilizing low cost ,and in some cases, lower
quality, alternaties to expand access through direct
goernment proision, especially at the primary leel,
and making greater use o the priate unaided ,sel-
inanced, sector at all leels o education.
Reorm o the present system o granting public
aid to priate educational institutions is considered
imperatie, both due to iscal pressures and due to
the challenges o managing this huge sector. A ariety
o reorms hae been attempted in many states oer
the last decade. Reductions in GIA were explicitly
posited by state goernments as part o their iscal
A Policy Nolo on
Tho Grunl-in-Aid Syslom in lndiun Educulion.
Muin lssuos und Cplions or Poorm
adjustment programs, such as in Uttar Pradesh,
Orissa and Karnataka. Many o these attempts ailed
aced with opposition by priate institutions, teachers
and students who oten successully approached the
courts or obtaining stay orders. In many instances,
the reorms hae been ad hoc and they hae not
been necessarily guided by the goal o achieing
educational objecties and an ealuation o
alternatie means. lurthermore, reorms hae been
attempted in indiidual states, oten ignoring
experience rom other states, the Central goernment
has not directly interened in these reorm attempts.
1his Policy Note lays out the main issues in the GIA
system and discusses options or reorm. T/e /ey
conc/usion is t/at providing pul/ic sulsidies for private
education is a vial/e weans for ac/ieving educationa/
goa/s of iwproving access for t/e poor and for greater
resource woli/ization. 1he alternaties are to resort to
direct goernment proision, which is higher cost and
may be less eectie, and unsubsidized priate
proision, which is inequitable. 1he GIA system is one
way o proiding subsidies to the priate sector, and
it has worked airly well in the past in seeral states, but
it needs reorm to improe equity targeting and
perormance monitoring, and reduce ineiciencies. lor
many states, improing the existing GIA system may
be the best immediate option, but other models o
giing subsidies ,direct inancing o students,
perormance linked grants to schools, should be
considered where appropriate institutional capacity and
implementation conditions exist. \hile reorm eorts
could be initiated in indiidual states, the Central
goernment can also proide inancial and technical
assistance or states to deelop and implement reorm
packages that meet centrally laid down criteria and
guidelines, but allow or diersity in meeting state-
speciic educational needs and goals.
1he paper describes the scope and coerage o the
GIA system across dierent education leels and
states, analyzes the beneits o this system and the
main problems in implementation, summarizes the

recent attempts at reorm in seeral states and

international experience with public subsidization
o priate education, and discusses options or
improing,reorming the system o public subsidies
to the priate sector, which could be used in the
context o Central goernment education programs
or the state iscal adjustment programs. 1he paper
is based on seeral background papers,reports: ,i,
a reiew o the national statistics and public
expenditures on GIA institutions, ,ii, a reiew o
the legal and regulatory ramework at the national
leel and in speciic states, ,iii, a case study o the
state o Kerala which has made extensie use o
GIA institutions and achieed uniersalization o
elementary and secondary education and a high leel
o enrolment in higher education, ,i, a detailed
study o GIA institutions in Karnataka, including
inancial simulations o moing to a dierent type
o subsidy system using data rom a sample o
schools, and ,, a reiew o international experience
in proiding public support or the priate sector
in education.
1
Tho Grunl-in-Aid Syslom in lndiu
- An Hisloricul Porspoclivo
1he priate sector in India reers both to institutions:
,a, that were established by priate persons and
continue to be managed priately but which receie
public aid on a regular basis ,called aided institutions,,
and ,b, that are managed priately but receie no
public unds ,called unaided institutions,. Most o
the latter are recognized institutions, i.e., they are
certiied by the goernment to hae minimum
standards o physical and teaching acilities and are
authorized to oer students or public examinations.
Some states allow unrecognized institutions, which
do not satisy these criteria to unction especially at
the elementary leel, students rom these institutions
hae to gain entry into a recognized institution by
the time they wish to appear or public examinations
or, alternatiely, are allowed to appear as priate
candidates in public examinations.
2
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cooo|oo|os |o ob||c oxon|oo||oos o| |ho ooo o| |ho |o.o
socoooo, s|oqo, .h|ch o||n|oo|os |ho oooo |o s|oo, |o o
ocoqo|zoo |os|||o||oo o| oo, s|oqo.
S
K|oqooo ooo /ozonn|| (200!;.
1he GIA system was introduced by the British
administration in 1859, in the erstwhile Bombay
Presidency, with the aim o promoting oluntary
eort and reliance on local resources. 1he role o
the colonial state in direct proision o education
was restricted to the ew Lnglish-medium schools
and the uniersities. Initially, oluntary eort in
education was undertaken mainly by Christian
missionaries, but later with the adent o social
reorm moements, other communities started
establishing schools and seeking inancial assistance
rom the goernment.
1he historical origin o the GIA system has had
a lasting imprint on the characteristics o the
priate institutions receiing public subsidies. A
ery l arge number, especi al l y o the ol der
institutions, continue to be those ailiated to the
church, others are associated with other religious
or caste groups who saw modern education as a
means t o economi c, soci al and pol i t i cal
adancement . Non-pecuni ary goal s ot en
motiated the establishment o these priate
institutions, but education itsel was seen as ital
to achieing these goals. 1his is especially true o
the regions where western education had made
large inroads by the time o independence - in
part i cul ar, Keral a, 1ami l Nadu, sout hern
Kar nat aka, and Mahar asht r a. 1he ai ded
i nsti tuti ons that were set up i n the post-
independence era, in these regions as well as in
other states which ormerly had ew education
aci l i t i es and expanded educat i on a t er
independence, were more eclectic in nature. 1he
non-proit status, although ormally adhered to
or legal reasons, was not necessarily the primary
motie or establishing the institution. In many
states, accessing political power ia the education
system ,but not necessarily proiding education
itsel, was the primary motie o establishing
priate educational institutions that receied
public subsidies, through instruments such as the
teachers` unions.
3
A great impetus to the establishment o priate
educational institutions was proided by the
Constitutional proisions under Articles 28, 29 and
30, which proided that minorities, whether based
on language or religion, were entitled to establish
educational institutions to presere their language
!
and culture. 1hey can also receie goernment
assistance but they cannot exclude any student purely
on the grounds o religion or language.
As originally ormulated and implemented or
seeral decades, the grant-in-aid system in India
proides public unds to priate institutions to coer
part or all o the teachers` salaries and a part o
other recurrent costs ,called maintenance grants`,,
while the priate management inances all the capital
costs and part o the recurrent costs. A major
re orm i nt roduced i n Ker al a soon a t er
independence, which introduced uniormity in the
treatment o priate and goernment teachers,
became the model or most other states. Kerala
had made the most extensie use o priate
institutions een at the primary leel since the 19
th
century by enabling priate educational institutions
establ i shed by ari ous rel i gi ous and caste
communities to seek public aid. 1he GIA rules
encouraged the priate managements to mobilize
their own resources, only subsidizing part o the
recurrent costs. 1his led to considerable diersity in
the aailability o resources across priate schools,
ariation in teachers` salaries and teachers being
subjected to arbitrary remoal by management.
Ater independence, the Kerala Lducation Bill ,195,
sought to introduce uniormity in the operations
o aided and goernment schools, speciically in
the appointments and salaries o teachers and their
rights. 1he Bill proposed that: ,a, priate institutions
had to appoint teachers rom a district list o
qualiied and accredited teachers, ,b, priate schools
could be taken oer by the goernment or non-
compliance with the rules, ,c, a local education
authority would be constituted to oersee all schools
in the area, and ,d, priate teachers were to be paid
the same salary as those in goernment institutions
although the ull salary was not payable by the
goernment. 1hese proisions o the Bill were
opposed by the pri ate managements and
opposition Congress party at the time. Neertheless,
a resh Act passed in 1958 by the newly elected
Congress goernment embraced almost all o them,
wi th the maj or change that whi l e pri ate
managements would retain the right to appoint
teachers ,ulilling prescribed criteria,, the
goernment would pay salary to the teachers in aided
institutions at the same leel as in goernment
institutions.
1he Kerala model` became the model or other states
although certain eatures o the Kerala GIA system
were not adopted by all states. Speciic eatures o the
Kerala GIA system were: ,i, transparency - the GIA
scheme was included in the Kerala Lducation Act and
Rules passed by the Legislature and any changes
required legislatie sanction, ,ii, lexibility in management
structure, ,iii, appointment o a Manager, who is not a
teacher or a principal and who is legally responsible,
by eery institution, ,i, sta and student strength
eriication by the goernment to sanction teacher
posts, ,, proisions or goernment to re-deploy
teachers rom surplus` post schools, ,i, direct
payment o teachers` salaries to reduce corruption, and
,ii, mandatory parent-teacher associations in eery
school to oersee unctioning o the school and
preent abuse o the aid.
Sizo o lho Privulo Aidod Soclor in
lndiu - School Educulion
In school education ,classes 1-12,, the priate-aided
sector is large at the secondary and higher secondary,
but there are signiicant dierences across states. In
1995-96, the latest year or which all-India data are
aailable, approximately 44 percent o higher
secondary schools and 34 percent secondary schools
were priate-aided ,1able 1,. Only 2.4 percent o
primary schools and 10.1 percent o upper primary
schools were priate aided.
Data on the distribution o schools by management
type are aailable or selected states or 2000-01
and reeal considerable ariation across states in the
proportion o aided institutions ,1able 2,. In
Maharashtra, Uttar Pradesh and Kerala, oer hal
the institutions are aided at the secondary and higher
secondary leels ,and at the primary leel also in the
latter,. 1he absolute number o aided institutions is
ery large in these states -8,000 in Kerala, 10,000 in
Uttar Pradesh and 14,500 in Maharasthra. Uttar
Pradesh, howeer, has almost double the number
o priate unaided institutions, most o them
primary and upper primary schools, whereas Kerala
and Maharasthra hae ewer unaided institutions. 1he
other three states - Andhra Pradesh, Punjab and
limachal Pradesh - hae relatiely ew aided
institutions, and a greater proportion o unaided
institutions.
"
4
Cooooc|oo b, |ho No||ooo| Coooc|| o| Eooco||ooo| osooch
ooo To|o|oq (NCET;.
5
Fo ooso o| cono|soo ocoss s|o|os, ooo|noo| shoos o|
oo|, |no, (c|ossos !-4/5; ooo socoooo, (c|ossos 8/ -!0;
oo osoo s|oco ooo|noo| shoos |o o|ooo |os|||o||oos o| |ho
oo |no, s|oqo (c|ossos 5/c-Z/8; ooo h|qho socoooo,
s|oqo (c|ossos !!-!2; oo |||o|, |o o|||o ooooo|oq oo |ho
.ho|ho |ho |ono |s ||o|oo |o socoooo, schoo|s ooo |ho
|o||o |o co||oqos.
Lnrolment shares indicate, howeer, that the priate
aided sector plays a larger role than that indicated by
the share o schools, een at the primary and elementary
leels. Data on enrolment are aailable only or 1993
rom the 6
th
All India Lducation Surey ,AILS,
4
1he
share o priate aided institutions, or India as a whole,
was 48 percent at the higher secondary stage, 46 percent
at the secondary stage, 31 percent at the upper primary
stage and 11 percent at the upper primary stage. Data
on enrolment shares or indiidual states reeal some
interesting patterns, both in the relatie importance o
the priate aided and unaided sector across states and
across dierent leels o education ,1able 3,.
5
Although
the relatie share o aided institutions is likely to hae
gone down since then, due to the curbs on giing GIA
to new priate institutions, the patterns are unlikely to
hae changed dramatically.
1he irst category o states comprises those which
rely heaily on aided institutions at both primary
and secondary leel, the share o priate unaided
institutions is relatiely small at both leels. Kerala
is unique in that oer hal the students at all
stages, rom primary to higher secondary, are
enrolled in priate aided institutions. 1amil Nadu
is also airly consistent in its use o aided
institutions, with the enrolment share rising rom
30 percent at the primary stage to 42 percent at
the higher primary stage. Maharashtra makes
considerable use o priate aided schools at the
primary leel ,3 percent, but een more so at
the secondary leel ,89 percent,.
1he second group o states - Gujarat, Uttar Pradesh,
\est Bengal, Orissa and Karnataka - makes relatiely
little use o the priate aided sector at the primary
leel ,1-1 percent, and with the exception o \est
Bengal, t/ere is greater or t/e sawe re/iance on t/e
private unaided sector rat/er t/an t/e aided sector
at t/is stage. 1hese states, howeer, rely almost
exclusiely on aided institutions at the secondary leel,
with enrolment shares exceeding those in the irst
category o states. 1he priate sector is relatiely
small at the primary stage but ery large at the
secondary stage. Orissa is noteworthy in that it has
irtually no priate sector -aided or unaided - at
the primary stage, but has a large aided priate sector
at the secondary stage.
1he third group o states ,Madhya Pradesh,
Andhra Pradesh, laryana, Punjab and Rajasthan,
makes limited use o the priate aided sector in
the pri mary stage and moderate use at the
secondary stage. At the primary stage, there is
greater reliance on the unaided sector compared
to the aided sector, whereas the secondary stage,
there is almost equal reliance on both types o
priate institutions. Oerall, the priate sector is
relatiely small at both leels, accounting or 10-
20 percent o enrolment.
linally, the last group o states ,limachal Pradesh,
Assam and Bihar, make negligible use o the priate
sector at both the primary and secondary stages, the
Tublo T. Dislribulion o schools by munugomonl, T5-
Typo Govl/L8 Privulo Aidod Privulo unuidod Tolul
Primury No. 544040 20378 282 534T0
1.7 3.4 4. 1CC.C
or rimory No. 13335 1751 221 174145
7. 1C.1 13.C 1CC.C
Soconoory No. 333C5 24582 14418 723C5
4.1 34.C 1. 1CC.C
Hiqbor No. 1C34 1C2 337 2454
Soconoory [1C2} 42.C 44.3 13.7 1CC.C
Sourco. /|D
#
Tublo 2.
Dislribulion o Schools by Munugomonl, 2000-0T - soloclod slulos
(porconl o ull schools ul ouch lovol}
Slulo Typo Primury Socondury Highor Socondury Tolul (nos}
Moborosblro /|ooo 5.4 cc.S 88.S !4,502
noiooo 5.1 25.2 4.8 ,34C
llor Prooosb /|ooo !.c 48.2 Z4.Z !0,02
noiooo 11. 22. .2 2C,2
Korolo /|ooo 5.Z 50. 42.c Z,!
noiooo 2.3 13.5 .C 8C1
/nobro Prooosb /|ooo S.c 8.4 - S,Sc2
noiooo 2.3 24.3 - ,34
Pun|oE /|ooo 0.c .5 !4.! 4Z8
noiooo .2 1C. .5 1,273
Himocbol Prooosb /|ooo - 2.5 S. c!
noiooo - 13. 14.3 333
Nolo. Tho |o|o| oonbo o| |os|||o||oos |oc|ooos oo |no, |os|||o||oos.
Sourco. /|D
Tublo 3. Enrolmonl Shuros in Privulo lnslilulions ul Primury und
Socondury Lovol by Slulo (T3-4}
Primory Soconoory
PA PUA P\T PA PUA P\T
Lorqo rivolo soclor ol Eolb lovols - moinly rivolo oiooo
Korolo 57 4 1 5 2 58
Tomil Noou 2 3 33 3 4 4C
Moborosblro 2C 7 27 78 11 8
Lorqo rivolo soclor ol soconoory lovol - moinly rivolo oiooo
Cu|orol 4 12 1 8 2 1
llor Prooosb 4 18 22 77 8
Wosl 8onqol 17 C 17 74 2 7
Crisso 1 1 2 51 18
Kornoloko 11 1C 22 53 14 7
Mooorolo sizo rivolo soclor ol Eolb lovols - smoll rivolo oiooo soclor
MoobyoProoosb 3 13 2 2C 2
/nobroProoosb 1C 1 1 12 28
Horyono 3 7 1C 13 13 2
Pun|oE 5 11 1 25
Ro|oslbon 4 1 2C 15
Smoll rivolo soclor - noqliqiElo rivolo oiooo
HimocbolProoosb 1 5 4 1C
/ssom 1 1 2 2 8
8ibor 2 1 3 4 2
Sourco. Co|co|o|oo |on S|x|h /||-|oo|o Eooco||oo Soo,, NCET.
$
enrolment share in aided institutions is ery low at
both stages.
1he importance o the priate sector, and the
relatie importance o the aided and unaided
sectors are markedly dierent in urban areas
,1able 4,. In order to acilitate comparison with
the oerall enrolment shares in 1able 3, the same
grouping o states has been maintained. Seeral
points are striking. lirst, the priate sector as a
whole accounts or 40-0 percent o enrolment
at the primary stage in all states, except \est
Bengal ,31 percent, and Orissa, Assam and Bihar
,each less than 15 percent,. Second, while the irst
group o states makes use o the priate aided
sector in the primary stage both in rural and urban
areas, many o the states in the second and third
group make considerable use o aided institutions
at the primary stage in urban areas but not in
rural areas. In the latter set o states, public aid
to pri ate i nsti tuti ons benei ts the urban
population to a considerable degree. 1hird, a
signiicant number o states rely on the priate
unaided sector in urban areas een at the primary
Tublo 4. Urbun Arous. Enrolmonl Shuros in Privulo lnslilulions ul Primury und
Socondury Lovol (T3-4}
Primury Socondury Purul Socondury
PA PUA P\T PA PUA P\T PA PUA
Korolo C 8 8 52 5 57 57 1
Moborosblro 37 17 54 7 22 8C 1C
Tomil Noou 5C 5 48 7 55 25 2
Cu|orol 8 31 3 87 3 C 2 1
llor Prooosb 11 53 4 78 84 77 12
Wosl 8onqol 2 2 31 73 4 77 75 C
Crisso 3 12 27 1C 37 58 2C
Kornoloko 25 27 52 5 1 72 5C 11
MoobyoProoosb 7 41 4 11 24 35 7 1
/nobroProoosb 22 33 55 2 23 52 5 3
Horyono 14 32 4 32 2 1 2 3
Pun|oE 21 22 43 37 13 5C 1
Ro|oslbon 13 4 5 18 13 31 1 C
HimocbolProoosb 5 35 4C 17 23 3 4
/ssom 1 3 4 2 8 2
8ibor 7 13 8 5 13 2 1
Sourco. Co|co|o|oo |on S|x|h /||-|oo|o Eooco||oo Soo,, NCET.
st age: bet ween 30-60 percent o pri mary
enrolment is in these institutions in Gujarat, Uttar
Pradesh, Madhya Pradesh, Andhra Pradesh,
laryana, Punjab, Rajasthan and limachal Pradesh.
1his implies that there is a clear diision in urban
areas in these states between the poor, who largely
attend the goernment schools, and the richer
sections, who attend the ee-charging priate
schools.
At the secondary stage, seen states in the irst
two groups rel y heai l y on ai ded secondary
schools in urban areas. loweer, in our o them,
the contribution o rural-aided institutions is
greater than that o urban-aided institutions ,in
terms o enrolment shares in the respectie
locations,. 1hese are Kerala, Maharashtra, Gujarat
and Orissa ,italicized in 1able 4,. In other words,
aided institutions hae contributed to rural
secondary education in these states more than in
urban areas.
At the secondary stage, seen states in the irst two
groups rely heaily on aided secondary schools in
%
urban areas. loweer, in our o them, the
contribution o rural-aided institutions is greater than
that o urban-aided institutions ,in terms o
enrolment shares in the respectie locations,. 1hese
are Kerala, Maharashtra, Gujarat and Orissa ,italicized
in 1able 4,. In other words, aided institutions hae
contributed to rural secondary education in these
states more than in urban areas.
Sizo o lho Privulo-Aidod Soclor in
lndiu - Highor Educulion
1he only inormation aailable or higher education
at the national leel is or 2000-01. O the total
13,02 institutions, 42 percent are priate aided
,1able 5,. About 3 percent o the total enrolment
is in priate-aided institutions - approximately 3.1
million out o a total 8.4 million. loweer, the
distribution across states is markedly dierent.
Although the break-up o enrolments by public and
priate sectors is not aailable or indiidual states,
it is likely that most o the growth in enrolment in
states with rapidly expanding higher education
sectors has occurred in priate unaided colleges or
in sel-inancing courses`. Since 1992,93,
restrictions on goernment unding hae made it
diicult or goernments to open new colleges,
sancti on new courses or sta. Many state
goernments,uniersities hae granted recognition,
ailiation to unaided colleges and Uniersities hae
also authorized new sel-inancing` courses in
goernment and aided colleges.
Public Expondiluro on Grunls-in-
Aid
1he size o the aided sector suggests that a signiicant
share o the public education budget will be deoted
or subsidies to the priate sector. 1able 6 shows
how this share aries across states at dierent leels
o education and how it has changed oer time.
States hae been ranked by the share o GIA in
total public expenditure in 2000-01.
Light states spend more than quarter o their public
education budgets on subsidies to the priate sector.
1he proportion is as high as 81 percent in \est
Bengal. In all these states, GIA accounts or oer
hal the public spending in higher and secondary
education, but the proportions in some states are as
high as 90 percent. In \est Bengal and Kerala, GIA
accounts or 84 and 55 percent, respectiely, o
public spending at the elementary leel. Another three
states, while spending a relatiely small share o their
total education budget on GIA, neertheless spend
between a quarter and two-iths o their higher
education budget on GIA. 1he remaining our states
- Madhya Pradesh, Rajasthan, Bihar and limachal
Pradesh - display relatiely low shares o GIA in
both total education and sub-sectoral public
expenditure. Not surprisingly, these are also the states
with relatiely low enrolment shares in aided
institutions.
One state, \est Bengal, has signiicantly increased
the share o GIA in public education expenditure
rom 51 to 82 percent. 1hree states, howeer, hae
considerably reduced the share o GIA in total
education expenditure by about 10 percentage points
- 1amil Nadu, Assam and Orissa. Other states hae
maintained a more or less constant share.
Clearly, subsidies to the priate education institutions
constitute a signiicant claim on public education
expenditures in a majority o states, especially at the
secondary and higher education leels. 1he sheer size
o these subsidies implies that the management and
administration o these subsidies is an important
Tublo 5. Highor Educulion. lnslilulions und Enrolmonl by
Typo o Munugomonl, 2000-0T
Munugomonl Univorsilios Collogos Univorsilios + Collogos Enrolmonl (in lhousunds}
Covornmonl Colloqo 245 4C7 4342 3443
Privolo /iooo Colloqo - 55C7 55C7 3134
Privolo noiooo Colloqo 21 32C2 3223 1822
Tolol 2 128C 13C72 83
Sourco. Lo|os||, Coo|s Conn|ss|oo.
&
component o the management o the education
budget as a whole.
1able shows the distribution o total GIA across
leels o education. In the eight states where GIA
represents a high share o total public spending on
education, the major share o GIA goes to
secondary education. 1he exceptions are Kerala
,where 51 percent goes to primary, and 1amil Nadu
where almost primary and secondary get almost
equal shares. It is also noteworthy that the states,
which hae a low share o GIA in total public
spending on education, also tend to spend a larger
share o the GIA on higher education ,except or
Bihar,. \ith the exception o laryana, these states
are al so those whi ch are more backward
educati onal l y and pri mary enrol ment and
completion rates are relatiely low. 1he most striking
case is that o Orissa which spends nearly three-
quarters o the total GIA on higher education. Public
Tublo . Shuro o Grunl-in-Aid Expondiluro in Public Educulion 8udgols
Slulo Shuro o GlA in Tolul Shuro o GlA in Public
Public Educulion Expondiluro Expondiluro ul ouch lovol (2000-0T}
T0/T 2000-0T Highor Socondury Elomonlury
Hiqb sboro o Cl/ in Tolol Poolic Exonoiloro
Wosl 8onqol 51.1 81.7 44. 4.2 84.4
llor Prooosb n.o. n.o. 7C.3 7.7 n.o
Korolo 55.2 52.8 57.1 51.7 55.3
Moborosblro 4.4 44.7 87.2 77.8 C.1
Cu|orol 35.3 33. 4.2 88.7 C.C
Tomil Noou 5.7 32.1 54. 34. 2.2
/ssom 33.3 24.8 2.8 .3 .4
Kornoloko 24.1 n.o. 5.4 n.o. n.o.
Low sboro o Cl/ in Tolol Poolic Exonoiloro- Lorqo sboro in Hiqbor ooocolion
Horyono . 1C.C 35.8 7.8 2.C
Crisso 2. .1 42.7 7.7 1.3
/nobro Prooosb 18.C 7. 2.5 2C.C 7.3
Low sboro o Cl/ in Tolol ono Soo-Soclorol Poolic Exonoiloro
Moobyo Prooosb 5.8 5.7 12.8 7.8 1.
Ro|oslbon 5. 3.2 11.1 3.7 1.5
8ibor 1.2 1. C.C 3. 1.1
Himocbol Prooosb 1.1 1.3 1C.5 1.1 C.4
Nolo. !. To|o| |oc|ooos C|/ oo |ocho|co| oooco||oo. 2. Do|o |o 2000-0! oo o|soo os||no|os. S. Fo L||o fooosh, ob||c
sobs|o|os |o |o|o |os|||o||oos coo|o oo| bo ob|o|ooo |o o|onoo|o, ooo |o |o|o|. 4. Fo Kooo|o|o, C|/ oo o|onoo|o,,
socoooo, ooo |o|o| oo| oo||ob|o |o 2000-0!. 5.Do|o |o 8|ho |o |ho |os| ,oo oo |o !-2000.
Sourco. Con||oo |on Do|o||oo Donooo |o Coo|s |o Eooco||oo o| |oo||ooo| s|o|o qooonoo|s.
subsidies to the priate sector hae been used in
these states or higher education rather than school
education.
Porormunco und Cosls o Aidod
lnslilulions Accoss und Equily
Public subsidization o priate schools can
enhance access by eliminating the direct costs o
schooling. Using data or 16 states, a simple
regression analysis shows that the gross enrolment
ratio or the 6-11 year age group is positiely
related to the percentage o enrolment in aided
institutions, een ater controlling or per capita
state income ,1able 8,. 1he relationship does not
hold or the enrolment ratio or the 11-14 or
15-1 year age groups, suggesting that the grant-
in-aid mechanism may hae been more useul in
promoting access at the primary leel by greatly
expanding coerage.
'
By itsel, the regression result or the 6-11 year age
group does not establish a causal relationship and a
rigorous ealuation o this hypothesis cannot be
attempted without controlling or actors that
inluence choice o dierent types o schools.
loweer, it does suggest that public subsidies to
the priate sector are particularly useul at the
primary leel to expand access. 1heir useulness at
higher leels depends in part on how many students
are able to complete the primary leel, which is
related to both amily constraints and the quality o
schooling proided.
Tublo 7. Dislribulion o GlA Across Lovols ( o row loluls}, 2000-0T
Slolos Elomonlory Soconoory Hiqbor Tocbnicol Tolol [Rs.Eill}
Hiqb sboro o Cl/ in Tolol Poolic Exonoiloro
Wosl 8onqol 37. 54.8 7. C.C 33.88
llor Prooosb n.o. n.o. n.o. n.o. n.o.
Korolo 5C.7 31.2 1.7 1.4 14.1
Moborosblro C.1 7.4 2.3 .2 38.18
Cu|orol C.C 7. 23.2 C.C 11.32
Tomil Noou 4C.3 3.1 1.7 C. 1.5
/ssom 15.2 .3 18.4 C.C 5.74
Kornoloko n.o. n.o. n.o. n.o. n.o.
Low sboro o Cl/ in Tolol Poolic Exonoiloro- Lorqo sboro in Hiqbor ooocolion
Horyono 8.5 2.3 5.7 5.5 1.34
Crisso 8. 18.5 72. C.C 1.53
/nobro Prooosb 2C.8 3.1 38.7 1.4 5.52
Low sboro o Cl/ in Tolol ono Soo-Soclorol Poolic Exonoiloro
Moobyo Prooosb 18.5 2C.7 33.C 27.8 1.3
Ro|oslbon 28.1 3. 23.4 11.7 1.C4
8ibor 48.8 4.5 C.C 4. C.51
Himocbol Prooosb 18.8 21. 5.3 C.C C.C
Nolo. Soo Tob|o c.
Sourco. Con||oo |on Do|o||oo Donooo |o Coo|s |o Eooco||oo o| |oo||ooo| s|o|o qooonoo|s.
1he participation o the poor and disadantaged in
aided institutions presents a mixed picture across
states. In particular, where the GIA is concentrated
on the secondary and higher education leels, a
disproportionate share o public subsidies to the
priate sector are captured by the higher income
groups ,since their participation rates at these leels
are higher,. \e examine three aspects o equity: the
share o SC,S1 enrolment, rural enrolment and
poor students in total enrolment in the goernment,
aided and unaided institutions.
Tublo 8. Gross Enrollmonl Pulio (-TT your ugo group} und
Enrolmonl in Aidod lnslilulions
Explunulory \uriublos
Conslunl Por cupilu incomo Enrolmonl in uidod schools
Cooicionl 43.54 3.C5 C.2
Slonooro orror 7.54 C.5 C.1
T-voluo 5.78 3.23 1.8
-sqoooo. 0.c4
Nolo. Doooooo| o|ob|o- CE |o c-!! ,oo oqo qoo (NSS, !5/c;, oo| o co||o s|o|o CSDf |o |hoosooos o| ooos
(!5/c - s|o|o oo|o;, ooo|noo| |o o|ooo schoo|s o| |ho |no, |oo| (c
|h
/|ES, !S/4;. Nonbo o| obsoo||oos. !c s|o|os.

1he proportion o SC,S1 students in aided

institutions is greater than that in unaided
institutions, but it is considerably lower than that
in goernment institutions ,1able 9a,. 1his is true
at all leels, but the dierences are especially
striking at the primary leel, where it is clear that
t he goer nment school s hae er y hi gh
proportions o SC,S1 students, compared to
the population share o these social groups. In
Kerala and \est Bengal, the proportion o SC,
S1 students in aided institutions is close to their
share in goernment institutions and their
population shares ,in Kerala, aided institutions
actually hae a higher share at the college leels,.
Other states in which aided institutions hae a
share o SC,S1 close to their population share
at the primary leel are Bihar, Orissa, 1amil Nadu
and \est Bengal. Beyond the primary leel, the
proportion o SC,S1 student alls in many states.
Oerall, thereore, public subsidies to the priate
sector disproportionately beneit other caste
groups while the unsubsidized priate institutions
do not proide or signiicant sections o the
SC,S1 population. Apart rom a ew states, the
SC,S1 students rely almost entirely on direct
goernment proision o education.
Tublo u. SC/ST Enrolmonl us Porconlugo o Tolul Enrolmonl - 8y Lovol und Typo o
lnslilulion (T5-}
Primury Socondury Highor
Govl. Aidod Unuidod Govl. Aidod Unuidod Govl. Aidod Unuidod
/P 28 13 1 12 1C 1C
/ssom 2 37 4 2 28 23 8 22 C
8ibor 2 17 1C 11 2 3 14 2 2
Cu|orol 34 1C C 33 18 C 3C C
Horyono 3C 15 11 14 1C C 12 C C
Kornoloko 25 8 11 22 14 14 12
Korolo 12 5 11 5 11 11 15 C
MP 1C 18 15 34 24 2C 4 C
Moborosblro 27 15 11 2 17 24 11 21 C
Crisso 35 4C 25 21 3C 23 1C C
Pun|oE 4 1 13 23 12 8 27 11 21
Ro|oslbon 3 1 2C 33 17 C 21 2 C
Tomil Noou 33 24 1 21 1 18 15 11 11
P 28 1 1 22 14 15 15 14 C
Wosl 8onqol 38 3 1 34 2 3 2C 15 C
Sourco. Cono|oo |on NSS !5/c.
In all states, goernment institutions hae an
oerwhelming share o rural students at the primary
leel ,1able 9b,. Aided institutions hae a high
proportion o rural students at the primary leel in
Assam, Bihar, Kerala, 1amil Nadu, Uttar Pradesh
and \est Bengal. Other states, howeer, hae a
signiicantly lower share o rural students in aided
institutions. Lspecially noteworthy are the relatiely
high shares o rural primary students in unaided
institutions in many states in all but ie states
,Gujarat, Karnataka, Maharashtra, 1amil Nadu and
\est Bengal,. In secondary education, goernment
institutions cater predominantly to rural students in
all states. Aided institutions, on the other hand, cater
predominantly to urban students in eight states,
contrary to expectations, unaided institutions hae
a large rural clientele in at least six states. At the higher
leel, the patterns are ery mixed across states.
1o what extent do priate aided institutions sere
the poor at each leel o education At the
primary leel, the proportion o students rom
the poorest 40 percent o households ,classiied
by per capita monthly consumption expenditure,
aries rom 9-15 percent in ie states and rom
16-30 percent in nine states ,1able 9c,. It is only

in Kerala that the enrolment share o the poorest

two quintiles slightly exceeds their population
Tublo b. Purul Enrolmonl us Porconlugo o Tolul Enrolmonl - 8y Lovol und
Typo o lnslilulion (T5-}
Primury Socondury Highor
Govl. Aidod Unuidod Govl. Aidod Unuidod Govl. Aidod Unuidod
/P 85 2 45 55 15 25 21 4C
/ssom 4 1 45 85 1 54 85 7C 1CC
8ibor C 51 5 3 37 1 42 7 87
Cu|orol 81 3 4 33 12 41 11 C
Horyono 2 24 58 85 4 35 33 2 C
Kornoloko 83 23 1C 73 3 48 31 37 3
Korolo 8C 81 77 72 3C 58 2
MP 82 18 35 1 28 3C 33 C C
Moborosblro 78 2C 3 5 51 41 35 2 18
Crisso 8 32 27 7 83 8 53 55 27
Pun|oE 84 27 47 7 23 43 37 43 C
Ro|oslbon 88 24 44 74 23 11 53 14 1CC
Tomil Noou 78 4 23 71 2 2C 28 25 43
P 3 58 5 77 72 1 42 38 C
Wosl 8onqol 82 5 18 8 55 12 4C 21 C
Sourco. Cono|oo |on NSS !5/c.
share ,45 percent,. 1he share o poor students in
unaided schools is generally lower than in aided
Tublo c. Enrolmonl o Poor us Porconlugo o Tolul Enrolmonl -
8y Lovol und Typo o lnslilulion (T5-}
Primury Socondury Highor
Aidod Unuidod Aidod Unuidod Aidod Unuidod
/P 18 18 3 11 C C
/ssom 1 17 12 C C
8ibor 21 11 8 4 1 C
Cu|orol 18 12 8 C
Horyono 13 21 5 12 C C
Kornoloko 12 11 18 2
Korolo 45 13 22 15 1C 4
MP 11 7 5 C 1 C
Moborosblro 18 11 1 2 2
Crisso 2 5 11 11 3 C
Pun|oE 2C 23 11 5 14 C
Ro|oslbon 12 14 C C C
Tomil Noou 2 4 C 2 C
P 18 3C 18 2C 8 C
Wosl 8onqol 2 4 5 C C C
Nolo. F|qoos |oo|co|o |ho shoo o| o||s |on |ho bo||on |.o oxooo||oo qo|o|||os |o |o|o| ooo|noo| o| ooch |oo| ooo |,o o| |os|||o||oo.
Sourco. Cono|oo |on NSS !5/c.

schools, with some important exceptions -

Andhra Pradesh, laryana, Punjab and Uttar
Pradesh. In these states, the priate unsubsidized
schools are proiding greater access to the poor
than the subsidized priate schools. Oerall,
howeer, the poorest chi l dren are enrol l ed
generally in goernment schools. 1he proportion
o the poor in aided institutions drop at the
secondary leel, partly because o their lower
completion rates. As a result, at the secondary
leel, the proportion o the poor is more similar
in aided and unaided institutions. At the higher
leel, there are ery ew poor students oerall,
and negligible numbers in both aided and unaided
institutions.
Summarizing the conclusions rom these analyses:
K in Kerala, the aided institutions sere the SC,
S1, rural and poorest sections, at least in
proportion to their population shares and the
shares o these students are at least the same
as in goernment institutions
K aided primary institutions in hal the states
sere primarily urban students
K ai ded s econdar y i ns t i t ut i ons cat er
predominantly to urban students
K aided institutions at the primary leel hae a
higher proportion o the poor than unaided
schools ,with some exceptions, but a lower
proportion than goernment schools. At other
leels, they predominantly beneit the richer
sections
K oerall, goernment schools sere the poor
and the disadantaged to a greater extent than
aided and unaided institution.
Cuulily
1here is little documented inormation on the relatie
quality o goernment, aided and unaided schools.
No assessments o student learning are aailable nor
is there reliable eidence on labor market outcomes
o students in dierent types o institutions. Aerage
examination results at the secondary leel in Andhra
Pradesh, 1amil Nadu and Kerala indicate that
students rom the priate unaided schools do much
better than priate aided and goernment students.
loweer, apart rom the problems associated with
using examination results as an indicator o quality,
the examination marks are not alue added`
measures and do not control or the better socio-
economic background and higher prior perormance
leels o students entering unaided institutions. 1wo
studies that hae been done or 1amil Nadu and
Kerala, respectiely, that do try to control or student
background and prior perormance show that aided
institutions do better than both goernment and
unaided schools at the primary leel ,Bashir, 199
and Verghese, 1996,. lurthermore, there are
signiicant ariations within each sector with low
perorming and high perorming schools within
goernment and aided schools.
In principle, the act that there is greater priate
control oer the management o the teaching orce
in aided institutions should lead to improed teacher
perormance. Most state laws allow institutions to
recruit teachers themseles ,with goernment
representation and under goernment guidelines, and
aided teachers are not subject to transer or
deputation, which allows continuity o teachers in
the institution. Job security and salaries on par with
those o goernment teachers also promotes stability
and preents the requent sta turnoer that is a
characteristic o unaided institutions, which oer
much lower salaries and short-term appointments.
1he general impression ,undocumented by
systematic studies, is that teacher accountability and
perormance is better in aided institutions than in
goernment ones in Kerala, 1amil Nadu, Karnataka
and Maharashtra.
Neertheless, arious studies indicate that the quality o
teachers and their perormance can be as low as in
goernment institutions. Motiation is low when salaries
are paid late, teacher acancies caused by inability to ill
sanctioned posts ,either due to lack o goernment
approal or unaailability o eligible teachers in resere
categories, increases the workload or employed teachers.
In-serice teacher training and proessional deelopment
are not mandatory in priate institutions and many state
goernments do not allow priate-aided teachers to
participate in their own programs.
In Uttar Pradesh and Orissa, there is considerable
eidence that a large number o aided institutions at
the secondary school leel are o inerior quality to
!
goernment institutions. In Orissa, many institutions
had not passed a single student in the secondary
school leaing examination. In these states, it appears
that aided teachers are less accountable than
goernment teachers. A related problem impinging
on quality is that in these states, the priate
managements do not proide the necessary
minimum inrastructure and acilities. A eature o
both these states is that aided institutions hae been
primarily established by politicians.
1he conclusions regarding quality are necessarily
tentatie but can be summarized as ollows. \here
priate managements are interested in proiding the
educational serice ,or whateer reason - political,
cultural, religious,, and where general public demand
or education is high, the quality and perormance
o aided institutions ,on aerage, tends to be higher
than that o goernment institutions. In this case,
the greater management control oer teachers
enables greater accountability and managements also
inest their own resources to improe quality. On
the other hand, where the purpose o establishing
aided institutions is not primarily educational but
motiated by capturing the public subsidies through
employment o teachers, priate management
control actually seems to lower teacher accountability
and there is no additional resource mobilization rom
the priate sector.
Cosls
Studies o unit cost in goernment and aided
institutions are not aailable or all states. Analysis
o per pupil public expenditure data or Andhra
Pradesh ,Oxord Policy Management, 2002,,
Karnataka ,\orld Bank, 2002,, 1amil Nadu ,Bashir,
199,, and Uttar Pradesh ,Kingdon, 1996, suggest
that in these states at least, unit costs are comparable,
i not lower than in goernment schools, at the
elementary and secondary leel.
Comparison o costs and eectieness are een
ewer. Data collected or two studies in the early
nineties suggest that priate schools ,aided and
unaided, do perorm better than goernment
schools and at lower cost in 1amil Nadu and Uttar
Pradesh at the primary leel ,Bashir, 199 and
Kingdon, 1996,. loweer, these results need to be
conirmed or other leels and other states with more
up-to-date data.
lssuos or Poorm in lho GlA
soclor
Six broad sets of issues merit consideration:
,i, rigidities in the GIA system or higher education,
,ii, teacher issues, ,iii, weak legal ramework and,or
0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Lucknow
Aided
Lucknow
Unaided
Tamil Nadu
Aided
Tamil Nadu
Unaided
Cost
Achieve.
Churl T - lndiu. Cosls und Porormunco o Govornmonl und Privulo Schools
Nolo. \o|ob|os oo (!; o||o o| |o|o |o ob||c cos| ooo (2; o||o o| |o|o |o ob||c och|oonoo|
Sourco. Fo Ton|| Nooo, So||ho 8osh| (!Z;, Fo Loc|oo. (Lf;, Coo|o K|oqooo (!c;
"
c
Thoo oo o|o||oos |o s|o|o oc||cos |o osoo||oo |o o|ooo
|oocho os|s. Koo|o hos oo osoo||oo .h||o Kooo|o|o
on|o,s |ho sono qoo|os os |o qooonoo| |os|||o||oos.
inability to implement laws, ,i, limited resource
mobilization by priate sector, ,, lack o monitoring
and quality assurance o proiders, and ,i, lack o
competition and a holistic ramework or priate
sector deelopment.
Pigidilios in lho GlA syslom or highor
oduculion
Inability to adjust the subsidy to changes in
student demand:
At the college leel, new courses that are in line with
student demand are not eligible or GIA in many,
while the older, less popular courses with low
student enrolment continue to receie ull subsidy.
1his creates the situation where public subsidy is
proided to courses that are not in demand in the
labor market ,although in higher education, some
courses which hae low enrolment may desere
subsidies on account o externalities and,or the need
to presere domain knowledge,.
Problems in defining the workload for college
teachers:
lor primary and secondary school teachers,
workload is deined in terms o a pupil-teacher ratio
,and lesson plan,, in colleges it is deined in terms
o teaching contact time ,16 hours per week or
degree leel work and 20 hours per week or pre-
uniersity colleges,. 1his sometimes leads to the
creation o new combinations o subjects to increase
the workload een though there may not be many
students or the course.
Touchor issuos
Inflexibility in teacher deployment:
Si nce teachers are appoi nted or permanent
positions, the present system is relatiely inlexible
when enrolment declines in a particular aided
institution. \hile many state goernments hae
the legal authority to redeploy teachers should
there be a surplus, and some hae done so ,Kerala,
Karnataka,, redepl oyment i s usual l y ti me
consuming, diicult to implement and does not
always reduce the iscal burden. In Karnataka,
aided teachers can be redeployed only to other
aided institutions ,since goernment teachers get
some additional beneits,, in Kerala they are
redeployed een to non-teaching goernment
posts because o the oerall decline in enrolment.
Managements that run seeral institutions can also
manipulate enrolment to keep the sanctioned
posts. 1he problem is especially seere or regions
where the child population is declining ,Kerala,
1amil Nadu, southern part o Karnataka, Andhra
Pradesh, and where priate unaided schools are
growing. 1he permanency o posts also aects
quality to the extent that it is diicult to get rid
o incompetent teachers. Security o tenure, on
the other hand, is important or ensuring teacher
continuity and commitment, and or ensuring that
the system beneits rom skills gained through
experience and inestments in in-serice training.
Delays in teacher appointments:
Although managements hae the authority to recruit
teachers, approal has to be irst sought or
recruitment and a goernment representatie oten
sits on the recruitment board since a public subsidy
i s i nol ed. 1hi s oten l eads to del ays i n
appointments reducing quality. \here reseration
quotas apply, there are urther delays since eligible
candidates rom the resered categories may not
be aailable.
6
1he issue here is how to ensure that
the public subsidy is used or the stated purposes.
Delayed disbursement of salaries:
In Karnataka, this was uniersally reported to be
the case both at school and college leel ,although
they were eentually paid by the end o the month,,
but delays were not reported in Kerala. Other studies
in Delhi and Bihar indicate long delays in release o
salaries. Oten, the ways and means position o the
state goernment means that salaries or teachers in
aided institutions remain in arrears or seeral months.
Linking of teachers' salaries to government pay
scales:
Although this is not legally binding, since the amount
o aid is not a right` o the management or
teachers, in practice, most state goernments oer
the same or similar pay scales to teachers in aided
#
institutions. Beneits and pensions oten dier,
howeer. ,In Kerala, howeer, aided teachers are
statutorily required to get the same beneits and pay
as goernment teachers, which adds to the iscal
burden,. 1he reision o pay scales due to the lith
Pay Commission has created additional expenditure
pressures on state goernments as well as litigation
and unrest, when pay scales hae not been upgraded.
Management commissions for recruiting
teachers:
In all states, including Kerala, it is reported that
managements take commissions rom prospectie
teachers or recruiting them. Due to the enormous
dierence in pay and beneits between teachers in
goernment-unded institutions and priate sel-
inancing institutions, there is an oer-supply o
teachers or the ormer. Lstimates suggest that each
new teacher contributes about two or three years`
o her prospectie salary to get a job in an aided
institution. Lxisting teachers may continue to pay 10
percent o their monthly salary to managements in
order to retain the job. \here guidelines or recruiting
teachers are adhered to, these practices will not
necessarily aect the quality o education, where the
guidelines are louted, in eect sub-standard teachers
are recruited at high cost to the public exchequer.
lield reports rom teachers suggest that many
institutions use these donations` or partially
i nanci ng i nestment i n new aci l i ti es and
improements in quality, but many managements
simply pocket them.
Lack of accountability:
1eachers in aided institutions sere at least two
masters: the goernment, which pays their salaries,
and the management, which has the right to appoint
or terminate them. In colleges, the ailiating
uniersity could also be considered another master.
Accountability or quality and outcomes is not ixed
at any leel.
Wouk logul rumowork or
implomonlulion o luws
Credible legal framework:
Unlike many deeloping countries, Indian states
hae a well-deeloped legal ramework but there
are ariations across states in the clarity o the
rules and regulations and more importantly, in
their enorcement. Many states hae a grant-in-
aid code`, which is a collection o goernment
orders that orm conditions upon which aid is
granted and regulated.

1he code is non-statutory

in nature, howeer, as executie instructions, they
hae constitutional sanction under Articles 162
and 4 o the Constitution. Violations o the
conditions o the GIA code can also result in
criminal sanctions. 1he Kerala GIA scheme is
unique in that the conditions or grant are
embodied in the Kerala Lducation Act and Rules
ramed under the Act, and hence are more
transparent - major changes can thereore be
enacted by only the legislature. Orissa, on the
other hand, has not een compiled all the releant
Goernment Orders into an easily accessible GIA
code. Most state goernments hae cl ear
guidelines on entry and exit that are enorceable
by law and proisions or penalty or abuse o
t he s ubs i dy, mi s management and non-
perormance. loweer, these proisions are
rarely inoked and criminal actions against
managements or misuse o subsidy or non-
perormance are r are. More i mport ant l y,
iolations o the GOs are oten retroactiely
legalized by either the courts or the legislature.
An exampl e o t hi s i s t he Ori ssa Ai ded
Lducati onal Insti tuti ons ,Appoi ntment o
1eachers` Validation, Act, 1989 that approed the
appointment o teachers who had initially been
appointed in iolation o the existing rules.
Abuse and fraud:
Open cases o raud are requently reported in Uttar
Pradesh and Orissa. 1hese include non-existent
institutions, ictitious teachers and inlated enrolment
to justiy teacher positions. At the other extreme, such
open abuse does not exist in Kerala, while some cases
are reported ,but are also dealt with by the
goernment, in Karnataka. Open abuse is closely
associated with the leel o monitoring both through
data collection systems and by communities through
parent teachers` associations.
Z
Soo /ooox 2 oo o|s||oc||o |oo|oos o| C|/ cooos |o o|oos
s|o|os.
$
Over-regulation:
Aided institutions are coered by speciic grant-in-
aid codes, speciic goernment orders issued rom
time to time, general laws coering all educational
institutions and goernment employees as well as
national and state case law. Karnataka, or example,
has as many as 6 codes or granting aid or each
sub-sector, in addition to the general laws. 1here
are ie basic issues: ,i, regulations coer minute details
regarding school acilities and leae little room or
manager i al di scr et i on or i nnoat i on , i i ,
incompleteness o rules and regulations, including
those relating to eligibility, type o grant gien and
inancial management processes ,iii, inconsistency
between practice and policy and between the arious
dierent acts leading to litigation ,i, requent minor
changes to rules and regulations that cause conusion
with managements and allow scope or abuse.
Non-compliance with regulations due to
inflexibility in the norms:
1here is discrepancy between the law` as laid out
in the books and as understood in the ield and as
actually practiced. Schools sering remote areas or
in urban areas are not able to meet all regulations
,or instance, land requirements or playgrounds are
almost impossible to meet in urban areas, but
nonetheless proiding aluable, otherwise unmet,
educational opportunities.
Litigation:
States are oerwhelmed by litigation, which runs into
tens o thousands o cases. Reiew o litigation at
the national leel and in selected states shows that
litigation has burgeoned in the ield o admission in
higher education ,by students, and in serice matters
at all leels ,by teachers,. 1here are ery ew instances
o state-management disputes with respect to audit.
Litigation regarding admission is generally related
to issues o reseration and whether managements
turned down eligible students or speciic courses.
Litigation regarding serice matters relate to teacher
appointments, promotions, pensions and so on. 1he
reasons or ew cases regarding audit is that either
the state is not regularly conducting audit or enorcing
standards. Cases o penalties enorced against non-
complying managements are negligible, despite the
enormous detail in the regulations.
Limilod rosourco mobilizulion rom
privulo munugomonls
The key problem is that fees are very low or non-
existent, so management has no separate income
in which to invest in facilities:
1his is compounded by declining enrolment or
many institutions. Most GIA codes do not hae a
proision or matching grants rom the priate
sector. 1he inancial contribution o the priate
sector is expected to be met through the numerous
regulations regarding proision o physical acilities
and other inputs, which are oten louted. 1he
wealthy charitable trusts and oundations are able
to inest heaily and to that extent, the GIA system
does promote priate sector resource mobilization.
loweer, other managements are not able to ,or
are not interested, to do so. At least part o the
reason or heay management commissions` on
teacher appointments ,as reported by teachers
themsel es, i s to pl ough back part o the
contributions into upgrading school acilities.
loweer, there is no guarantee that the resources
mobilized in this way will lead to inestments in
education, at least part o the public subsidy reaches
priate pockets or non-educational purposes.
Negl i gi bl e Invest ment s i n Qual i t y
Improvement:
One result is that managements do not inest in
quality improement and curriculum upgradation
,the latter is also regulated by the goernment or
Uniersity,. Many states do not allow aided teachers
to participate in goernment proided in-serice
teacher training, neither do the aided institutions
inest in teacher training themseles.
Wouk Moniloring und non-oxislonl
quulily ussurunco
Weak monitoring systems:
Many states do not hae well-established systems
or data collection een or numbers o institutions,
students and teachers. Kerala and 1amil Nadu, on
the other hand, hae good statistical and monitoring
systems. In these states, the GIA institutions are also
required by law to establish Parent 1eacher
Associations that act as a monitoring mechanism.
%
loweer, een a airly adanced state like Karnataka
has serious issues with data collection and reliability:
ery little data is collated at the state leel and there
is hardly any computerization or analysis o this data,
data are readily aailable at the district and block
leel but there are many anomalies. Aided schools
in Karnataka are not required to establish School
Deelopment and Monitoring Committees. Other
states with ery large GIA systems do not undertake
systematic data collection een at the lower leels.
Data on students and teachers in aided institutions
at the college leel is unaailable at the state leel in
almost all states except Kerala. Consequently, the
entire inancial management system o GIA has
weak underpinnings.
Limited involvement of beneficiaries:
1he current GIA system is in the nature o a contract
between the goernment and the pri ate
management. Apart rom Kerala and 1amil Nadu,
most states do not mandate parent teacher
associations or school deelopment committees in
priate institutions. 1he experience o both these
states, as well as international experience, suggest
that the inolement o parents in monitoring use
o the aid, student and teacher perormance could
reduce gross abuse o the system.
Quality assurance is absent at all levels:
Currently, public examinations at the secondary and
higher secondary leels proide the only means o
assessing quality at the school leel. Uniersities are
unable to ulill this unction adequately in higher
education, because o the hundreds o ailiated
col l eges and pol i ti cal i nol ement i n the
management and administration. 1he absence o
reliable quality assurance systems is one o the main
reasons why many o the legal proisions regarding
withdrawal o aid or non-perorming institutions
cannot be implemented.
Luck o compolilion und u holislic
rumowork or promoling privulo
soclor purlicipulion
GIA system locks in existing inefficiencies
and poor quality:
1he conentional argument or public subsidies
to the priate sector is that they promote a more
eicient and equitable production o educational
outcomes by allowing choice or students and
greater competition among proiders. 1he GIA
system, howeer, eliminates competition since
some priate institutions receie grants in
perpetuity ,although contingent on student
enrolment, while others do not get any public
subsidy at all.
Lack of a holistic policy framework for the
private sector:
Priate education either takes place outside the
system altogether or is subject to extensie
goernment regulation. Priate unaided schools are
allowed to oer instruction in the Lnglish medium
and dierent curricula ,or example, o the more
demanding Central Boards o Lducation, but
priate aided schools and goernment schools are
not allowed to do so. 1his has led to a all in demand
in some areas, and surplus teachers and unutilized
acilities inanced by public unds. 1he dierential
treatment creates inequities in educational proision
with richer students being able to access education
that is considered more beneicial either or higher,
proessional education or or labor market
outcomes. 1he existing subsidy mechanism does not
enable poor students to access these priate schools.
At the same time, the distinctions between the grant-
in-aid and other unaided institutions are getting
blurred and it is not clear that that the subsidy is
being used or intended purposes, as aided
institutions are now allowed to open sel-inancing
courses ,at the college leel, or ill acant posts with
teachers hired at market rates ,schools and colleges,.
The GIA mechanism does not allow flexibility
to promote specific educational objectives:
Since the GIA allows goernment unding to be
channeled only through the supply side, targeting
speciic population groups or areas, or promoting
educational goals such as introduction o innoations
and quality improement is diicult.
Poconl Allompls Al Poorm
1he Constitution itsel proides an example or the
reorm o the grant-in-aid system but until recently
&
many states hae not introduced major reorms.
Article 33 o the Constitution entitled aided
educational institutions managed by the Anglo-
Indian community to continue drawing aid, on a
reducing scale, or the irst ten years ater adoption
o the Constitution. 1hereater, aid was completely
stopped or these institutions. Recent attempts at
reorm in indiidual states, some o which are
discussed below, hae been drien mainly by iscal
compulsions to reduce reenue expenditures. Many
states hae introduced proisions since the early
nineties barring inclusion o new priate institutions
within the GIA scheme - and new institutions hae
to gie an undertaking that they will not seek
admission to GIA. 1his has not been ollowed in
Uttar Pradesh and Orissa, until recently, some states,
such as Karnataka, hae made speciic exceptions
or institutions with SC,S1 management. States hae
also stopped or reduced maintenance grants`, so
that public aid is restricted to teachers` salaries. \ith
the exception o Gujarat, the reorm eorts hae
tended to be ad-hoc in nature, and iercely contested,
leading to many reersals and patch-up agreements
between the goernment, managements and teachers.
All o the eorts, including those in Gujarat, hae
not dealt with the issue o using public subsidies to
the priate sector or promoting educational goals
,promoting equity, enhancing quality and instituting
accountability,, ocusing almost exclusiely on
reducing the iscal burden to the state.
Korulu
Kerala`s rapid demographic transition and absolute
decline in the child population has led to two issues
in school education: ,i, alling pupil-teacher ratios,
and ,ii, uniable schools o ery small size. Demand
or Lnglish-medium education has also exacerbated
these issues.
1he goernment has taken the ollowing steps to
address these issues:
K Redep/oywent of surp/us teac/ers in aided
sc/oo/s: 1he unoicial estimates o such
teachers, called protected teachers` because
thei r sal ari es conti nue to be pai d by
goernment irrespectie o whether they
work, astly exceed the oicial estimates
,12,000 - unoicial, 2,408 - oicial,. Relatiely
ew hae been re-deployed, partly due to
resistance by priate managements because
they lose their discretion in selecting teachers
,and hence commissions,, because o subject
mismatch and because aided teachers ,unlike
goernment teachers, are ree to participate
in political actiities. Most surplus teachers are
primary teachers and special teachers
,language, crat, etc.,. Protected teachers` are
thereore oten re-deployed in non-teaching
posts.
K Reduction of sa/aries to surp/us teac/ers: In
2001, the goernment announced that those
teachers who coul d not be absorbed
elsewhere beore June 30, 2002 would be paid
only hal their salaries. lollowing a 32-day
strike in May 2001, the decision was
postponed.
K C/osure of uneconowic sc/oo/s: About 2,244
schools are considered uneconomic with
enrolments below hundred. About 58
pe r c e nt o t he m a r e a i de d, t he
oerwhelming majority o them are lower
pri mary school s. 48 school s hae been
closed to date and another 393 schools
would be closed in 2003. Since the criterion
or closure is only low enrolment, there are
signiicant negatie impacts on equity. Most
o these small aided schools are in hill areas
and in remote areas, which sere tribal and
dalit communities.
K !anctioning of Eng/is/wediuw c/asses in
governwent and aided sc/oo/s: 1his policy has
been adopted to speciically address parents`
demand, which also leads to the students
joining unaided schools. In 2002, the
goernment announced that Lnglish-medium
classes could be started rom class 5 in aided
schools and that qualiied Lnglish teachers will
be appointed in both goernment and aided
schools.
K De/in/ing of t/e preuniversity (c/asses II and
I2; frow co//eges: In 1996, the goernment
announced that these classes would be
attached to schools. 1eachers who became
surplus in colleges were absorbed by
'
introducing special subjects such as trael and
tourism, communicatie Lnglish, etc. Selected
secondary schools ,both goernment and
aided, were to be allocated the plus two`
courses. 1he goernment selection was set
aside by the ligh Court in June 2000
ollowing a petition alleging arbitrary selection
o schools. Subsequently, the Cabinet
approed sanctioning o plus-two courses in
unaided schools also and unaided courses in
aided schools. All these moes are being
opposed by the Aided Schools Managers
Association.
K Identification of surp/us teac/ers in co//eges:
Approximately 100 priate aided college
teachers and 1500 non-teaching sta are
considered surplus, but redeployment is
irtually impossible at this leel. 1he
goernment has not been illing acancies and
managements hae been allowed to ill in
posts with part-time and guest teachers or
the last ie years.
Kurnuluku
1he GOK has taken the ollowing steps to try and
reduce the GIA expenditure:
K In I997. t/e governwent announced t/at on/y
co//eges and sc/oo/s founded lefore I987 nou/d
le adwitted to t/e GI. code. Subsequently, the
order was relaxed or institutions with SC,S1
management to allow institutions that were
ounded up to 1992. 1he priate school
managements and employees associations are
lobbying or extension o the cut-o date so
that new institutions can get the subsidy.
K Nen GI. courses /ave leen lanned since
I9909I, this order has largely held although
some colleges get around it by creating new
combinations` o courses, creating workload
and,or recruiting new teachers. New courses
in colleges are unaided courses with teachers
paid at much lower leels.
K In arc/ 2000. t/e C/ief inister announced
a I5 percent cut in GI. to co//eges, t he
goernment contribution to teacher salaries
would be reduced with colleges haing to
make up the dierence. lollowing protests
by college teacher unions, the order was
reersed.
K . recruitwent freeze on a// teac/ing and non
t eac/i ng post s i n ai ded i nst i t ut i ons nas
announced in arc/ 200I, all acant posts in
colleges were to be treated as unaided. Again,
the teachers` union led to a cancellation o
this order so that posts that were acant on
March 1, 2001 could be illed ,but not
subsequent ones,.
K In 200I. t/e preuniversity co/ / eges nere
separated frow t/e previous/y cowposite co//eges
ly a governwent order. 1his would enable the
teaching sta to be recruited at lower PUC
scales, rather than the degree college scales.
K Both in schools and in colleges, managements
are allowed to hire unaided teachers at market
salary leels or unilled acancies.
K In t/e /ast tno years. a fen t/ousand aided
sc/oo/ s teac/ers /ave leen redep/ oyed.
loweer, the process has not continued this
year. Due to the dierence in beneits or
ai ded and goernment teachers, the
Department cannot re-deploy aided teachers
to goernment schools.
Mudhyu Prudosh
G( decided to nit/dran its aid to private sc/oo/s
at t/e rate of 20 percent per year for five years. 1he
aid will be conerted to a block grant, giing schools
discretion to purchase inputs. Schools and colleges
will be expected to raise their ees and compete or
students. 1he new policy also makes colleges and
uniersities the employers o teachers who recruit
new sta on renewable ie-year contracts with
promotion on merit. Guidelines or sta salaries
hae been prepared by the state goernment.
Gu|urul
Gujarat is the only state with a sizeable aided
sector at the secondary leel that has attempted
major reorm o the inancing mechanism. 1he
main eatures o the reorm, introduced are: ,a,
grants or new institutions are restricted to
!
schools in certain geographical locations which
are undersered, ,b, inancial support is gien
on a declining basis reaching 50 percent o total
recurrent expenditure, ,c, the goernment pays a
ixed amount o Rs. 4,500 per teacher ,which is
about two-thirds the salary o a primary teacher
i n a goernment school ,, managements are
al l owed to pay hi gher amounts, ,d, there i s
lexibility in ees, and ,e, the maintenance grant is
delinked rom the number o teachers and has
been linked to the number o classrooms.
Grunl-in-Aid Mochunism und
Public Subsidizulion o lho Privulo
Soclor - un lnlornulionul
Porspoclivo
1he grant-in-aid inancing mechanism can be treated
as an implicit oucher scheme since students can
choose between a public and priate school and
since payment o the subsidy in these systems is tied
to enrolment, with common criteria or public and
priate schools. 1he classic oucher scheme enisages
a payment ,cash or coupon, gien directly to students
with students submitting ouchers to the school o
their choice. 1he alue o the oucher is determined
on the basis o a common leel o expenditure per
pupil. 1he general principle, howeer, is that unding
ollows students, the intended purpose is to enable
choice among consumers and hence, competition
among schools. 1he GIA system is similar to the
classic oucher system in that i a student chooses a
priate aided school in India, unding ,in the orm
o payment or teachers` salaries, ollows students.
In principle, the GIA system allows a student rom
a non-priileged background to moe to a priate
school. 1he main dierence rom a classic oucher
scheme, howeer, is that schools do not hae
discretionary choice oer how to spend the public
subsidy since the grant is tied to teachers` salaries.
1here is a considerable amount o theoretical
work on the aowed adantages o the oucher
mechanism - speciically, on beneits deried
rom promoting parental choice and competition
among schools - although practical experiences
with large-scale oucher plans are limited in the
world, including in the United States. 1here is no
single oucher plan and there are many dierences
in scope, in the proisions made or inancing
and in the extent o regulation o schools. 1he
empirical eidence on the impact o ouchers
on quality and eiciency is mixed.
As 1able 10 shows, the priate sector is relatiely
small in most industrialized countries but tends to
be larger in deeloping countries. Len in those
countries with large priate sectors, the extent o
priate inancing is relatiely small, indicating a
reliance on public subsidies. By contrast, many
deeloping countries hae large priate sectors, but
een amongst them, the extent o priate inancing
is relatiely low indicating that public unds subsidize
the priate sector.
Industrialized countries that oer the classic
oucher scheme are relatiely ew in number.
Most industrialized countries that subsidize the
priate sector do not operate classic oucher
schemes but pay directly or teachers` salaries and
other expenses, oten linked to norms in public
schools. 1he ormer group o countries has a
ery small priate sector in education and the
subsidy is linked to the leel o per-pupil
allocations in public schools. Coerage in terms
o percentage o enrolment is thereore low. 1he
oucher proides a high leel o subsidization,
coering 0-100 percent o total costs, including
most teacher costs and also some operating
expenses, materials and equipment, building costs
and een transportation.
Among those which operate the classic oucher
scheme are Denmark and Sweden, where the
goernment gies priate schools a per-pupil
subsi dy or grant that the school s manage
themseles. In Denmark, the oucher makes up
80 - 85 percent o school tuition cost and parents
contribute the rest o the tuition and ees.
Sweden`s oucher plan requires eery municipality
to und local enrolments in priate schools, the
al ue o the oucher equal s the per pupi l
expenditure in public schools and independent
schools must be open to all students and charge
no tuition. 1he U.S. has no uniorm oucher
scheme. 1here are exampl es o publ i c and
priately inanced ouchers, although all are small
compared to schemes in the rest o the world.
Generally, the oucher equals a proportion o
!
per pupil expenditure in public,priate schools
and targets low-income minority households.
Similarly, the New Zealand 1argeted Indiidual
Lnti tl ement Scheme ,1IL, has a ery l ow
coerage, coering 160 students per year. Low-
income Maori children were helped to receie
quality education in priate schools with the
oucher amounts arying by grades and coering
part o the school tuition.
Lxampl es o cl assi c oucher schemes i n
deeloping countries are also ew. 1he largest
program is the Chilean oucher scheme, where
all schools receied payments based on monthly
enrolments and an administratiely determined
oucher or each pupi l . 1he Col ombi an
program, where scholarships are gien to poor
students or secondary school attendance, was
initiated as part o a Bank-unded project.
Industrialized countries that oer subsidies to priate
institutions through payment o teachers` salaries
include Australia, lrance, Germany and the
Netherlands. Only the Netherlands has a ery large
priate sector. It also oers the best example o
this where iscal equality between public and priate
schools is constitutionally mandated.
1he Indian grant-in-aid system is comparable both
in size and in the nature o the subsidy to the
system o subsidizing priate schools in the
Netherlands. Neertheless, there are important
dierences between the Indian and Dutch
systems. 1he similarity between the Indian and
Tublo T0. Cross-Counlry Compurison o Privulo Soclor in Educulion, T8
Counlry Proporlion o onrollmonls in Proporlion o inuncing rom
privulo inslilulions (} privulo sourcos (Primury und
Socondury}
Primury Socondury Porconl
/uslrolio 2.3 34.C 15.
Cbilo [v} 41. 45.2 31.3
Donmork [v} 1C.
o
15.1
o
2.1
Fronco 14.3 2C.3 7.3
Cormony 1. .8 24.1
Hunqory 3.2
o
4.
o
8.C
lnoonosio 17.2 42.4
o
18.2
1oon C.8 1.5
o
8.3
1oroon 24.8 .4 2.C
E
Koroo, RouElic o 1.7 37.5 2C.7
Moloysio 1.4 3 2.C
c
Moxico .3 1C.7 13.8
Nolborlonos . 78.7 5.7
Norwoy 1.5 4.7 C.
Poru 12 1.1 38.2
Pbiliinos 7.7 2.5 4C.3
E
Soin 32.4 2.7 1C.8
Swooon [v} 2.3
o
1.7
o
C.2
Swilzorlono 3.3
o
7.8
o
11.
niloo Slolos [v} 11.7
o
.
o
.2
niloo Kinqoom 5.2 8.3 5.7 *
Nolo. o. !5 oo|o, b. !Z oo|o, c. !c oo|o. (; |oo|co|os |ho| |ho cooo|, ooo|os o c|oss|co| oocho schono.
Sourco. \o.oo, 2002.
!
Dutch systems lies in their common objectie
,protecti ng ri ghts o parents o di erent
backgrounds, and in the extent o their coerage
at the secondary leel. 1he Indian grant-in-aid
system, howeer, i s equal l y perasi e at the
tertiary leel but hardly so at the elementary leel
,except in a ew states, whereas the Dutch system
is perasie at the elementary leel but not at the
tertiary leel. 1he other common eatures are:
the legal ramework or priate schools ,to be
established as non-proit organizations,, the extent
o regulation regarding teachers` salaries and ees
and the mode o deliery o the subsidy ,payable
to institutions,. Beyond these basic common
eatures, there are marked diergences between
the two systems.
Public subsidies in India coer mainly the salary
component while the priate promoter is expected
to incur capital and other non-salary recurrent
expenditures. In the Netherlands, all costs are
coered by the goernment. 1hese dierences arise
rom the dierent objecties in the two countries -
in the ormer, promoting oluntary contributions
or education is important, whereas in the latter,
promoting equity in inancing o public and priate
schools is considered important. In India, state
goernments are responsible or determining
eligibility or the subsidy and or proiding it
allowing considerable diersity across states, in the
Netherlands, the Central goernment proides the
entire subsidy. One major dierence lies in the
coerage o priate institutions: in India, new priate
institutions are generally not eligible, creating a
situation whereby some institutions permanently
receie aid while others neer get any aid. In the
Netherlands, on the other hand, eery priate school
is eligible or aid. Dierences in the regulatory
ramework regarding the type o education,
selection o pupils and ees are also striking. 1hese
are much more regulated in India to be in conormity
with regulations in the goernment schools - hence,
priate aided schools ollow the same curriculum,
teaching methods and examinations, they are obliged
to admit all eligible pupils and cannot charge ees
except in line with those set by the goernment
schools. In the Netherlands, dierences in content
and teaching methods are explicitly allowed,
although the goernment prescribes the broad
curricular areas. More importantly, schools can
reuse admission to pupils o other religions - a
eature that has considerable ramiications or the
social eects o the education system.
India has not adopted other mechanisms or
proiding subsidies to priate institutions on a large
scale. Lxamples o demand-side interentions do
exist - or example, scholarships or SC,S1 students
and rural girls in some states - but their coerage is
small and uneen, and corruption is rampant in many
states. Other countries hae adopted other
mechanisms or promoting priate participation.
1he schemes include interentions on the supply-
side ,subsidies to priate operators to encourage
them to establish schools, or on the demand-side
,targeted at eliminating the demand constraints that
are either preenting amilies to send children to
school or continue in school,.
A reiew o these mechanisms shows that i the
subsidy does not coer teachers` salaries ,as in the
direct or implicit oucher scheme,, the subsidy
enables only a small proportion o the poor to attend
priate schools and the priate sector tends to be
small ,because it caters only to those that can aord
the ees,. On the other hand, i the priate sector is
large and caters to a large number o the poor, it
tends to be o ery low quality. 1he use o such
inancing mechanisms can ensure better-targeted
inance, but because o the need or transparency
and capacity building to administer such subsidies,
they hae been most successul as part o an
externally inanced project with considerable external
superision.
1argeted bursaries and matching grants are examples
o supply-side interentions. Targeted lursaries are
cash payments that may go directly to schools,
municipalities, or proinces and are earmarked or
speciic purposes, such as improing the curriculum
or increasing school access or minority, indigenous,
or poor children. 1hereore, they hae the potential
o improing access, equity, and educational quality
by introducing competition between schools,school
districts. Goernments may also target resources to
schools or communities through watc/ing grants.
cowwunity grants. a wi of pul/ic and private sector
support and cowwunity financing schemes to either
propel the supply o schooling and,or catalyze the
demand or education. 1hese mechanisms employ
!!
the school, community and,or the priate sector in
contributing inancially as well as in proposing
innoatie programs or educational improement.
1hey could be gien in lump sum, but are usually
tied to outcomes, including the number o students
attending a school, the number o classrooms
constructed by a priate school, the land and student
perormance.
Lxamples o demand-side interentions ,other than
the classic oucher scheme, are stipends and student
loans. !tipends are cash payments that a public agency
makes to a amily to either oset a child`s schooling
expenses or to compensate a amily or the loss o
the child`s labor. Generally core expenses such as
books, tuition, and transport, and incidental expenses
such as materials, game ees, and clothes are coered.
A stipend is particularly eectie in the poor to
attend an institution o their choice. 1he Bangladesh
lemale Secondary School Program, which is
externally unded, is one o the largest such
programs. !tudent /oans are used usually at the tertiary
leel. Loans can be in the orm o commercial
priate loans or goernment-guaranteed student
loans. 1he goernment may take an actie role by
selecting candidates or establishing regulations.
Pocommondulions or Poorm
As stated earlier, the impetus or reorm o the GIA
system has come rom iscal considerations and state
goernments hae resorted to arious ad-hoc
measures to contain the growth in expenditures.
1hese considerations hae oten ignored the act
that state goernments are committed to achieing
certain educational goals, including uniersalizing
participation and completion o elementary
education, improing equity at higher leels and
raising quality at all leels. Should the goernment
cut back or eliminate subsidies to the priate sector
or should it use alternatie means to achiee these
goals 1he alternaties are to resort to direct
goernment proision or to use the priate unaided
sector. Comparing the educational outcomes and
cost o the three dierent systems - goernment,
aided and unaided - can help to answer this question.
1here are relatiely ew studies comparing the
sectors on these attributes, especially on the
eectieness or alue added by institutions o
dierent types. It is clear, howeer, that the costs in
goernment institutions are at least as high as in aided
institutions, and much higher than in unaided
institutions. Under current cost conditions, expansion
through the goernment sector alone seems a iscally
uniable option. Lxpansion through the priate
unaided sector poses serious equity issues since poor
students will be unable to pay the required ees,
especially at higher leels.
T/is evidence in t/is study suggests t/at continued
use of t/e systew of pul/ic sulsidies for t/e private
sector is a vial/e option for epanding access and
woli/izing additiona/ resources for education and is
preferal/e to e/iwinating t/ese sulsidies. 1hree main
approaches in continuing the system o public
subsidization o the priate sector can be delineated:
,a, retain the main eatures o the present GIA system
but improe its administration to ensure it achiees
educational goals, or ,b, reorm the system to moe
to a system o perormance-based grants or schools,
or ,c, moe to a student-based subsidy system allowing
students to choose between public and priate schools.
Beore discussing these approaches in greater detail,
this section outlines some general principles that should
guide the reorm.
Agreement on the goals and principles of the
r ef orm program is necessary and their
articulation is necessary to build public support.
1he ollowing are important or most states:
promoting greater equity, reducing abuse and
ineiciency in the use o subsidies, enhancing quality
and accountability, enhancing resource mobilization
rom the priate sector and introducing dierent
mechanisms or administering subsidies in order to
achiee dierent educational objecties.
State-specific approaches are required in order
to take into account the enormous differences
across states in the use of GIA.
States should decide which sub-sector,s, is ,are, a
priority or reorm, and whi ch strategy i s
appropriate, based on an ealuation o how best to
achiee educational goals and the institutional
capacity to implement reorm. For a// states. /onever.
it is desiral/e to wove anay frow t/e present ad/oc
revisions to t/e GI. po/icy tonards a /o/istic reforw
effort t/at is grounded in t/e states vision for t/e
education systew. Consensus building among the
!"
main stakeholders about the goals o the reorm
and detailed operationalising would be required to
sustain the reorm program. Broadly speaking, the
relatie emphases and priorities or arious
categories o states are as ollows:
(a; states n/ere GI. /as leen used to iwprove
access at t/e priwary /eve/: 1hese are Kerala,
1amil Nadu, Maharashtra and \est Bengal.
Reducing GIA, or closing down small aided
schools, would immediately hae a negatie
impact on participation o the poor and those
liing in remote areas. \here there is a decline
in the child population, the immediate priority
is to introduce greater lexibility in the teacher
norms without reducing access. A new
strategy or smal l school s woul d be
appropriate - modeled on those in other
countries acing similar issues - in order to
sae on resources while proiding education
o high quality.
(l; states n/ere t/ere is /eavy re/iance on GI.
at t/e secondary /eve/: the aboe our states as
well as Gujarat, Uttar Pradesh, Orissa and
Karnataka all into this category. Improing
the equity targeting o the public subsidy and
using it to leerage more priate sector
resource mobilization or quality improement
are the main issues or these states.
(c; states n/ere a disproportionate s/are of GI.
goes to /ig/er education: Orissa and to a lesser
extent Andhra Pradesh all in this category. In
both states, participation and completion
leels at primary and secondary leels are ery
low and strongly biased in aor o the rich.
lence, subsidies to priate colleges are
captured by the rich. 1he main issues here are
to ,a, redirect the subsidies or higher
education to primary education, and ,b, ind
alternatie inancing sources and mechanisms
or higher education. In both cases, a policy
ramework to use the pri ate sector
participation or the beneit o the poor needs
to be deeloped.
(d; states n/ere t/ere is /iwited re/iance on GI.
at any /eve/: these are Madhya Pradesh,
Rajasthan, Bihar and limachal Pradesh. As
noted earlier, these states hae a goernment
sector and a large priate unaided sector.
Urban primary education in many states is
also o the same kind. Since the poor are
eectiely barred rom attending ee-paying
institutions, they attend the lower quality
goernment institutions, which reduce their
chances o continuing to higher leels o
education and their labor market perormance
,employment and earnings,. 1he main issue
or these states, and in urban education or
many states, is to promote greater equity
through targeted subsidization o the poor
to attend priate schools.
In addition, the political strength o the priate sector
managements and teachers` associations needs to be
taken into account. States with large aided sectors
hae powerul lobbies o these groups that are able
to inluence policy. Among them, Karnataka and
Uttar Pradesh, both with large GIA sectors, are two
o the our Indian states which hae an upper house
,Legislatie Council,, which has 1,12 members
elected by graduates and 1,12 by teachers.
Representaties o the priate managements`
association and teachers` association are oten
members o the legislature.
Reform in the higher education sub-sector
requires a different institutional framework
f rom that in the school education sub-sector.
1he goernment has a smaller direct role to play in
higher education een is-a-is GIA colleges,
especially in relation to quality improement and
perormance monitoring which is the role o the
Uniersities. In school education, on the other hand,
the goernment can play a more direct role since it
sets the standards or curriculum, examinations and
academic standards.
Working out mechanisms to resolve conflict,
in conjunction with clear articulation of
goals, is necessary to avoid the ref orm
program being mired in endless litigation.
1he existing legal ramework does not coner
public aid as a matter o right on institutions and
hence, in principle, there should be no diiculty
in changing the terms on which aid is gien. Aid
is gien granted on the basis o agreements, there
i s no l egal i mpedi ment t o changi ng t he
!#
Tublo TT. Compurison o Public-Fundod Privulo Schools. lndiu und Nolhorlunds
lndiu
Co|oclivo Promolo volunlory oorl in ooucolion, rolocl
ooucolionol ono cullurol riqbls o linquislic ono
roliqious minorilios
Lovol o ooocolion /ll lovols, Eul osociolly soconoory, biqbor
soconoory ono qonorol biqbor ooucolion
Covoroqo ln mony slolos, only rivolo inslilulions
osloElisboo Eooro 18-87 Eul vorios ocross
slolos. ConsiooroElo voriolion in covoroqo Eul
bol lbo inslilulions ol soconoory ono biqbor
lovols in mony slolos oro rivolo oiooo
Privolo monoqomonl \orios occoroinq lo loqislolivo romowork in
oioronl slolos, in qonorol, con Eo inoiviouol,
inslilulion ono cororolo Eooy Eul inslilulion
bos lo Eo run os non-roil orqonizolion.
Conlrioolion o /ll coilol oxonoiluro [lono, Euiloinqs,
rivolo inslilolions oguimonl,non-solory rocurrinq oxonoiluros
os or qovornmonl norms} lo Eo incurroo Ey
rivolo inslilulion, volunlory oronlol
conlriEulions ollowoo.
Tyo o soosioy Poymonl o solorios o loocbors ono somo non-
loocbinq slo Ey qovornmonl, numEor o loocbor
osls ono solorios lo Eo orovoo Ey
qovornmonl ono oro usuolly Eosoo on lbo somo
norms os in qovornmonl inslilulions
Mooo o oolivory PoyoElo lo inslilulions/loocbors
Poolic inoncinq Slolo qovornmonls, Conlrol qovornmonl bos no
oirocl inoncinq rolo
Eoocolion conlonl /ll uElicly unooo inslilulions musl ollow slolo
ono rocossos qovornmonl roscriEoo curriculo, loxlEooks ono
suEmil uils lo common uElic oxominolions
olonq wilb qovornmonl inslilulion sluoonls.
Lonquoqo o inslruclion bos lo Eo lnoion, Enqlisb
mooium inslilulions oro nol oliqiElo or suEsioios.
noiooo inslilulions oro nol suE|ocloo lo roqulor
insoclions.
Soloclion o oils Scbools musl oomil oll oliqiElo sluoonls,
irrosoclivo o communily or roliqion, roliqious
inslruclion is nol comulsory or uils
Foos No luilion oos oyoElo, olbor oos sol ol
nominol lovol in oqroomonl wilb qovornmonl
ono common or oll inslilulions o o orliculor
lovol in o slolo
Nolhorlund
Froooom lo osloElisb scbools ono oolormino
rincilos ono orqonizolion o loocbinq.
Encouroqo oronlol cboico ono inonciol
oguily Eolwoon uElic ono rivolo scbools
Primory ono soconoory [clossos 1-12}
/ll rivolo scbools in lbo counlry [7C orconl
o oll scbools, covorinq oroximololy 7C
orconl o uils}
/ny qrou o oronls, scbools bovo lo Eo run
os non-roil orqonizolions
Nono [oooilionol oronlol conlriEulions
ollowoo}
\oucbor [ormulo-Eosoo}, qovornmonl covors
cosl o ocilily, oguimonl, slo ono runninq
oxonsos os in uElic soclor scbools o somo
lovol
Diroclly lo oll rivolo scbools
Conlrol qovornmonl. 1CC, locol qovornmonl
bos no inoncinq rolo
Scbools oro roo lo oolormino rincilos ono
orqonizolion o loocbinq - Eul Conlrol
qovornmonl roqulolos curriculor qools. /n
inooonoonl insoclorolo ovoluolos oll
scbools, qovornmonl ono rivolo.
Scbools con rouso oomission lo cbiloron o
oioronl roliqion
No luilion oos
Sourco. Fo No|ho|ooos, con||oo |on \o.oo (2002;.
!$
ramework. Nonetheless, as the extensie litigation
on the subject shows, the legal powers o the
goernment al one do not determi ne whether
reorm can be i mpl emented wi thout j udi ci al
challenge. 1he method o implementation, the
extent o change and the duration o the transition
woul d determine the legality. 1he courts are
concerned with the arbitrariness` o goernment
action, the immediate impact on teachers and
negatie consequences or students` interests.
Another consideration is whether the interests o
concerned parties are taken into account in
proposing new changes. As a acet o air
procedure, noti ce o i mpendi ng change and
meaningul consultation with aected parties are
likely to reduce litigation that can stall the entire
reorm process. Speciic steps that could be
considered are:
K inorming the concerned parties about
proposed changes
K seeking the iews o these parties in a
meaningul dialogue
K giing suicient time or adaptation by
institutions, teachers and students
K proiding the rationale and justiication or
the change, speciically in terms o the oerall
goals o the goernment in education,
promoting equity, instituting greater systems
o accountability, making institutions iable,
aoiding corruption and enabling public
subsidies to reach a greater segment o the
population
\here aid is non-statutory, changes can be carried
out by appropriate amendments to goernment
orders, the Codes and amending indiidual
contracts ater securing the consent o the donee
institution - with the caeat that the amended orders
should be publicized in easily comprehensible
language ,see below,. I the terms o aid are
contained in Rules, the amendment to the Rules has
to be justiied at arious goernment leels, i the
terms o aid, or some conditions are ound in parent
Acts, approal o the State Legislature will need to
sought to amend those parts, necessitating, in turn,
a broad political consensus oer the nature o the
reorms.
Three broad approaches to reforming GIA can
be delineated:
,i, Strengthening the existing system in order to
improe eectieness, equity orientation and
responsieness to demand.
,ii, Moing to a perormance-based grant system.
,iii, Moing to a student-based grant system.
Possible steps or each o the aboe are
discussed below and could address many o
the issues listed in Section 8 aboe. T/e first
approac/ ni// not address t/e issue of prowoting
greater cowpetition or introducing greater
variety in financing wec/anisws for specific
oljectives. T/e ot/er tno approac/es are letter
i n t /i s respect . lut t /ey are a/ so wore
dewandi ng i n t erws of desi gn and
iwp/ewentation as t/e sulsequent section
discusses. 1he steps listed or the irst approach
are a pre-condition to moing to either o
the two approaches. lor many states, moing
to either o the second or third approach
inoles a major reorm and considerable
additional institutional capacity, and may
required to tried out on a smaller scale.
Slronglhon lho oxisling GlA syslom -
priorily uclions
Immediate steps can be taken to improe targeting
o aid, modernize data management processes,
improe the legal ramework and strengthen
inancial management ,Steps ,a, - ,d,,. 1he existing
system can also be modiied to enable priate
managements to mobilize additional resources and
to introduce perormance monitoring ,Steps ,e, -
,,,, but this will require urther operational detailing
or determining criteria or ees, estimating reenues
and setting up assessment systems.
(a) Improve Lfficiency and Targeting of the
Aid
,i, Allow colleges to opt out o GIA or
unpopular courses in return or receiing
aid or newer courses. 1his addresses the
issue o the subsidy going to irreleant
and outdated courses while the newer
courses rely exclusiely on priate
!%
i nanci ng, whi ch l i mi t s qual i t y
i mproement. Courses that were
considered necessary or protecting
domain knowledge could continue to
receie aid. 1he college would hae to
enter i nto an agreement wi th the
goernment to opt out o GIA and be
responsible or working out agreements
with teachers. 1his could also be
attempted at the secondary leel.
,ii, Lstablish equity criteria or proiding the
grant-in-aid, such as proportion o
students rom disadantaged or poor
backgrounds and link the grant to ulilling
such criteria
(b) Modernize Data Management Processes
,i, Reamp t he dat a col l ect i on and
management system or aided institutions
at the school stage ,including higher
secondary,. At a minimum, reports must
show enrolment, teachers, institutions,
broken down by district and management
type ,goernment, aided and unaided,
and growth oer time. Oer time, more
sophi st i cat ed i ndi cat ors such as
perormance, repeti ti on, dropout,
promoti on, and graduati on rates,
student,teacher ratios and per student
subsidy cost can be gien. Gien the
limited technical capacity o most state
education departments, the best course
is to outsource the data management and
analysis to competent specialized agencies.
Data col l ecti on methods must be
i mpr oed by gi i ng s peci i c
responsibilities to head teachers, block and
district oicers or collecting and
checking the reliability o the data. 1he
proessional agency could carry out
random checks in the ield. 1he data itsel
could be maintained and regularly updated
on a website that is accessible to the
public.
,ii, Parallel recommendations would apply
or higher education, but the responsibility
could be ixed either with the state
goernment directorate or with the
respectie Uniersities. lurther detailed
breakdown o the data by discipline and
courses will also be required or policy
planning.
,iii, Data analysis should coer indicators
linking physical and inancial data such as
expenditure per pupil, per teacher and
per institution, ariations across socio-
economic groups, regions and leels.
,i, 1he data on student enrolment should
be used along with school-mapping
exercises and demographic projections to
ealuate teacher needs in dierent types
o schools and make orward estimates
o these requirements.
,, lunding and appropriate technical
expertise will need to be proided or
some states that currently lack adequate
capacity.
(c) Improve the Legal Iramework
,i, Create an accessible, updated summary
o al l r ul es and r egul at i ons i n
comprehensi bl e l anguage. Such a
document could be relatiely easily
collaged at the goernment leel and
distributed at low cost to all institutions
and to the department oicers. 1his could
also be maintained on a website or open
access.
,ii, Si mpl i y rul es and regul ati ons. A
comprehensie enquiry should be
undertaken into whether existing rules and
regulations are required to raise standards
in schools with the aim o simpliying
them.
,iii, Computerize and classiy pending cases
with the aim o speedy disposal. 1his is
essential both in order to reduce the
inordinate time spent by goernment
oicials on court cases and in order to
enable introduction o new reorms.
,i, Create and support strong parent teacher
associations in aided schools that are made
responsible or monitoring student
attendance and teacher presence. Legal
!&
codes and orders should be amended to
coner speciic powers on these bodies.
1he committees,associations could be the
nodal point or orwarding complaints
so t hat t he goer nment has an
independent eedback mechanism. 1his
will help to reduce abuse on account o
conniance between managements and
teachers.
,, In states where abuse and raud are
rampant, implementing the existing legal
proi si ons, i ncl udi ng reoki ng o
recognition or imposition o penalties,
discontinuation o the grant ,while taking
appropriate action to protect the interests
o students, is a necessary irst step.
,i, Lstablishing clear and simple criteria,
related to monitorable indicators o
student perormance, or withdrawal o
aid and implementing these will help to
improe quality.
,d, Strengthen the linancial Management and
Institutional Capacity
,i, Pay salaries directly to teachers. 1his will
help to reduce open raud and abuse by
management.
,ii, Laluate the nature and eectieness o
audit and other controls by outsourcing
audit with elaborate parameters. 1hese
include: a, an independent audit o a
certain percentage o schools,colleges on
a random sample basis, similar to random
scrutiny o income tax returns. In this
method, the auditor would go into the
records and carry out physical eriication
o students, teachers, acilities and
expenditure, b, test audit o all accounts
books and inspection o all equipment,
c, ealuation o learner achieement on
a random sample basis o 5-10 percent
o aided institutions each year by a
r eput ed out si de agency, and d,
comparison o the independent audit
report with the returns iled with the
goernment.
(e) Lnhance Resource Mobilization by the
Private Sector
,i, Introduce greater lexibility in ees with
reimbursement or waier o ees or
poorer students. In order to combine this
with the equity targeting o aid, the
goernment needs to deelop criteria or
students who can be charged higher ees,
more precise estimates or reenue
mobilization and monitor the use o
additional resources. A monitoring
mechanism needs to be put in place.
,ii, Make resource mobilization by priate
managements a condition or continuing
the grant
(f; Create independent qua/ity assurance
organizations/wec/anisws to monitor
quality and learning outcomes and exert
external pressure on institutions to
upgr a de qua l i t y a nd i mpr oe
accountability.
Movo lo u porormunco-busod grunl
syslom
T/e lasic princip/e of t/is reforw is t/at continuation
of t/e grant nou/d le contingent on various aspects of
perforwance. 1he grant would continue to be gien
to institutions but the existing grant would be
de-linked rom teachers` salaries and gien in a
lump sum. 1o begin with, the total grant would
be the existing teaching grant, which is gradually
reduced to a pre-determined leel ,or instance,
it could coer 50 percent o teacher costs or
could be a ixed salary contribution per teacher,.
1he key eature o the system is that the grant
would be linked to outcomes and processes, such
as student perormance, innoatie programs,
inclusion o special groups, and matching grants
rom the priate sector or the community. 1he
important element o the design is to deine the
nature and scope o the subsidy, what costs it
woul d coer and how perormance woul d be
monitored.
In order to do this, the areas in which perormance
would be appraised and the method o perormance
appraisal will need to be delineated.
!'
K !tudent perforwance: At the school leel,
assessment o student learning at arious leels
,e.g., 1erminal years o primary, upper
primary, secondary and higher secondary
stage, could be a condition or aid. All
institutions receiing aid would be required
to hae their students assessed. In order to
be air and credible, assessments must be
done by a competent proessional agency and
the content and methodol ogy o the
assessment must be subjected to proessional
and public scrutiny. lurther, allowance must
be made or the background o students in
an institution, since poorer and more
depried students generally perorm lower
on tests. In this case, a alue added`
approach, ocusing on improements in
achieement will be more appropriate.
Perormance targets will need to be set or
indiidual institutions. Models or establishing
s uch s ys t ems o as s es s i ng s t udent
perormance exist in other deeloping
countries and could be ollowed - although
their adaptation to a system o proiding
grants has proed more problematic. In
higher education, the role o the Uniersities
in monitoring student perormance has to
be enhanced, appropriate changes to the
Uniersity Acts may be required or this.
K Teac/er accountali/ity: Again at the school
l e e l , i ns i s t e nc e on a s y s t e m o
perormance eal uati on o teachers,
including but not restricted to a system o
sel-appraisal, is easible. Insistence on
proessional up gradation o teachers
, t hrough part i ci pat i on i n i n- seri ce
programs, or additional qualiications,
woul d al so be desi rabl e to promote
inestments in training. Managements could
be al l owed t o deel op a syst em o
i ncenti es and penal ti es or teacher
perormance. 1his could be supplemented
by external superision ,on a sample basis,
on teacher perormance and reports rom
parent committees.
K Institutiona/ rating: In this case, perormance
woul d be j udged on such i ssues as
management processes, innoations in
c ur r i c ul um a nd t e a c hi ng- l e a r ni ng
methodology, community participation
and other aspects o institution unctioning.
1hi s ki nd o rat i ng woul d be most
appropriate or secondary and higher
secondary school s and col l eges, most
elementary schools are too small to do this.
One method o introducing such a system on a
gradual basis is to proide unding to all schools on
the basis o deelopment plans prepared by
institutions with the participation o the parents`
committees. Reorm could initially be restricted to
high schools, which in any case, appropriate the
greater share o the current grant-in-aid. A portion
o the existing grant-in-aid could be conerted to
grants or improing quality and perormance, with
conditions or matching grants rom communities,
priate sector ,which could be relaxed or schools
in disadantaged areas or sering such groups,.
Alternatiely, additional grant money could be
proided to schools with the incentie o accessing
more untied unds i they surrender some o the
existing grant-in-aid ,or instance, as aided teachers
retire or leae the post,. Schools would deelop
their own perormance criteria on the arious
outcomes. 1his approach has the added merit o
deoling greater authority, responsibility and
accountability to schools, which is necessary to bring
about substantial improement. loweer, in order
to initiate this process, manuals and procedures or
preparing and approing deelopment plans, and
or releasing unds will need to be deeloped.
An alternatie approach is to establish an
autonomous organization or monitoring school
quality and conducting learning assessments.
Although its main objectie will not be ,and should
not be, to determine how much grant will be
released, its rating o indiidual institutions on
outcomes and processes could orm the basis or
release o grants on pre-determined criteria.
Movo lo u sludonl-busod grunl
progrum
In t/is approac/. t/e sulsidy nou/d le given direct/y
to students n/o nou/d /ave t/e freedow to c/oose
letneen different types of institution. 1he institution`s
total grant will depend on the number o students
"
who opt to enroll there. Possible ways o doing this
are discussed below.
\ith an incremental approach, a policy is required
to compulsorily transer GIA unds that arise
through acancies and,or teacher requirement to a
Student Scholarship 1rust lund` ,SS1l,. In order
to incenties schools to take on disadantaged
students, an Incentie Contribution or Lnrollment
could be initiated. 1he scholarship und could be
used to proide scholarships to poor students to
attend school and to pay the school`s incentie
contribution or new students.
Adopting a more radical approach, indiidual
institutions could opt or complete inancial autonomy
in return or opting out o GIA status, but would
hae to proide scholarships or poor students. 1he
school could moe two teachers each year out o
GIA ,through normal attrition or retirement, but this
could also be incenties, and replace them with unaided
teachers. 1he grant-in-aid or these teachers` salaries
would be conerted to a scholarship und. In this case,
schools or colleges would begin a process o cost-
recoery rom richer students in a phased manner,
while the remaining students would hae their ees
unded out o the scholarship und. Since
administration o a scholarship program has not been
salutary, inolement o credible non-goernment
groups with no direct stake in such a program would
be necessary.
linancial simulations undertaken or Karnataka on
the basis o data rom a small sample o schools
and colleges show that initially additional inancing
would be required or the transition, but oer a
period o seen years, institutions could inance an
increasing proportion o poor students rom the
scholarship und and would hae a small surplus
let or re-inestment.
8
1he major disadantage o this approach is that the
good institutions may opt out o the scheme leaing
the poor perorming institutions to continue
receiing the aid. lence, enabling institutions to opt
out would need to be combined with remedial
actions, penalties or discontinuation o aid to errant
institutions, giing students the option to join other
institutions ,and making acceptance o such students
a condition or opt out` by other institutions,.
I such a major reorm were contemplated, there
would need to be broad political consensus, strong
leadership and proessional inputs to:
K drat an appropriate incentie scheme
K establish partnership with a credible third party
,proessionals or priate organizations with
no direct stake in running such institutions,
K monitor its progress and adapt in the light o
implementation experience
K insulate the reorm program rom short-term
political considerations.
As discussed earlier, the theoretical adantages o a
student-based oucher program are many, but there
has not been much experience worldwide with large-
scale implementation. Speciic issues that need to be
addressed at the design and implementation stage
are:
K targeting and selection o beneiciaries eligible
or scholarship
K eligibility criteria or participating institutions
K assessment o the capacity and motiation o
priate institutions
K a sound system or tracking students and
oucher renewals
K ensuring timely payment o scholarship grants
K minimizing the costs o administration, which
can be high or such schemes
K amendment o the existing legal ramework
K introducing budgetary changes to transer
salary expenditures to grant expenditures
Tho Poorm Progrum Poquiros
Munugomonl und Tochnicul
Cupucily 8uilding und Addilionul
Finuncing in lho Shorl Pun
T/e waj or const rai nt to t /e ef fect i veness of
sulsidization wec/anisws in deve/oping countries /as
leen t/e iwp/ ewentation capacity of operators.
interwediaries. and adwinistrations given different
responsili/ities. Capacity building through training
"
at all leels o implementation is required to minimize
problems. Goernment institutions will need to take
on new management and accountability unctions
instead o merely paying teachers` salaries. Many o
the reorms suggested in the preious sections,
including those or improing the existing system,
require that certain actors play a role that they were
neither willing to perorm nor capable o ulilling.
Indiiduals or organizations gien resources to
operate their own schools may or may not hae the
capacity or organizational skills to meet the challenge.
In t/e s/ortrun. any serious reforw prograw ni//
require additiona/ funding eit/er to strengt/en
wonitoring and financia/ wanagewent processes. or
to create qua/ity assurance wec/anisws. Moing to a
perormance-based or student-based system will
require een more unding initially. Reorming the GIA
mechanism into an instrument or promoting equity
and quality cannot be seen merely as a cost-cutting
exercise. In the long run, this may leerage additional
resources rom the priate sector and plug eiciency
losses in the use o public unds.
. crucia/ aspect of woving to a nonsa/ary lased grant
systew is to protect t/e nonsa/ary ependiture
cowponent. n/ic/ is typica//y reduced n/en state
governwents are faced nit/ ludgetary constraints.
Reduced or delayed payments reduce program
credibility and ownership by beneiciaries. 1he
secondary school scholarship program in Colombia
was adersely aected due to such delays with
negatie consequences or the long-term objectie
o improing quality. linding methods to protect
such expenditures in the budgetary process will be a
challenge.
Irrespectie o the approach to reorm adopted in
indiidual states, indiidual state goernment
education departments may ind it diicult to start
the process and deelop a well-thought out program
o reorm without additional technical inputs or
inancial incenties. !tate fisca/ adjustwent prograws
can offer financia/ incentives or state goernments
to opt or change and to achiee educational goals
through more eicient use o their resources.
.not/er strategy is for t/e Centra/ governwent to
provide financia/ and tec/nica/ assistance for states
to deve/op and iwp/ewent reforw pac/ages t/at weet
centra//y /aid donn criteria and guide/ines n/i/e
a//oning for diversity in statespecific educationa/
needs and goa/s. 1hese interentions can also help to
monitor progress in the reorm program, to
i ntroduce changes wi th the experi ence o
implementation and to expose states to experience
o similar reorms elsewhere.
"
Korulu
1he state o Kerala has made extensie and long
use o the grant-in-aid system, it is also the state
with the highest leels o educational participation
and completion. Almost 90 percent o students who
enter class 1 reach class10. Something on outcomes
- priate sector contribution.
1he grant-in-aid codes were operational since the
early 20
th
century in the princely states o both
1raancore and Cochin and enabled priate
educational institutions established by arious
religious and caste communities to seek public aid.
loweer, the GIA rules encouraged the priate
managements to mobilize their own resources, only
subsidizing part o the recurrent costs. 1his led to
considerable diersity in the aailability o resources
across priate schools, ariation in teachers` salaries
and teachers being subjected to arbitrary remoal
by management.
1he major reorm o the GIA code occurred under
the irst elected Communist Ministry in Kerala, which
came to power in 195. 1he Kerala Lducation Bill
Annoxuro T
Annox Tublo T. Koy Fouluros o lho Logislulivo Frumowork or GlA in Korulu
Tronsoroncy Cl/ is qovornoo Ey KER, in olbor slolos, lboro oro o mullilicily o cooos
ono ocls lbol qovorn oiooo inslilulions.
Monoqomonl slrucluro FloxiEilily roqoroinq slrucluro o monoqomonl - inoiviouols ono lrusl,
sociolios ono roliqious orqonizolion con osloElisb scbools/colloqos Eul
lboy bovo lo ooinl ono oy or Monoqor.
Conlicl o inlorosl Porson ooinloo os loocbor connol Eo Monoqor.
Slo slronqlb voriicolion Eoucolion oicor ixos loocbinq osls olor inolizinq numEor o oivision.
Eoclivo uil ollonoonco is colculoloo lbrouqb surriso visils Ey ooucolion
oicors.
Discilinory oclion Slolo qovl. con loko oiscilinory rocoooinqs oqoinsl oiooo loocbor, i lbo
monoqomonl ooos oo nol so.
Roooloymonl o surlus Slolo qovl. con ooinl surlus slo lo olbor oiooo or qovornmonl
loocbors scbools.
lnsoclion Scbools oro suE|ocl lo roqulor insoclion Ey oominislrolivo oicors o Scbool
Eoucolion, \ico-Cboncollor bos lbo oulborily lo oismiss o monqor quilly
o corrulion, molroclico olc.
Poronl Toocbors Monooloo Ey lbo Rulos in oll oiooo scbools ono ocluolly in oxislonco.
/ssociolion
,195, sought to introduce uniormity in the
operations o aided and goernment schools,
speciically in the appointments and salaries o
teachers and their rights. 1he Lducation Bill became
the subject o the most intense political conlict,
managers o the priate institutions ,linked to other
political parties, led the opposition to the Bill, which
eentually led to the dismissal o the goernment.
1hree speciic points o contention were ,a, priate
institutions had to appoint teachers rom a district
list o qualiied and accredited teachers, ,b, priate
schools could be taken oer or non-compliance
with the rules, and ,c, a local education authority
would be constituted to oersee all schools in the
area. Priate teachers were to be paid the same salary
as those in goernment institutions but the entire
salary was not payable by the goernment.
1he next Congress goernment modiied these
clauses and passed the Lducation Act o 1958.
Ironically, the main eature o the preious Bill -
uniication o the salary, leae and other serice
conditions o teachers in goernment and aided
institutions and protection o teachers against
"!
arbitrary action - was presered, howeer,
managers retained the right to appoint teachers while
the goernment undertook to pay the salary o the
aided teachers. Increasingly, managers took recourse
to the rights accorded by the Constitution or
protection o minorities, to shield their rights in
appointments o teachers. In eect, the rights o
the managers were presered in almost all
conditions except salary, which was passed on to
the goernment. 1he political inluence o the
managers led to an enormous increase in the subsidy
to the priate sector.
1he Kerala Lducation Act and Rules became the
model or the GIA policy and practice across many
states. 1he key eatures o the legislatie ramework
are shown in Annex 1able 1.
Slronglhs o lho Korulu GlA syslom.
Equity focus - aided institutions, both at school
and college leel, are distributed airly eenly
across all the districts. lor the state as whole, 59
percent o all schools are aided, the ariation
across districts is 42-1 percent. Unaided schools
represent only about 4 percent o the total in
almost all districts. Although some aided schools
cater to the richer students ,especially in urban
areas,, the majority cater to the same clientele as
in goernment schools.
Governwent wonitoring of student and staff - a
special cell, called the Supercheck Cell, headed by a
Deputy Secretary to the goernment has been
constituted. 1he cell conducts regular checks to ensure
schools ollow sta ixation norms and check
enrolment and attendance o students. 1he cell reports
irregularities to the Director o Public Instruction, who
may take action based on the report. 1he Deputy
Secretary also checks the annual data and inspection
reports o the Lducation oicers, the order regarding
sta ixation is issued on July 15
th
and inspection is to
be completed by Noember.
Less aluse of pul/ic sulsidies - due to the aboe, as
well as the existence o P1As, cases o non-existent
aided institutions and ictitious teachers do not arise,
unlike in other states. loweer, there are problems
o corruption in appointment o teachers, discussed
below.
lssuos in lho Curronl GlA Syslom.
Despite its strengths, the Kerala GIA system aces
many problems and requires reorm. 1hese
problems hae arisen due to two main actors: ,i,
rapid demographic changes, leading to an absolute
decline in the child population, and ,ii, changing
demand or education, in terms o curriculum and
courses. 1he present GIA ramework does not allow
easy adaptation to these changing conditions. 1he
problems are as ollows:
!urp/us teac/ers: Due to decline in the child
population, the number o surplus teachers has
increased. Oicially, there are about 1500 such
teachers, unoicial estimates put the number at 12-
15,000. 1he KLR mandates that the goernment is
responsible or the protection o the salary and
beneits o teachers rendered surplus, een though
they can be redeployed to teaching or non-teaching
posts. 1his leads to a iscal burden or the state
goernment, while at the ield leel, there is
corruption in order to sae` redundant posts.
Inf/eili/ity in t/e curricu/uw: Institutions receiing
aid hae no choice regarding the curriculum. At the
school leel, the state curriculum with instruction in
the mother tongue must be ollowed. On the other
hand, priate unaided schools are allowed to oer
Lnglish medium instruction and alternatie
,recognized, syllabi. 1here is greater demand or
this, leading to decline in enrolment in both aided
and goernment institutions. At the college leel,
institutions get aid or teachers only in approed
courses. Introduction o new courses requires
approals o the Uniersity and the goernment is
not obliged to proide aid or such courses. 1his
leads to a situation where the low-demand courses
continue to receie the highest subsidy ,aid, while
the newer courses receie no subsidy. Low student
demand renders existing aided posts surplus, but
there are enormous diiculties in declaring these
posts surplus.
anagewent cowwissions in teac/er recruitwent:
linancial donations by prospectie teachers to the
managements at the time o recruitment are reported
to be commonplace. Notiication and adertisement
is mandatory as per the KLR but interiews are
considered a ormality with a decision haing been
""
taken beorehand. 1he amounts range rom Rs. 3
lakhs or a primary teacher to Rs. 8 lakhs or a
secondary teacher ,approximately 3 years` aerage
salary at each leel,. College teachers pay similar
amounts. 1he system o donations has become
more widespread now and een teachers who had
been recruited earlier reported that while such
donations were not taken earlier, management now
demands regular contributions in the orm o
deductions rom the salaries. loweer, most
respondents in interiews conducted or this surey
elt that about hal` the amount was used by
managements to inest in inrastructure or the
school.
Recrui twent of tewporary teac/ers: 1he KLR
proides or appointment o a temporary teacher
i a teacher is on leae or more than two months,
who becomes a claimant i a acancy arises.
Managements also charge or hiring temporary
teachers and oten 2-3 claimants arise or subsequent
acancies, leading to litigation.
Litigation: 1he number o court cases is not
computerized and estimates ranged rom 4-5000
pending cases. On aerage, the Kerala ligh Court
has pronounced a judgment on about 15 cases
relating to aided institutions eery year or the last
twenty years. Cases relating to colleges, constituting
about one-ith o total cases, almost always relate
to student admissions ,eligibility, reseration,
disciplinary action, or teacher appointments. 1he
majority o cases at the school leel on the other
hand, rel ate to sta,management conl i ct
,appointments, suspensions promotions, seniority,.
"#
1. Rulos rovioo lbol ovory scbool sboulo Eo
oominisloroo Ey o roqisloroo lrusl or socioly.
2. Provision or ronl qronl ono boslol qronl is
roviooo in lbo Rulo.
1. Soc. 23 roscriEos or lbo Crisso Eoucolion
Dovolomonl Funo. Tbis uno is monoqoo
Ey o commilloo consliluloo Ey lbo Slolo
Covornmonl. Cronls o lbo slolo, ono
oonolions oro crooiloo lo lbo uno. Tbo
oE|ocls o lbo unos oro.
i. lo issuo qronl in ovour o ooucolionol
inslilulions or imlomonlolion o
imrovomonl scbomos
ii. qronls o inlorosl roo loons lo
ooucolionol inslilulions.
1. No roriolory or sinqlo monoqor scbool
is rocoqnizoo unoor lbo Cooo.
2. Nol moro lbol ono momEor o o omily Eo
o momEor o Monoqinq Commilloo.
1. Tbo /cl rovioos or inoiviouols lo conslilulo
lbo monoqomonl.
2. Soc. o lbo /cl roscriEos lbol lbo
Covornmonl is unoor on oEliqolion lo
oy lbo solory o oll loocbors in oiooo
scbool oiroclly or lbrouqb lbo Hooomoslor
o lbo scbool. Tbo Covornmonl ossumos
coml olo rosonsi Ei l i ly or lbo
oisEursomonl o solory o loocbors ono
olbor momEors o lbo slo. Tbus, lbo
vory concol o o loocbinq qronl bos Eoon
oliminolinq.
3. Porl ll o lbo /cl oools wilb comulsory
ooucolion. Soc. 23 oirocls lbo Slolo
Covornmonl lo rovioo or roo ono
comulsory ooucolion o cbiloron. Soc. 2
oEliqos lbo quoroion o cbilo lo sono bim
or bor lo scbool
4. Woloro scbomos or loocbors, sucb os
rovioonl uno, common ool o surlus
loocbors, wbo woulo Eo qivon
omloymonl, rovision or comossionolo
ooinlmonl, olc., is roviooo in lbo /cl.
5. /monomonls oro corrioo oul only lbrouqb
Loqislolivo /ssomEly Ey ossinq o low,
wboroos in olbor slolos il con Eo oono ol
lbo ooorlmonlol lovol Ey woy o
Covornmonl Croors.
Wbolbor
only
socioly/lrusl
or olso
lbrouqb
inoiviouol
Wbolbor
orily in
oy scolo
wilb Covl.
loocbors
Prior
orovol
roguiroo
Eooro
oismissol/
lurnovor
Wbolbor
slolo bos
conlrol
Hooos o
Cronl.
1.Rocurrinq
Cronl
2.Non-
rocurrinq
Cronl
/ccounl-
oEilily
Wbolbor
olso
roguiroo
lo ilo
rolurns
Wbolbor
cooo
olios lo
loocbors
lroininq
inslilulos
Slulo Munugo- Touchors Condilion Foo Grunls Audil Touchors Dislincl Fouluros
monl o Sorvico Conlrol Truining
Dolbi Socioly/lrusl os os os os os No
Crisso os os os os Nol known os No
Kornoloko Socioly/lrusl os os os os os os
Korolo os os os os os os No
Annoxuro 2
Compurison o Grunl-in-Aid Codo o dioronl Slulos
"$
Wbolbor
only
socioly/lrusl
or olso
lbrouqb
inoiviouol
Wbolbor
orily in
oy scolo
wilb Covl.
loocbors
Prior
orovol
roguiroo
Eooro
oismissol/
lurnovor
Wbolbor
slolo bos
conlrol
Hooos o
Cronl.
1.Rocurrinq
Cronl
2.Non-
rocurrinq
Cronl
/ccounl-
oEilily
Wbolbor
olso
roguiroo
lo ilo
rolurns
Wbolbor
cooo
olios lo
loocbors
lroininq
inslilulos
Slulo Munugo- Touchors Condilion Foo Grunls Audil Touchors Dislincl Fouluros
monl o Sorvico Conlrol Truining
Moobyo Prooosb os os
/nobro Prooosb os os os os
Moborosblro Socioly/lrusl Nol known Nol known os os os No
Ro|oslbon Socioly/lrusl os os Nol known os os
llor Prooosb Nol known os os os os os Nol known
1. Tbo slolo bos o comlolo conlrol ovor lbo rimory
ooucolion, wbicb is roo ono comulsory.
2. Tbo qronl in oio cooo is in lbo orm o Covornmonl
Croors. ll is ooronlly o mollor oociooo Ey lbo
Covornmonl ono inlimoloo lo lbo inslilulions sookinq
oio.
1. Liko in Dolbi, /nobro Prooosb olso bos rovision or
boslol ronl.
2. Clbor lbon scbool qronl in oio cooo olso
rololo lo colloqos or qonorol ooucolion ono
or loocbors lroininq ono olso or inslilulions
or sociol ooucolion.
1. /cl rovioos lbol lbo monoqomonl sboulo Eo roqisloroo
oilbor unoor lbo socioly roqislrolion /cl or unoor lbo
Moborosblro PuElic Trusl /cl.
2. Tboro is o rovision or Scbool 8ooro or Eoucolion
Commilloo wbo oro rosonsiElo or moinloininq
oooguolo numEor o rimory scbools, or sonclioninq
qronl in oio or olso wilborowol o rocoqnilion.
1. Tbo Ro|oslbon qronl in cooo olso rololos lo lbo inslilulions
or ooucolionol, cullurol oovolomonl ono bysicol
culluro o lbo oolo.
2. Proriolory inslilulions, wbicb oro nol roqisloroo unoor
lbo Socioly Roqislrolion /cl ono Ro|oslbon PuElic Trusl
/cl, oro inoliqiElo or rocoivinq qronl.
3. Tbo monoqinq commilloo o lbo inslilulion rolocls o
soculor cboroclor. /s or lbo rovision nol moro lbol
lwo-lbiros o momEorsbi o lbo monoqinq commilloo
con Eolonq lo ony orliculor coslo, socl or crooo.
1. Tboro is o rovision or o soorolo Eooro or 8osic
Eoucolion, inlormooiolo Eoucolion ono Soconoory
Eoucolion. Sucb Eooros oro osloElisboo Ey lbo Slolo
Covornmonl.
2. Tboro is o rovision or o rocoqnizoo scbool
wboso inonciol rosourcos oro mooo ovoiloElo
Ey lbo monoqomonl o sucb scbools in
occoroonco wilb lbo slonooro os sociioo Ey
lbo Eooro.
3. /ny orson rololoo lo lbo monoqomonl connol
Eo ooinloo os Hooomoslor or ossislonl
loocbor o o rocoqnizoo scbool.
4. Soorolo Rulos or Croluily Funo or lbo
loocbors o oiooo scbool.
"%
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"&
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