System of School Vouchers in India

Recently there has been a lot of discussion about School vouchers and people have taken predictable positions on that. A friend of mine had recently forwarded a blog entry on this subject by Basab Pradhan who also quotes Gurcharan Das on this subject.

Briefly, the voucher system is supposed to solve the problems of quality delivery of primary education by introducing free market dynamics. Through vouchers the parents have a choice of choosing which school their child goes to. The delivery of education is entrusted to private players who can redeem these vouchers from the government. The idea is that the parents would choose the best performing school and those schools which are not performing would have fewer enrollments and thus the government would not be wasting money on them. Obviously this proposal would appear as a silver bullet for the free market proponents like Basab Pradhan and complete anathema to hard core lefties. The reality, as always, lies some where in between.

I am definitely not as enthusiastic about this proposed system and I would like explain why.

Lack of information amongst parents

It is standard economic theory that one of the essential pre-conditions for efficient functioning of markets is availability of adequate information for all the players. In the Indian context the poor parents in rural areas are usually illiterate and cannot really determine whether the school is functioning at par, above it or below it. Can they really make an informed choice about which school their children can go to? I really doubt it. As the next point would show there is already sufficient evidence to the contrary.

Quality of private schools

There seems to be an unsaid belief that the private schools would be better than government run schools. This probably is reinforced by observing the private schools that cater to the middle and upper middle classes in urban areas. There are quite a lot of private schools (“convent” schools as they are called) which have proliferated in urban slums to cater to the needs of the working class and the poor. They usually sell by claiming to be English medium. These schools are really bad in reality. Our maid’s son went to one such school and even after 4 years in those school, and paying fees, he could not even read basic English. The parents themselves being illiterate could not tell whether their child was learning anything at all or not. Sometimes we have to remind ourselves that India’s premier educational institutions like the IITs, IIMs and the REC’s (now called something else) are in fact government run institutions. In any case it would be worthwhile to survey ALL (not just the elite) private schools and find out their performance before making any conclusion on who is delivering better primary education, private run or government run.

Feasibility in rural areas

Voucher system has serious feasibility issues especially in rural areas. Consider the following data got out of the Department of Public Instruction.

Area	Govt Schools	Aided Schools	Private Schools	Total
Bangalore (South) Urban	493 (59.9%)	49 (5.95%)	281 (34.15%)	823
Bangalore Rural	1722 (93.74%)	4 (0.22%)	111 (6.04%)	1837
Challakere	192 (91.87%)	1 (0.48%)	16 (7.65%)	209

As you can see clearly from this data the penetration of private schools in rural areas is minimal and even there the data presented is at the Taluk level and I am fairly certain that the private schools are concentrated in the towns (taluk head quarters like Challakare and small towns Nayakanahatti). Since vouchers are based on market competition, it is not enough just to replace the existing government school with a private school which receives vouchers. There needs to be multiple private schools competing with each other for the same set of students. Do we really think this is feasible?

Teachers in rural areas?

Government school teachers are absent in villages as they find facilities there appalling. They prefer to stay in urban centers for the same reasons why you and I prefer to stay in the urban centers. Without any other factor changing, just by issuing vouchers there is not going to be a sudden change through which teachers (whether working for private schools or government schools) would be willing to go to villages every day. This is a very serious problem for which there is no single solution yet. But vouchers are definitely not going to make a difference.

Abuse of the system

There is a scheme already in place which is very close to the school voucher system. In Andhra Pradesh there is a scheme for SC/STs in rural areas for getting trained in employment generating vocations. They can go to the local training centers (something like ITI) and get trained in motor winding, electrical, operating the lathe kind of skills. For each person trained the government pays the training center for the training. The training centers just exist in name only. They give half (or mostly less) of the money that the government pays them to the candidate directly and give them a certificate without conducting any training. The candidate initially is very happy with that money and probably spends it on alcohol but has gained no skills. What is stopping the voucher system to disintegrate into this kind of abuse? Where parents routinely send their children for child labor (in some cases even hazardous) this kind of abuse is not mere speculation but one more system of corruption waiting to happen.

P.S. – I am not an anti-market person. I think the government has no business in running businesses, in general. That is best left to private players. But governance involves delivery of certain public goods (like basic education and basic health) that only a government can deliver best, especially in a country with low level of human development. This “markets would solve everything” is a puerile attitude not befitting those espousing it.