India - Primary education achievement and challenges

Report No. 15756-IN India Primary Education Achievement and Challenges September 1, 1996 South /\s i CoLnItry L)eDpartment II PoI)ul1ation and [ Human Resources Operations Division Document of the World Bank  Abbreviations and Acronyms CABE Central Advisory Board of Education DIET District Institute for Education and Training DPEP District Primary Education Programme FAIES Fifth All India Education Survey GER Gross Enrollment Ratio HLM Hierarchical Linear Model MLL Minimal Levels of Leaming NER Net Enrollemnt Ratio NFE Non Formal Education NFHS National Family Health Survey NSSO National Sample Survey Organization OB Operation Blackboard SAIES Sixth All India Education Survey TLC Total Literacy Campaign UPE Universal Primary Education VEC Village Education Committee  Acknowledgments This report was written by a team led by Marlaine Lockheed (principal education specialist and task manager), and comprising John Middleton (chief, EDI New Products and Outreach), Keith Hinchliffe (senior economist), N.K. Jangira (education specialist), Philip Cohen (consultant), Jane Hannaway (The Urban Institute, Washington), and Adriaan Verspoor (education advisor). It is based on a collaborative program of research and studies conceptualized and carried out in India by the Ministry of Human Resource Development/Department of Education and major Indian research institutions and scholars. The document was prepared under the overall direction of Richard Skolnik, chief, Population and Human Resources Operation Division and Heinz Vergin, director, South Asia Country Department 2 (Bhutan, India and Nepal); special guidance was given by John Middleton and Adriaan Verspoor from the World Bank's Resident Mission in New Delhi. Comments on the text were received from peer reviewers Robert Hecht (principal economist), Emmanuel Jimenez (chief, Poverty and Human Resources Division, Policy and Research Department) and Erik Hanushek (University of Rochester). Statistical and computational assistance was provided by Bing Deng (consultant) and Alaka Singh (consultant). Population estimates were computed by Laura Shrestha (demographer). Meera Chatterjee (women-in-development officer) contributed an analysis of tribal demographics. Bruce Ross-Larson and Alison Strong edited the paper. Production assistance was provided by Margot Verbeeck and Phil Alipio. The team wishes to express its thanks for the encouragement and extensive collaboration of the Ministry of Human Resource Development Department of Education and the DPEP Bureau and Technical Support Group, and in particular to S.V. Giri, former secretary, P.R. Dasgupta, secretary; R.V.V. Ayyar, additional secretary; and R.S. Pandey, joint secretary. The team also gratefully acknowledges its debt to the institutions and many scholars whose work made the preparation of this report possible, in particular the National Council for Education Research and Training, the National Institute for Education Planning and Administration, the Central Institute of Indian Languages, the School of Planning and Architecture, the National Institute of Rural Development, the Institute of Social and Economic Change, the New Concept Consultancy Services and the various scholars whose background papers are listed in the bibliography. The assistance of UNICEF in making available DPEP baseline data for the States of Orissa and Madhya Pradesh is gratefully acknowedged.  iv India: Primary Education Achievements and Challenges This report is the product of the World Bank. However, it has been enriched through discussions and meetings in which high level Indian officials and experts have participated. Key findings were presented in a seminar at the Ministry of Human Resource Development on August 1, 1996. The report draws heavily on research carried out under the auspices of the Department of Education, DPEP Bureau, and largely addresses issues related to the education of the disadvantaged and disadvantaged areas. Research and studies carried out for the District Primary Education Program have significantly increased the knowledge base about primary education in India. To the extent possible, the report is a synthesis of this empirical evidence. Still, many topics such as early childhood education are not covered. The deficiencies of this report may encourage increased attention to research on primary education. While various alternative suggestions are given for solving the challenges of education in India, the report is not intended to be prescriptive. Indeed, it could not be, given the scale and diversity of primary education in India.  Contents Executive Summary .......................................................... xl 1. Introduction and Overview .........................................................1l Progress and Prospects ..........................................................2 Remaining Challenges ..........................................................9 2. Economic and Social Outcomes Justify Investing in Primary Education ......................................................... 15 Economic Outcomes ......................................................... 16 Social Outcomes ......................................................... 23 Conclusions ......................................................... 34 3. Improving Access and Eficiency ......................................................... 39 Access to Primary Education is Growing ......................................................... 40 But Many Children Remain out of School ......................................................... 41 Supply-Side Interventions: Providing the Infrastructure ......................................................... 48 Demand-Side Interventions: Enhancing Incentives for School Attendance .................................................... 52 Improving Student Flow to Reduce Costs ......................................................... 56 Conclusions ......................................................... 59 Technical Note ......................................................... 61 4. Enhancing Learning Achievement ......................................................... 63 Achievement Is Low ......................................................... 64 Households Can Improve Achievement ......................................................... 68 School Quality Matters ......................................................... 70 Cost-Effectivene ss An alys is as a Guide for Local Investments ......................................................... 78 Conclusions ......................................................... 85 5. Reduc ing Gaps in Enrollm ent, Retention, and Achievement ......................................................... 89 Significant Poverty Gap ......................................................... 90 A Narrowing Gender Gap ......................................................... 94 Varying Caste and Tribal Gaps ......................................................... 101 Conclusions .........................................................1 112 6. Improving Teachers' Performance .........................................................1 13 Who Are India's Teachers? .........................................................1 114 How Are Teachers Prepared? ......................................................... 116 How Are Teachers Motivated? ......................................................... 121 Where Do the Problems Lie? ......................................................... 123 What Are the Solutions? Strategies for Improving Teacher Performance ..................................................... 129 7. Improving the Quality of Textbooks and the Efficiency of Their Production .................................................... 133 Improving Textbooks to Meet Needs ......................................................... 135 The Process: how to Develop Better Textbooks ......................................................... 141 How to Improve Efficiency in Textbook Publishing ......................................................... 145 Conclusions ......................................................... 152  vi India: Primary Education Achievements and Challenges 8. Building Managerial and Institutional Capacity ................................................................ 157 A Complex and Changing Management Structure ................................................................ 158 Meeting the New Challenges ................................................................ 169 9. Financing Elementary Education ................................................................ 173 Constitutional Responsibilities for Education Finance ................................................................ 173 Central Government Finances Small, Strategic Share ................................................................ 179 State Governments Finance the Lion's Share But Constraints Tighten ........................................................ 180 Contrasting Trends in State Education Expenditure ................................................................ 183 Conclusions ................................................................ 191 Technical Note ................................................................ 195 10. Financing More and Better Primary Education ................................................................ 197 Financing Selective Interventions ................................................................ 197 Closing the Financing Gap ................................................................ 204 Going Beyond Minimum Needs ................................................................ 208 Conclusions ................................................................ 209 Bibliography ................................................................ 211 Annexes Annex A. School Incentive Programs ................................................................ 230 Annex B. Unit Costs in Elementary Education ................................................................ 237 Annex C. Variable and Measure Specification from the Baseline Survey Database in India .................................... 245 Annex D. Descriptive Statistics for the Variables Used in the Study: Eight States .................................................... 255 Annex E. Results of Hierarchical Linear Modeling Analyses for Eight States .......................................................... 267 Annex F. Cost-Effectiveness on Public Spending on Educational Inputs ................................................................ 287 Annex G. Annual Teacher Salary Costs, by State, 1995 ................................................................ 293 Annex H-a. Basic Social Indicators for 15 Large States ................................................................ 297 Annex H-b. Basic Education Indicators for 15 Largest States, 1993 ................................................................ 298 Annex H-c. Basic Economic Indicators and Education Expenditure for 15 Largest States, Various Years .................. 299 Annex l-a. Estimates and Projections of Size of Age Group 6-10 for All India and the Major States, by Sex, 1987-2010, SelectedYear .......................................................................... 301 Annex l-b. Estimates and Projections of the Size of Age Group 11-13 for All India and the Major States, by Sex, 1987-2010, Selected Years .......................................................................... 303 Annex J. Value of Textbooks as a Percentage of State Expenditure ......................................................................... 305 Annex K. Annualized Cost of Construction for Primary School Roofs and Walls .................................................... 307 Boxes Box 1-1. Why the Children in a Fishing Village in Kerala Didn't Go to School ..............................................................4 Box 1-2. Centrally Sponsored Schemes to Implement the National Policy on Education .................................................7 Box 1-3. District Primary Education Program ...........................................................................9 Box 2-1. The Effect of Birthrates on Education Needs .......................................................................... 33 Box 3-1. Non Formal Education for Working Children ....................................................... 45 Box 4-1. Policy Analysis to Help Raise Learning Achievement and Reduce Gaps ....................................................... 71 Box 4-2. The Effect Size ....................................................... 79 Box 4-3. Specific Interventions Improve Schools in Assam Cost-Effectively ....................................................... 86 Box 5-1. Why Tribal Children May Not Like School ....................................................... 109 Box 5-2. How One Teacher Can Make a Difference .......................................................Il I Box 6-1. In-Service Training for Active Learning in Uttar Pradesh ....................................................... 119 Box 7-1. "Textbook Renewal": Giving the right People the Right Resources and the Right Trainig ............................. 42 Box 7-2. Better Textbooks Mean Better Learning .......................................................................... 154 Box 8-1. Private Schools More Cost-Effective than Government Schools in Uttar Pradesh and Tamil Nadu .............. 169 Box 9-1. Tainil Nadu's Noon-Meal Program Improves Attendance and Reduces Dropout .......................................... 189 Box 9-2. Small Inmpact by Incentives in Two States .......................................................................... 190 Box 10-1. Achieving Universal Primary Education in Andhra Pradesh ........................................................................ 207 Box 10-2. The Quality-Quantity Trade-off in Tamil Nadu .......................................................................... 209 Figures Figure 1-1. Enrollment has been Steadily Growing at All Levels Enrollment in Primary, Upper Primary and Secondary School in All India, Selected Years, 1951-96 .............................................3 Figure 1-2. Achievement of 95 Percent Primary Net Enrollment in five Asian States ....................................................6  Contents vii Figure 2-1. Increased Schooling-Particularly Primary Schooling-Bring increased output Annual Percentage growth in Educational attainment and States Domestic product in Selected Indian States, 1971-81 ................................................................... 18 Figure 2-2. The Total Fertility Rate Falls as Women's Education Level Rises ............................................................. 25 Figure 2-3. So Does the Desired Fertility Rate .................................................................. 25 Figure 2-4. Women's Use of Birth Control Rises With Education Level .................................................................. 27 Figure 2-5. Mother's Education Has a Dramatic Effect on Infant Mortality ................................................................. 29 Figure 2-6. Mother's Education Has a Similar Dramatic Effect on Child Mortality ..................................................... 30 Figure 2-7. The Likelihood That a Child will be Immunized Increases With Mother's Education ............................... 30 Figure 2-8. The Children of More Educated Mothers Are More Likely to be Better Nourished .................................. 31 Figure 3-1. Literacy Is Rising Rapidly-But Is Still Too Low .................................................................. 40 Figure 3-2. All Sources Show That Participation in Primary School Is Rising, But from Very Different Levels ............................................................. . 42 Figure 3-3. School Participation in India, 1993 ............................................................. 43 Figure 3-4. Female Literacy Is Strongly Associated with Children's School Participation ........................................... 47 Figure 3-5. Dropout Rates in All India, 1974-91 ............................................................. 53 Figure 4-1. Students' Achievement in the Lowest-Achieving State Was Less Than Half That in the Hight- Achieving State Total achievement (arithmetic, reading, and language) in 23 states, 1991 ................................................ 66 Figure 4-2. Arithmetic Achievement Levels at the End of the Primary Cycle Were Low and Varied Widely by District Grade 4 arithmetic achievement in selected low-literacy districts in four states, 1993 .............................. 67 Grade 5 arithmetic achievement in selected low-literacy districts in four states, 1993 .............................. 67 Figure 5-1. Few Students Eligible for Incentives Actually Receive Them .................................................................... 94 Figure 5-2. Household Welfare Explains Much of the Difference in Math Achievement for Students in Scheduled Castes and Tribes ............................................................................ 107 Figure 6-1. Teachers' Average Educational Attainment Has Been Rising in low-literacy districts in Andhra Pradesh and Karnataka, 1994 ............................................................................ 117 Figure 6-2. Salary Difference between Teachers and Selected Others Government Employees, all India ................... 121 Figure 9-1. Elementary Education Gets Less Than 2 Percent of GDP .......................................................................... 178 Figure 10-1. The Estimated Cost of Primary Education For All Children 6- 10 in India 1996-2007 ............................ 201 Figure 10-2. The Estimated Financing Gap ............................................................................ 202 Tables Table 1-1. Literacy Rates in All India, Selected Years, 1881-1991 .............................................................................3 Table 1-2. Growth in Schools and Enrolled Students in All India, 1986-93 .................................................................5 Table 1-3. Official Primary Enrollment and Dropout Rates and Adult Literacy Rates in 15 Major States, 1991 and 1993 ............................................................................ 11 Table 2-1. Rates of Return to Education in Andhra Pradesh, 1977 ............................................................................ 21 Table 2-2. Private Rates of Return to Education in Maharashtra, 1988 ......................................................................... 22 Table 2-3. Illiteracy, Total Fertility Rate, and Crude Birth Rate in Uttar Pradesh and Tamil Nadu, 1992-93 .............. 25 Table 2-4. Women's Average Age at First Marriage in Uttar Pradesh and Tamil Nadu, 1992-93 ................................ 26 Table 2-5. Proportion of Young Children in the Population of Selected States, 1991 ................................................... 32 Table 2-6. Selected Social and Demographic Indicators for Major Indian States, 1992-93 .......................................... 33 Table 3-1. Age Distribution of Grade Four and Five Students in Low-Literacy Districts in Eight States, 1993 ........... 44 Table 3-2. Boys and Girls Aged 5-14 Attending School in All India, 1977-90, Various Years .................................... 44 Table 3-3. Literacy, Enrollment, and Attendance in Major States, 1992-93 ................................................................. 46 Table 3-4. Literacy Rate in High- and Low-Literacy Districts in Six States, 1991 ....................................................... 48 Table 3-5. Classroom Requirements in All India, 1986 and 1993 ............................................................................ 49 Table 3-6. Classroom Requirements in Selected States, 1986 and 1993 ....................................................................... 50 Table 3-7. Primary Teachers and Teacher Requirements in Major States and All India, 1993 ..................................... 51 Table 3-8. Promotion, Repetition, and Dropout Rates in Selected States and All India by Grade, 1990 ...................... 55 Table 3-9. Grades Four and Five Students Who Have Repeated at Least One Year In Low-Literacy Districts in Eight States, 1993 ............................................................................ 55 Table 3-10. Survival by Grade and Sex in Primary Education for 1990 Cohort in All India ........................................ 56 Table 3-11. Changes under Different Primary Enrollment Scenarios to 2008-09 .........................................................8 5 Table 3-12. Excess Student Years Provided under Different Primary Enrollment Scenarios to 2008-09 in 15 Major States ............................................................................ 59 Table 3-13. Gross Enrollment Rates Vary according to the Source of Enrollment and Population EsFimates .............. 61 Table 4-1. Average Grade 4 Achievement in the 15 Largest States, 1991 .................................................................... 68  viii India: Primary Education Achievements and Challenges Table 4-2. Household Contributions to Children's Schooling in Low-Literacy Districts in Eight States, 1993 ........... 70 Table 4-3. Average School Facilities Available in Low-Literacy Districts in Eight States, 1993 ................................. 73 Table 4-4. Average Number of Instructional Materials Available in Low-Literacy Districts in Eight States, 1993 .............................................................................. 74 Table 4-5. Cost-Effectiveness of Selected Household Inputs in Low-Literacy Districts in Eight States, 1993 .............................................................................. 80 Table 4-6. Cost-Effectiveness of School Physical Facilities in Low-Literacy Districts in Eight States, 1993 ............................................................................... 82 Table 4-7. Cost-Effectiveness of Instructional Materials in Low-Literacy Districts in Eight States, 1993 .............................................................................. 82 Table 4-8. Cost-Effectiveness of Increasing Teacher Quality in Low-Literacy Districts in Eight States, 1993 .............................................................................. 83 Table 4-9. Cost-Effectiveness of Increasing the Opportunity to Learn in Low-Literacy Districts in Eight States, 1993 .............................................................................. 85 Table 5-1. Literacy and Years of Schooling in Highest and Lowest Income Quintiles ................................................. 90 Table 5-2. Poverty Gap in Enrollment and Dropout Rates among Children Aged 6-14 by Household Income in 15 Major States, 1992-93 .............................................................................. 91 Table 5-3. Poverty Gap in Enrollment and Drop Out Rates among Children Aged 6-14, by Parents' Landholding and Occupational Status, in 15 Major States, 1994 ............................................. 92 Table 5-4. Poverty Gap in Achievement among Grade 4 and Grade 5 Students by SES Quartile in Low-Literacy Districts in Eight States, 1993 ............................................................................. 93 Table 5-5. Gender Gap in Literacy Rates for People Aged 7 and Above (1991) and 10- 14 (1987-88) in 15 Major States .............................................................................. 95 Table 5-6. Gender Gaps in Enrollment (1993-94) and Nonattendance Rates for Selected Groups in 15 Major States .............................................................................. 96 Table 5-7. Gender Gaps in Attendance in Low-Literacy Districts in Eight States, 1988-89 and 1993-94 .................... 97 Table 5-8. Gender Gap in Grade 4 and 5 Arithmetic and Language Achievement in Low-Literacy Districts in Eight States, 1993 .............................................................................. 98 Table 5-9. Gender Gap in Average Annual Cost of Schooling at the Elementary Level in 15 Major States, 1994 .............................................................................. 100 Table 5-10. School Characteristics that Narrow the Gender Gaps in Mathematics ....................................................... 101 Table 5-11. Scheduled Castes and Tribes in 15 Major States and All India, 1991 ........................................................ 102 Table 5-12. Children Aged 5-9 Enrolled in School, by Caste Group, 1981 .................................................................. 103 Table 5-13. Caste and Tribal Gaps in Primary Enrollment (1993-94) and Dropout Rates (1986-87) ........................... 103 Table 5-14. Caste and Tribal Gaps in Attendance in Low-Literacy Districts in Eight States, 1993 .............................. 104 Table 5-15. Students Aged 6-22 Not Continuing Education, by Caste Group, In Maharashtra, 1986-87 ..................... 105 Table 5-16. Cast and Tribal Gaps in Grade 4 or 5 Achievement in Low-Literacy Districts in Eight States, 1993 .............................................................................. 106 Table 5-17. Language Use and Knowledge in Schools in Tribal Regions, 1993 .......................................................... 110 Table 6-1. Selected Characteristics of Primary Teachers in 15 Major States and Low-Literacy Districts in Eight States, 1993 .............................................................................. 11S Table 6-2. Entry-Level Salaries of Teachers and Other Govemment Employees with Comparable Education, July 1994 .............................................................................. 122 Table 6-3. Teachers in Low-Literacy Districts in Eight States Who Have Studied Mathematics or Language of Instruction to Grade 8 or 10 Only, 1993 ................................. 123 Table 6-4. Share of Preservice Teacher Training Curriculum Devoted to Selected Topics in India, Recent Years .............................................................................. 124 Table 6-5. General Education Attainment of Teachers in Low-Literacy Districts in Eight States, 1993 ...................... 125 Table 6-6. Teachers' Classroom Practices in Low-Literacy Districts in Eight States, 1993 .......................................... 126 Table 6-7. Teachers' Attendance in Low-Literacy Districts in Eight States, 1993 ........................................................ 127 Table 6-8. Working Conditions for Teachers in Low-Literacy Districts in Eight States, 1993 ..................................... 128 Table 7-1. State Policies on Subsidized Textbook Provision for Primary Students, Major States, 1996 ...................... 133 Table 7-2. Textbook Titles in Use in Major States, 1994-95 .............................................................................. 135 Table 7-3. Textbook Reading Comprehension for Grade 3 Students in Six States, 1995 ............................................. 137 Table 7-4. Results of Linguistic Analysis of Grade 3 Language and Mathematics Textbooks in Six States, 1995 .............................................................. 137 Table 7-5. Textbook Pages Per Student by Grade in Five States, 1993-94 .............................................................. 139 Table 7-6. Public and Private Roles in Primary Textbook Publishing .............................................................. 146 Table 7-7. Textbook Manufacturing Costs and Sale Prices for Grades 1-8 in Six States, 1993-94 ............................... 147 Table 8-1. Parallel Political, Administrative, and Technical Management Systems in Education ................................ 158  Contents ix Table 8-2. State-Level Responsibility for Education Functions in Karnataka, 1 994 ...................................................... 1 6 3 Table 8-3. Responsability of Pan Chayati Raj Institutions For Priamry Education, Various 3-Tiers States ..................................................................... 164 Table -4. District, Block, and Village Responsibility for Education Functions in Karnataka, 1994 ..................................................................... 165 Table 8-S. Headmaster's Responsibility for Selected Education Functions in Low-Literacy Districts in Eight States, 1993 ..................................................................... 168 Table 9-1. Relationship between Revenue Balance and Gross Fiscal Deficit in Eight States, 1993-94 ........................ 183 Table 9-2. Number of States Where Education Expenditure Increased or Decreased as Share of Total Government Expenditure and State Domestic Product, 1980-94 ....................................................... 183 Table 9-3. Education Expenditure as a Share of State Domestic Product and Total Budget Expenditure in Eight States, 1985-86 and 1992-93 ..................................................................... 184 Table 9-4. Education as a Share of Total Plan Expenditure in Five States, 1980-97 .................................................... 185 Table 9-5. Total State Education Department Expenditure by Education Level in Eight States, 1992-93 ..................................................................... 186 Table 9-6. Unit Cost of Elementary Education in Six States, 1991-92 ..................................................................... 187 Table 9-7. Unit Costs by Education Level in Three States, 1991-92 ..................................................................... 188 Table 9-8. Primary Pupils Benefiting from Incentive Schemes in Selected States, 1986-87 ......................................... 191 Table 9-9. Unit Costs of Elementary Schooling by Major Item in the Six Districts of Haryana and Maharashtra, 1993-94 ..................................................................... 195 Table 9-10. Unit Costs of Incentive Programs in Haryana and Maharashtra, 1993-94 ................................................. 196 Table 10- 1. Resource Requirements, Availability, and Financing Gaps for Expanded and Better-Quality Primary Education in All India, 1996-2007 ..................................................................... 199 Table 10-2. Resource Requirements, Availability, and Financing Gaps under Various Assumptions about Growth Rates of GDP and Teachers' Salaries ................................................ 205  \  Executive Summary India's primary education glass is two-thirds full, one-third empty. Having steadily raised primary enrollment rates over the past four decades, India now has 67 million children aged 6-10 attending primary school. But 28-33 million primary school age children are not in school. The result is that many of the huge returns to primary education are forgone. Primary education leads to better family health, lower fertility, and thus slower population growth. It helps workers to take advantage of technological change, raising their productivity and earnings. Increasing the labor force's average primary schooling by even one year can increase output substantially. And because educated parents are more likely to send their children to school, primary education perpetuates the benefits from one generation to the next. These benefits of primary education launched the takeoff of the fast-growing economies of East Asia. But India's low average educational attainment has not yet reached that critical threshold where benefits are greatest and high economic growth rates are sustained. Reaching that threshold will take some time. At the current rate of growth in schooling, some of the largest states in India will not reach an average of four to five years of primary education until well into the next century. Nor can education be measured solely in years of enrollment. What matters is what students learn, retain, and apply in life. Teachers are critical in students' learning, but with teachers' salaries consuming 97 percent of the primary education budget, little is left for anything else, including instructional materials and teachers' in-service training. Textbooks are also critical in students' learning, but the instructional and physical quality of textbooks in India is often poor, and students in most states must carry too heavy a load of textbooks. Another important part of the primary education story is the great diversity in performance. Almost all students-97 percent-are in the 15 major states. Two of these states are doing very well, providing almost all their children with a primary education.  xii India: Primary Education Achievements and Challenges But several are far behind-and six account for 25 million of the 33 million primary school age children not in school. Progress in the other states falls somewhere in between. Within states, too, there is diversity-with some districts faring poorly even in states that are otherwise doing well, and vice versa. There also are gaps between groups of children, with education outcomes differing between girls and boys, between the poor and the better-off, and between tribal or scheduled caste children and others. India's goal of universal primary education of good quality points to three main challenges: expanding access, raising learning achievement, and reducing gaps in education outcomes across states and among groups. Four actions will be key in meeting these challenges: * Increasing financing for primary education. * Improving the preparation, motivation, and deployment of teachers. a Improving the quality of textbooks and the efficiency of their production. - Building managerial and institutional capacity. The decentralization of authority and financing-to the states today and the districts tomorrow-makes the task of ensuring the required levels of funding problematic, the improvement of teaching and textbooks easier, and the building of local capacity essential. In all this, the central government's leadership will be more important than ever-in guiding policy, in sponsoring national initiatives, and in transferring resources to the states while devising incentives for states to increase their education budgets. Chaflenges for Primary Education India has achieved high gross enrollment rates. But low attendance and high dropout rates mean that many fewer children complete the primary cycle than enroll. If all children are to complete a primary education of good quality, the Indian governments (national, state, and local) must create accessible schools, increase the efficiency of student flows (by reducing repetition), and provide the resources needed to improve quality. For the most difficult to reach children, this education may be provided through nonformal or alternative education programs. Finding the money for this will not be easy, because primary education is especially vulnerable to today's fiscal problems, especially at the state level. Of all services that state governments provide, education invariably consumes the largest part of the budget. Primary education in turn consumes the largest part of the education budget-as it should, because as well as producing benefits directly, it also increases the effectiveness of investments in such other services as health and nutrition.  Executive Summary xiii The main challenge for central, state, and district education authorities is to improve the supply, quality, and holding power of education in rural primary schools. Cost-effective strategies must be found for increasing the percentage of children aged 6-10 who complete primary school, improving their general levels of learning, and reducing gaps based on gender, poverty, and tribal or caste affiliation. The scale and complexity of the necessary changes require that authorities and civil society at all levels continue to be part of the planning and implementation. Expanding access Accommodating all children aged 6-10 in primary schools by 2007 (the final year of the Tenth Plan) could require building as many as 1.3 million classrooms and hiring 740,000 new teachers. Professionally supervised community construction of schools using local materials can be cost-effective. Also required will be temporary measures to accommodate primary school participation by overage students who enroll late and sustained measures to reduce repetition. Local efforts by village education committees to monitor student enrollment and school attendance could help to ensure that children who enroll complete their education without repeating grades or dropping out. Enrollment data and age-specific literacy rates suggest that India has made much progress in expanding access to education: in 1993 about 100 million children were enrolled in primary school, up from 85 million in 1987. But school attendance is often irregular, and primary dropout rates are high. About 33 million of the 105 million children aged 6-10 were out of school in 1993. About 75 percent of the children who are out of school live in six states-Andhra Pradesh, Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh, and West Bengal. Reaching full enrollment of the age group 6-10 remains a major challenge in all states of India and a distant goal in some. Although there is considerable uncertainty about the reliability of the available data on India's education system, the following picture emerges. On the positive side: More than 80 percent of six-years-olds enroll in school. * Enrollment by girls increased by 20 percent between 1986 and 1993. * About 65 percent of children aged 6-10 attend school regularly. And on the negative side: * Growth in enrollment between 1986 and 1993 was modest (13.8 percent), and the official gross enrollment rate increased by only 4.2 percentage points to reach 95 percent in 1993-94.  xiv India: Primary Education Achievements and Challenges * There are severe shortages of teachers and classrooms, especially in the most populous states. * About 15-20 percent of the children enrolled do not come to school regularly. * About 35 percent of those who enroll drop out before completing the primary cycle. To address this situation, the government has made a commitment to the goals of the 1990 Conference on Education for All at Jomtien. It has set a goal of providing education of good quality to all primary school age children. And it has committed itself to ensuring that the necessary resources are available, indicating that the allocation to education will increase from less than 4 percent of GDP to 6 percent by the end of the Ninth Plan in 2002. Improving the quality of primary education and using available resources more efficiently are priorities that no state can ignore. Several states-for example, Kerala, Orissa and Tamil Nadu-now have the capacity to enroll all children age 6-10 and by improving efficiency could reach the Jomtien goals in the near future. Other states-and districts within states-will require special attention if India wishes to make real progress toward the Jomtien goals. National progress will critically depend on progress in the six states that have three-quarters of the children who are out of school. Almost half the additional classrooms and teachers required to enroll all children aged 6- 10 are needed in Uttar Pradesh and Bihar. Rajasthan has the lowest female literacy rate and the second lowest (after Bihar) proportion of 6-10 year-olds attending school. Andhra Pradesh, Madhya Pradesh, and West Bengal are populous states with below-average school attendance rates. It is in these six states that the key challenges of educational development lie and that the success of the government's policy goals will be determined. Demand-side interventions may be needed to encourage the regular attendance of children in school. One possible approach is to enforce compulsory attendance laws in states where enrollment rates are higher. Another is to create demand for attendance, through midday meal programs, attendance scholarships or awareness campaigns. Researchers have found that the midday meal program has positive effects on learning achievement in Madhya Pradesh, and attendance scholarships have been effective in Kerala. While more research is needed to assess the effects of these benefits and more selective targeting may be necessary to improve their cost-effectiveness, these strategies could help poor families meet the costs of schooling. Probably more important, however, is to provide schools that parents perceive to be of sufficient quality to be worthwhile.  Executive Summary xv Enhancing learning achievement Learning achievement in India is low. Children who reach the final year of lower primary school (grade 4 in some states and grade 5 in others) often have mastered less than half the curriculum. Studies around the world show that parents investing in their children's education may be the most effective way to boost learning achievement. But poverty limits the ability of most Indian parents to make the necessary investments-purchasing books and supplies, forgoing their children's labor. So, for the foreseeable future, strategies for raising learning achievement will need to focus on improving the quality of education in schools. What is most effective in doing this varies across states and districts, making it important to enable states, districts, and even schools to make their own decisions about which inputs to invest in. Increasing learning achievement requires building on knowledge about the factors that affect learning and their costs in India. * Most important is the opportunity to learn-time spent in school, with the teacher present and providing instruction, and in doing homework. * Teachers' subject knowledge is the most critical factor in teacher quality. * Teaching practices matter. * School factors associated with higher learning achievement vary by location. * Good school facilities and sufficient classroom space are associated with higher achievement. i Even modest teaching tools-such as textbooks, libraries, and classroom instructional materials-are significant determinants of achievement. * Some popular investments do not boost achievement. Supply-side (school-level) interventions to increase instructional time,-provide a physical facility for learning, provide better-educated teachers, and ensure that students and teachers have appropriate instructional materials deserve the highest priority in developing strategies to raise learning achievement. Cost-effectiveness analysis can help identify specific inputs appropriate for different local conditions. Since teachers' attendance is a strong predictor of students' learning, strategies that more closely link teachers' salaries to their work performance could also be considered. The new panchayati raj institutions could play a role in such strategies.  xvi India: Primary Education Achievements and Challenges Considerable variation across states, districts, and schools means, however, that packages of interventions identified locally to meet the needs of specific schools are more likely to be cost-effective than are uniform packages. What is effective in a state with a higher level of educational development may differ from what is effective in a state with a lower level of development. Recognizing this, the Government of India has established a program, now being implemented in most of the major states, to support the local development of primary education. Particularly important is to improve the quality in rural primary schools, where more than 78 percent of children are educated. Providing better services should not only directly improve learning achievement, it should also increase the schools' attractiveness to children and parents alike-and thus increase enrollment and attendance. Achieving acceptable levels of quality will require strategies that take into account variation in access, completion, and learning achievement in primary education within and among states. Strategies also need to take account of the fact that girls, the poor, and students from scheduled castes and tribes tend to stay in school for the shortest period and score below average. Reducing gaps in enrollment, retention, and achievement Gaps in education outcomes persist in India-between girls and boys; between the poor and the better-off, and between children from scheduled castes or tribes and other children. Poverty partially explains the gender and caste and tribal gaps, and poverty- reducing interventions would probably help narrow them. But such interventions have been insufficient in India and poorly targeted-more efficient would be to target them to all poor students, regardless of gender or caste or tribal status. Other constraints contributing to gaps in education are more cultural than economic. These constraints- and appropriate strategies for addressing them-vary among disadvantaged groups and, for tribal students, within them. In India, the gender gap is due to a mix of cultural and economic constraints and could be reduced through awareness campaigns, childcare centers, direct incentives, and the hiring of more female teachers. While the caste gap is due largely to poverty, welfare-based interventions may be more efficiently directed at the poor, regardless of caste status. To close the tribal gap, which stems from a complex combination of economic and cultural factors, non-welfare-based interventions focusing on cultural factors will continue to be appropriate. International evidence shows that education gaps narrow for two main reasons: enrollment gaps close as the education system expands to provide access to all, and achievement gaps (including differences in attendance and retention) close when the education system targets interventions selectively.  Executive Summay xvfi Four EssentialActionsfor Expanding Access and Improving Learning 1. Increasingfinancingfor primary education Over the past two years, the Indian authorities-at both the center and the state level- frequently have reiterated their intention to ensure that the public resources for education increase to 6 percent of GDP over the period of the Ninth Plan (1997-2002). In 1993-94 total spending on education by central and state departments of education was 3.5 percent of GDP, down from 3.8 percent in 1989-90. As a share of GDP, spending on elementary education was 1.6 percent in 1993-94. So, both the center and the states need to increase significantly their allocations to education. Current trends indicate that this will be very difficult unless the fiscal perforrnance of the public sector improves substantially. But providing all children a primary school education of higher quality is within India's grasp. Many states have identified and applied successful strategies for providing schools, classrooms, teachers, textbooks, and other instructional materials to reach this objective-strategies that could be adapted and used in other states; And many states have found avenues for cooperation between public and private institutions in training teachers, constructing and managing schools, and producing and distributing textbooks- learning lessons that too could be applied in other states. With conservative assumptions about economic growth, 80 percent of the resources required for universal primary education would be available a decade from now if past trends continue. But three problems must be resolved before universal primary education can be reached. First, states need to learn more from one another about successful strategies. Second, a means needs to be found for transferring resources to the states with the highest share of children out of school. Third, strategies for increasing the demand for primary education need to be explored to ensure that the places created in primary schooling are used. The trends in revenue deficits in the major states and the falling share of development expenditures suggest that boosting budgetary resources for education will require significant changes in the conduct of fiscal policy-increasing revenues, restructuring expenditures, and becoming more cost-effective in the provision of schooling. A combination of strategies could be considered. In line with agreements reached with the Government of India as reflected in the 1995 county economic memorandum, these include: Developing a wider revenue base to improve resource mobilization. * Allocating at least the share of plan expenditure for primary education projected for the Eighth Plan period and preparing for significant increases (as planned) in the share under the Ninth Plan beginning in 1997.  xviii India: Primary Education Achievements and Challenges Increasing the spending on education through a general restructuring of total expenditures. There is scope for such restructuring: losses by the state electricity corporations are two and a half times the total state plan expenditures on education. * Developing financial arrangements for the planned third tier of government, at the district level, that will ensure that adequate financing is developed for these governments' responsibilities in education-and that there are incentives not to divert such funds. Inequalities within states will have to be addressed through policies that effect differential transfers from the state to lower levels of government. And local governments will have to be enabled to raise additional revenues from taxes that may be less available to state governments. In addition: Focusing on reducing repetition and dropout rates to reduce the cost per graduate. Lowering repetition rates would make it possible to accommodate many more students for marginal increases in expenditure. * Reviewing the efficiency and effectiveness of incentive programs. Even without the school feeding programs, twice as much is spent on incentive programs as is spent on all nonteacher school inputs. The little evidence that exists suggests that several of the major components of incentive and scholarship programs tend to be inefficiently administered and have no real effect on enrollment and retention. More effective might be the free distribution of higher-quality textbooks. Overall, governments of educationally backward states may be able to increase their rate of expenditure growth on primary education if economic growth rates are buoyant and public finances are restructured. But growth rates would need to double. This is probably not realistic. To augment the efforts of state governments, the central government could increase its support to these states. 2. Improving the preparation, motivation, and deployment of teachers Improving teachers' performance is the most important challenge in primary education in India. Their salaries claim by far the largest share of state education budgets. They are the principal instructional instrument in most schools. And their performance falls short of what is needed to ensure that all children complete primary school with adequate learning.  Executive Summary xix India's governments have done much to improve the quality of the teaching corps- raising education requirements, improving training, and increasing the diversity of the teaching force (though not enough to match the diversity of the students). But as a result of historical deficiencies in teachers' education and training and poor performance incentives, many teachers still have little understanding of the material they teach, have few teaching skills, and are poorly motivated. Teachers are frequently absent from school, either because of poor motivation or competing administrative demands on their time. Essential, then, for the next decade: improving the preparation, the motivation, and the deployment of teachers. What will it take to improve the performance of teachers? Here are five strategies that could have high payoffs: Implementing teacher qualification standards that extend the length of preservice general education and increase the knowledge of teachers. Shortening the duration of preservice teacher training and shifting its emphasis to building teaching skills. * Sustaining state-level and district-level provision of continuous, school- based in-service training. Improving the conditions of teaching and making career advancement and promotion contingent on performance. * Increasing the share of female teachers and teachers who speak local languages, especially important for girls and scheduled tribe students. 3. Improving the quality of textbooks and the efficiency of their production India gets textbooks to almost all its primary students-for many of them at no cost. But the quality of the textbooks leaves something to be desired. The instructional quality and readability of many is low. The physical quality is often poor. And in many states children carry too heavy a load of textbooks-physical and cognitive. Improving textbooks is critical: they are the main instructional aid in India's primary schools, carry the curriculum for both students and teachers, and for most students are the only available reading material. There also is a need for increased efficiency in the production and distribution of textbooks. For many of the quality and efficiency issues, the solutions can be found in India. Studies have found good practices in one state or several in most aspects of textbook development and publishing. Among the examples: good use of the private sector for printing and distribution in Uttar Pradesh, better pay for textbook writers in Karnataka, simpler and more readable texts in Maharashtra, Tamil Nadu, and Assam, and limiting the number of pages assigned and  xx India: Primary Education Achievements and Challenges printed in Kerala. Each state will need to select combinations of reforms that suit local circumstances, building on present strengths and changing practices in key areas. The changes called for should be feasible for each state, given that a large share of improved practices have been put in place in other Indian states. As could be expected, new practices are also called for. Some are needed to take advantage of the potential for improved efficiency emerging with the adoption of Minimum Levels of Learning (MLL) standards by all states, making cross-border sales more feasible. Others are needed to help the textbook publishing industry evolve toward international standards of practice. The three most promising areas: adopting strategies to improve quality, establishing autonomous textbook corporations, and reducing the cost of textbook provision through greater involvement of the private sector. Improving quality. Three relatively straightforward actions would do much over time to produce more readable, more effective textbooks: * Setting standards on vocabulary and on sentence type and length. - Conducting simple trials of readability and comprehension with students and teachers. Investing more in research, writing, and design. Improving production through textbook corporations. In many states the fragmentation of authority for textbook publishing raises the costs and lowers effectiveness. Financially autonomous textbook corporations such as the one in Tarnil Nadu offer three key advantages: Instituting financial controls. Improving quality control. Using flexible staffing strategies. Reducing the cost of textbook provision. In India, as elsewhere, there has been a tendency to manage the costs of textbooks by reducing the quality of manufacturing. Six alternative strategies may prove more fruitful: * Increasing the financial accountability of textbook corporations. * Reducing the number of pages. Increasing competition in printing.  Executive Summary xxi * Letting printers purchase paper. * Encouraging cross-border sales. Expanding the private sector's role in distribution. 4. Strengthening management and institutional capacity Strengthening the managerial and institutional capacity of the education system typically requires improving organizational structures, developing institutional capacity, and strengthening information systems. Although progress on all these issues is still needed in India, it has made significant strides in addressing them in four ways: * Through the 73rd and 74th amendments to the constitution (1992), establishing panchayati raj institutions-institutions at the district, subdistrict, and village levels-in all states and devolving responsibility for primary education to district-level panchayats. * Training district-level planners, village education committee members, and school headmasters and head teachers involved in the District Primary Education Program. * Strengthening state and district education institutions to provide support at the block and village (school) level. Establishing a management information system to provide more accurate and timely education data for use at all levels. The management of education in India should soon change dramatically as responsibility is devolved to panchayati raj institutions. This devolution of responsibility is likely to lead to much uncertainty as states sort out which responsibilities they should transfer to these institutions and which they should retain. It will also lead to new needs in training and technical support for the panchayati raj institutions, many of which have little experience in managing education. Institutions at all levels will see their functions change, and district-level personnel, school headmasters, and village education committees will acquire many new responsibilities or receive formal authority to carry out complex tasks that they already perform. These shifts in responsibility need to be accompanied by careful planning to prevent the administrative weaknesses that arise when managers lack sufficient authority or resources to do their jobs effectively, when lines of communication are blocked, when roles and responsibilities are unclear, or when managers' time is consumed by routine tasks.  xxii India: Primary Education Achievements and Challenges Strengthening the Central Government's Leadership India's central government is responsible for developing many aspects of policy and for funding centrally sponsored plan schemes in primary education, and it provides general financial transfers to states. Its allocations to education under the Ninth Plan are slated to increase significantly, particularly for elementary education. The central government has increased its role in support of primary education since 1986, mainly through supporting interventions to improve learning achievement. It has employed both uniform and especially tailored interventions. First, centrally sponsored schemes to strengthen basic education supported such relatively standard interventions as Operation Blackboard for small rural schools, a national research and development program to help states establish minimum levels of learning in core subjects, district institutes of education and training to provide professional support to teachers, state-level programs of nonformal education, and total literacy campaigns. Second, recognizing the role of location-specific factors in educational achievement, the central government launched the District Primary Education Program in 1993 to increase enrollment, retention, and the quality of primary education through district-designed activities and performance-based resource allocation specially tailored to meet local needs. The analysis in this report suggests that the central government will need to expand its role in primary education in the medium term for three reasons: the low level of resources devoted to primary education by many state governments and the large number of children out of school, the importance at this stage of educational development of capacity building in states and districts to plan and manage education more effectively, and the need for substantial research to select cost-effective strategies. - Gradually expanding the District Primary Education Program, with careful attention to cost-effectiveness, would be essential during the medium term, to provide a bridging mechanism as states undergo fiscal reforms. Untied grants to states for educational development might also be considered under terms that do not allow substitution and require a commitment by the state government either to increase the growth of its education spending (for low spending states such as Haryana) or maintain education's share in total spending (for high-spending states such as Kerala) and generally shift expenditures toward the social sectors. The central government might also wish to address educational inequality across states more broadly. It could focus the criteria for distributing general transfers more on need, balanced by an increased emphasis on equal fiscal effort across states. And it could target grants for the centrally sponsored schemes to ensure that states that have made strong efforts to raise revenues and allocate expenditure toward the social sectors are not penalized-and that those with low tax efforts or with expenditure patterns biased against the social sectors are not rewarded.  Executive Summay xxiii India faces these challenges with four assets. The first is an expanded primary education system that has put the basic elements of schooling in reach for many children. The second is a strong policy framework with significant commitment from the central and state governments. The third is an innovative and initially well-financed reform program aimed at strengthening primary education, with a strong focus on quality. And the fourth is an educational research and development community increasingly engaged with the problems of primary education.   1' Introduction and Overview 1.1 The vision of education for India is contained in Article 45 of its constitution: "free and compulsory education for all children until they complete the age of fourteen." Since independence, India's governments have expanded the provision of primary formal and nonformal education to realize this vision, attaining high primary gross enrollment rates. But India has come late to its emphasis on primary education compared with some countries, where a focus on primary education has helped achieve high economic growth with equity and sharply reduce poverty. While a large share of primary age children in India enroll at the beginning of primary school, about 40 percent drop out before completing the cycle. Learning achievement is low. Despite progress in improving equity, gender and caste disparities persist in most education indicators. And as could be expected in a nation of India's size and diversity, there are wide variations between and within states in the efficiency and equity of primary education. This study reviews India's recent efforts to remedy past problems, the current status of education in India, and the remaining challenges. 1.2 The overall challenge for India is to sustain and deepen current reforms in primary education in an era of fiscal adjustment and increasing administrative and political decentralization. Strategies for expanding and improving primary education will need to be planned and managed locally to meet the diverse constraints on primary education, with an increasing focus on cost-effectiveness. 1.3 In India primary education is the concurrent responsibility of the central government and the states. In many states this responsibility is not adequately fulfilled, and primary education is underfunded. To achieve national policy objectives in education, states will need to improve their fiscal performance and devote more resources to primary education. And at least in the medium term, the central government will need to continue to support state efforts. An important challenge is to devise the most effective mechanism for this support. 1.4 This chapter describes the education system in India and gives a brief overview of national and state reform efforts. And it identifies key issues that need to be addressed if  2 India: Primary Education Achievements and Challenges the people of India are to realize the benefits arising from a universal primary education of good quality-personal, social, and economic development with equity. The rest of the study addresses these questions: 1. Why is investing in primary education important (chapter 2)? 2. What are the remaining challenges? * Increasing access and efficiency (chapter 3). * Improving learning (chapter 4). * Reducing equity gaps (chapter 5). 3. What is required for expanding and improving primary education? * More classrooms and teachers (chapter 3). * Better teachers and teaching (chapter 6). * Better textbooks (chapter 7). 4. What will it take to simultaneously expand and improve primary education? * Decentralized planning and management and high-level technical and administrative support (chapter 8). * More resources for primary education (chapter 9). 5. How can what is needed be afforded (chapter 10)? Progress and Prospects 1.5 India's education system today is in large part a consequence of its past. As late as 1931 the literacy rate in India remained appallingly low, at less than 10 percent among adults and no more than 2 percent amnong women (Parulekar 1957). Little growth in literacy had occurred since 1881 (table 1-1). At independence in 1947 fewer than 15 percent of the adult population was literate. Literacy grew slowly over the next four decades, and in 1991 the literacy rate for adults (all those over age 7) was 52 percent, well below rates in East Asian economies when they began to integrate with the world market. For example, the Republic of Korea's literacy rate was 71 percent and Thailand's was 68 percent in 1961.  Chapter 1. Introduction and Overview 3 1.6 Nevertheless, in 40 years India had gone from having 52 million literates to having 350 million literates (Nanda 1992). But the rise in the literacy rate did not mean that there were fewer illiterates. In 1981 there were 121 million illiterate males and 181 million illiterate females in India, and in 1991, 127 million illiterate males and 197 million illiterate females. Table 1-1. Literacy Rates in All India, Selected Years, 1881-1991 (percent) Year Literacy rate 1881 6.3 1911 7.3 1931 9.3 1951 18.3 1961 28.3 1971 34.5 1981 43.7 1991 52.2 Note: Literacy rates for 1881-1931 are for those aged 10 and above, rates for 1951-71 are for those aged 5 and above, and rates for 1981 and 1991 are for those aged 7 and above. Source: For 1881-1931, Parulekar 1957; for 1951-91, IndiaI993a. The Engine of Literacy Growth: Rising Enrollment 1.7 The engine of the growth in literacy was the expansion of primary education. India's education system is the second largest in the world, although its exact size is subject to debate. According to provisional statistics from the Sixth All-India Education Survey, 98 million children were enrolled in 575,000 lower primary schools in 1993, another 34 million in 161,000 upper primary schools, and 22 million in 90,000 secondary schools (NCERT 1995). Roughly 5 million students were enrolled in nearly 8,000 institutions at the tertiary level (India 1994b). In all, 18 percent of India's population was enrolled in school, up from 7 percent in 1951. At all levels, some private schools-about 40 percent of urban primary schools and more than half of all secondary schools in 1987-offer a first-class education to those who can afford the fees.' The success of the Indian education system is reflected in its sheer size, and in its graduates, found in all professions in all parts of the world. 1.8 But this study is not about the successes of India's private, urban, secondary, or tertiary education. It is about how to provide primary schooling or its equivalent for all 105 million children of primary school age-a third of whom do not attend school-and how to improve the quality of the more than 500,000, mostly public schools, serving the rural poor in India. 1.9 The structure of public schooling varies across states, although in most it follows a similar pattern. Elementary education covers grades 1-8, with upper primary school X In India schools are fully government, govermment-aided private, or fully private. Govemment and govemnment-ided private schools are publicly financed. This study refers to government schools as public school.  4 India: Primary Education Achievements and Challenges beginning at grade 5 in some states and grade 6 in others. Lower secondary covers grades 9-10, and upper secondary grades 11-12. All elementary subjects typically are compulsory, while some secondary subjects are elective at grades 11-12. Schooling is nominally compulsory in 14 of the 23 states and union territories. 1.10 Enrollment has grown at all levels (figure 1-1). But at least 33 million poor, rural primary school age children do not go to school, even in states with high participation rates (box 1-1). Figure 1-1. Enrollment Has Been Steadily Growing at All Levels Enrollment in primary, upper primary and secondary school in all India, selected years, 1951-96 Student enrolled I (millions) Iioo 90 70 60 IGrades 1-5 60I 40I 30 Gae - 20 10 1950.51 1955-56 1960-61 1965-66 1970-71 1975-76 1980-81 1985-86 1990-91 Source: India 1994b. Box 1-1. Why the Children in a Fishing Village in Kerama Didn't Go to School In Kayipady, a fishing hamlet in Kerala, there are 250 children aged 5-14, but none was enrolled in school in April 1995. The nearest primary school was only 3 kilometers away, at Kumbla, but the people of Kayipady preferred not to send their children there. Why? To reach school, the children had to wade a river, cross the main railway line, and then cross the main highway twice. Concerned for their children's safety, parents kept them at home. When a school was established in Kayipady in July 1995, 185 children aged 5-10 enrolled in grade 1. Source: DPEP 1995. 1.11 In the late 1980s, growth in primary enrollment began to lag. Growth in schools and in enrollment was slower at the primary level than at the upper primary and secondary levels, and lower in rural than in urban areas, consistent with past trends (table 1-2).  Chapter 1. Introduction and Overview 5 Table 1-2. Growth lo Schoob and Enrolled Students lo All ldia, 1986-93 (perct) Level Rural Urban Total Schools Primary 7.6 19.6 8.8 Uppeprimary 13.1 27.5 15.8 Secondary 24.2 30.5 25.8 Higher secondary 63.1 42.7 52.1 Students Primary 11.6 20.9 13.8 Upper primary 21.8 30.5 39.9 Secondary 30.9 34.5 32.5 Higher secondary 45.5 33.9 37.7 Source: NCERT 1995. 1.12 Recent government and survey data for all-India and the 15 largest states show that gross enrollment rates in 1993 exceeded 95 percent (NCERT 1995). Literacy stood at 52 percent in 1991, 64 percent for males and 39 percent for females (Nanda 1992). The education participation rate for children aged 6-10 stood at 68.4 percent, with 75.5 percent of boys and 61.3 percent of girls surveyed reporting being in school (IIPS 1995). Official primary school dropout rates were 39 percent for girls and 35 percent for boys (India 1993a). 1.13 India has made much progress toward universal primary education, and could achieve nearly universal-95 percent-primary net enrollment rates by 2005. But that will be at least two decades later than in such countries as Indonesia and Malaysia, and three decades later than in the Republic of Korea (figure 1-2). 1.14 Together, these figures reflect the enormous gains that India has made in education since independence-and the significant challenges that it still faces. It is addressing these challenges through recent policy reforms that build upon experience. National Policy and Central Schemes 1.15 Working groups of the Planning Commission established ambitious target dates for achieving universal elementary education, targets that were revised throughout the 1960s and 1970s. In 1966 the Kothari Commission proposed achieving the goal no later than 1986. But this target, too, was superseded when the 1986 National Policy on Education articulated a goal of ensuring that, by 1990, all children aged 11 would have completed five years of formal or nonformal education (Mehta 1994b).  6 India: Primary Education Achievements and Challenges Figure 1-2. Achievement of 9S Percent Primary Net Enrollment in Five Asian States Not enrollment ratio (percent) 100 90 80 70 60 50 40 30 20 10 1 1965 1970 1975 1980 1985 1990 yA 3China Republic of Korea Alkdonesia + Malaysia ..1ndla +.,-.Pakistan Note: Figures for India for 1985 from FAIES and for 1990 from World Bank Staff Estimates. Source: Lockheed and Verspoor 1991; NCERT 1992; IIPS 1995; World Bank 1995c; Warwick and Reimers 1995. 1.16 A key strategy for achieving universal elementary education was to provide an alternative to formal schooling for working children and girls not in school. In 1978 the Department of Education established a program of grants to states to develop nonformal education classes. These classes are held at times convenient to the children, usually the in early evening, and led by an educated instructor who receives training and a stipend from state governments. State nonformal education resource centers prepare learning materials and teachers' guides, and provide these to the teachers, along with a blackboard and a kerosene lamp. Classes are held in instructors' homes, after hours in schools, or in other public buildings. A supervision and support system of trained officers parallel to the supervision structure for formal schools has been established down to the block level. 1.17 The 1986 National Policy on Education set the stage for an increasingly important role for the central government in primary education. The policy explicitly recognized the need for a concerted effort to expand and improve basic education-formal and nonformal primary and adult literacy education. At the primary level, the policy gave priority attention to reducing the disparities in enrollment for girls and for scheduled caste and scheduled tribe students. To carry out the policy, the Department of Education created a set of centrally sponsored grant schemes to assist to states in developing basic education (box 1-2).  Chapter 1. Introduction and Overview 7 Box 1-2. Centrally Sponsored Schemes to Implement the National Policy on Education To implement the 1986 National Policy on Education, the Ministry of Human Resource Development Department of Education initiated a series of grant programs (or centrally sponsored schemes) to assist states with the development of primary education. Operation Blackboard-1986. The Department of Education established Operation Blackboard to counter conditions seen as constraints to retention and learning: the large number of single-teacher schools, the lack of female teachers, and the inadequacy of teaching materials and aids. The scheme provides grants to states to construct an additional classroom and post an additional teacher to single-teacher schools, requiring that half the teachers posted be women. It also provides grants to finanec the purchase and distribution by the state of a predetermined, standardized package of teaching materials and aids. District institutes of education and training (DIETs)-1988. Recognizing that professional support for teachers would be important in improving their effectiveness, the Department of Education established a scheme to finance the creation of institutes of education and training in all rural districts, by converting existing teacher training institutes and through new construction. All DIETs follow standard organizational model, with departments for teacher education and training, planning and management, research and evaluation, curriculum and materials development, educational technology, and work experience education. Total Literacy Campaigns-1988. After an unsuccessful attempt to provide adult literacy instruction, along with vocational skills training, through formal classes, the Department of Education tumed to total literacy campaigns to increase adult literacy. Overseen by a national Literacy Mission board, the literacy program provides grants to district administrations for organizing intensive campaigns to mobilize large numbers of volunteers. Literacy materials and training courses for volunteer instructors are developed by state resource centers. Minimum Levels of Learning-1989. Inappropriately complex and difficult primary curricula and textbooks were recognized as a barrier to learning, and a factor in decisions to drop out. To address this problem, the Department of Education initiated a national research and development program to identify, for each state, basic competencies in language, mathematics, and social and environmental studies to be taught in the primary grades. Known as Minimum Levels of Learning (MLL), these competency statements have been largely completed and tested, and are ready to form the basis for new curricula and a new generation of primary textbooks in the states. Source India 1993a. State Projects 1.18 Associated by donors, states also initiated basic education projects. Building from experience with the Andhra Pradesh Education Project, which had begun in the early 1980s with the support of the United Kingdom's Overseas Development Administration (ODA), Bihar (UNICEF), Rajasthan (Swedish International Development Authority), and Uttar Pradesh (International Development Association) started projects between 1990 and 1993. While these projects vary substantially in design, they all share the objectives and strategies of the 1986 policy. They focus on increasing girls' enrollment and improving educational outcomes, and include features to strengthen community involvement with schools through village education committees, improve teaching and learning materials, and improve in-service teacher training, with district institutes of education and training playing key roles. In each state registered societies were created to receive and disburse funds, and to provide an umbrella organization, closely tied to state education departrnents, for project implementation. Decentralized Education Development and the District Primary Education Program 1.19 In 1992 Parliament approved an updated National Policy on Education. The new policy sharpens the priorities for girls' education and improved quality in primary  8 India: Primaiy Education Achievements and Challenges education. And it calls for an integrated and decentralized approach to developing primary education systems, with a focus on building the capacity of districts to plan and manage primary education. 1.20 The call to strengthen the capacity of districts paralleled 1992 constitutional amendments that increase the responsibility and authority of local governments. These amendments gave the control of primary, secondary, adult, nonformal, technical, and vocational education to panchayati raj bodies. The Central Advisory Board of Education issued a special report on how to decentralize in the management of education, detailing the structure, role, functions, and powers of local bodies. The objective in transferring management authority to local bodies is twofold: to improve the efficiency and effectiveness of schools, and to promote democratization at the local level (India 1 993e). 1.21 Almost all states have passed enabling legislation for the constitutional amendments, and administrative guidelines for decentralization are being issued. Recent studies on the potential impact on primary education suggest that decentralization would increase local support for mobilizing resources, particularly for school construction and nonsalary recurrent costs, improve supervision and control over schools and teachers, and increase school enrollment and reduce dropout rates (Jain 1995c). Research will be needed to evaluate the effect of the legislation on these outcomes as it is implemented. 1.22 In close consultation with the states, the Department of Education established the District Primary Education Program (DPEP) in 1993 to implement the recommendations of the revised policy (box 1-3). The designs of the DPEP management and interventions draw on experience gained through the central schemes and, most important, the state projects in Andhra Pradesh, Bihar, Rajasthan, and Uttar Pradesh. The program finances quality improvement projects planned at the district level, emphasizing improving inputs and strengthening community participation. The DPEP was launched in seven states in 1994 and expanded to three more in 1996.2 With the four state projects, India has now initiated significant action in 14 of its 15 largest states. 1.23 In creating the DPEP, the government of India seeks to accomplish several broad objectives. First, while recognizing that states will need to bear the main burden of managing and financing primary education, the government wishes to create a transitional mechanism for providing financial and technical assistance to hluild state and district capacity during a period in which states are both implementing new forms of decentralized management in education and undergoing fiscal adjustment and reform. Second, the government seeks to initiate action rapidly in a large number of states. Third, it seeks to develop a program that would enhance the capacity of national educational research and development institutions to provide an empirical basis for program design and evaluation, and to take an active role in developing counterpart agencies in the states. 2Assam, Karnataka, Kerala, Haryana, Maharashtra, Tamnil Nadu, and Madhya Pradesh in 1994; Himachal Pradesh, Orissa, and Gujarat in 1996.  Chapter 1. Introduction and Overview 9 Finally, the government wishes to have a single window for external assistance to facilitate coordination of the substantial amounts expected.3 Box 1-3. District Primary Education Program In 1992 the Central Advisory Board on Education (CABE) completed a revision of the National Policy on Education of 1986, calling for an integrated approach to primary education development focused at the district level. The result has been the District Primary Education Program-the most intensive effort by the central government to increase enrollment, retention, and quality in primary education. The program targets investment to districts with below- average female literacy rates, and decentralizes planning to districts to encourage popular participation. While the DPEP finances some new school construction, it emphasizes investments in the quality of primary instruction, particularly in-service teacher training, improved teaching and learning materials, and improved school facilities. The program is strengthening community and school organizations, and replacing the Operation Blackboard materials approach with grants to these organizations and to teachers to purchase materials. The program is also enhancing state education support programs, including textbook development and publication, planning and management, research and evaluation, and teacher training. The DPEP is managed at the national level by the newly created DPEP Bureau in the Ministry of Human Resource Development. The bureau serves as a financial and technical intermediary, appraising, financing, monitoring, and supervising state and district action programs. The DPEP finances 85 percent of state and district expenditures, with the balance provided from state budgets on the basis of seven-year district and state investment plans. The DPEP also finances national technical assistance and research and development programs to support the development of state institutional capacity. Implementation progress is monitored annually, and serves as the basis for annual budgetary allocations to district and state subprojects. Learning achievement and dropout indicators will be monitored every three years against baselines established for each participating district. As the program achieves full coverage of districts for lower primary education, it could expand to cover upper primary schooling. The DPEP differs from other centrally sponsored schemes, which provide resources to states for programs that follow standard designs, in five principal ways: (1) proposals for financing subprojects are developed by each participating district and state; (2) proposals are appraised by the DPEP Bureau against technical, managerial, and financial criteria; (3) participating states must make DPEP grants fully additional to normal growth in education budgets; (4) funds are made available to states and districts annually on the basis of performance reviews and proposals for the next year- and poorly performing subprojects can be dropped from the program and replaced; and (5) implementation support and technical assistance are made available to states and districts through contracts with research and development agencies. The DPEP will be the channel for all substantial external assistance to primary education.. The European Union provided a grant of ECU 150 million to the DPEP in 1993, and the World Bank approved IDA credits of $265 million in 1994 and $425 million in 1996. In addition, the United Kingdom ODA is planning to support DPEP in two states. Remaining Challenges 1.24 Universal primary education of good quality is key to boosting economic growth while also improving equity in India's liberalizing economy. For India's poor, completing a good-quality primary education and acquiring basic skills will be essential in enabling them to participate in growth and benefit from health and family welfare services. In the medium term more and better primary education for girls will help families realize their desired size, leading to better family health and slower population growth. And slower 3For these reasons, and to ensure that investments would be equitable (targeted) and fully in line with national policy, the government explicitly chose a single national program over the earlier state-by-state project approach.  10 India: Primary Education Achievements and Challenges 1.25 There are important benefits-and India has made substantial gains toward achieving them. But it needs to address four overarching issues in education-access, efficiency, learning achievement, and school quality-as well as specific challenges in reform. In addressing these challenges, India can call on a base of solid assets. Access 1.26 Access to primary schooling varies across states, within states, and by gender and social class. Differences among states in primary education coverage largely reflect differences in population growth trends. The annual rate of population growth (based on the 1991 census) ranges from 1.3 percent in Kerala to 2.5 percent in Uttar Pradesh. As a result of these growth rates, between 1995 and 2005 the number of children in Kerala in the age group 6-10 will decline from 2.8 million to 2.4 million, while in Uttar Pradesh the number will increase from 19.6 million to 24.0 million.4 With a smaller primary school cohort, Kerala can invest a fixed share of budgetary resources while still improving the quality of primary education and expanding secondary education. But Uttar Pradesh will have to increase primary education's share in the state budget just to keep pace with population growth. 1.27 Over the past 40 years much has been achieved in improving equity between boys and girls in primary education. During 1981-91 primary enrollment for girls grew 3.7 percent a year, while for boys it grew 2.5 percent a year. But gaps remain, as discussed in chapter 5. The male literacy rate for those aged seven and above is nearly double the female rate. 1.28 Children from the poorest families and rural girls are most likely to be out of school. A third of rural children aged 6-10 are not in school, and half the urban children not in school are from the poorest 20 percent of households. Efficiency 1.29 According to official government of India statistics, 65 percent of all boys and 60 percent of all girls who enroll complete the first five-year cycle of primary schooling. Completion rates vary widely, however-from 40 percent in Bihar to 84 percent in Tamil Nadu to virtually 100 percent in Kerala (see table 1-3). And rural dropout rates are higher than the national averages. Of the children who complete the first five-year cycle of primary schooling, 77 percent of boys and 69 percent of girls progress to upper primary school, equivalent to about 46 percent and 28 percent of their age cohorts. Only 35 percent of children who enroll in grade 1 are enrolled in grade 8 eight years later. 4This paper uses the term "6-10 years" to refer to children who have reached their sixth birthday but not yet reached their I Ith birthday.  Chapter 1. Introduction and Overview 11 school, equivalent to about 46 percent and 28 percent of their age cohorts. Only 35 percent of children who enroll in grade 1 are enrolled in grade 8 eight years later. Table 1-3. Official Primary Enrollment and Dropout Rates and Adult Literacy Rates in 15 Major States, 1991 and 1993 (percent) Gross Dropout rates Literacy rate enrollment 1993 (age 7 and abave) 1991 State rate 1993 Male Female Male Female Andhra Pradesh 93 42 42 55 33 Assam 93 - - 62 43 Bihar 73 62 66 53 23 Gujarat 106 42 51 73 48 Haryana 84 2 7 69 40 Karnataka 119 37 44 67 44 Kerala 96 0 0 94 86 Madhya Pradesh 98 23 35 58 29 Maharashtra 119 24 32 77 52 Orissa 101 53 52 63 35 Punjab 85 21 23 66 50 Rajasthan 85 35 56 55 20 Tamil Nadu 144 16 18 74 51 Uttar Pradesh 76 20 20 56 25 West Bengal 104 36 46 68 47 All India 96 35 39 64 39 -Not available. Source: For gross enrollment rates, NCERT 1995; for dropout rates, India 1993a; for literacy rates, Nanda 1992. Learning Achievement 1.30 Children who do reach the final year of lower primary school often have low learning achievement, as discussed in chapter 4. In a 1991 study in 23 states, the National Council of Education Research and Training (NCERT) found that the average achievement on curriculum-based basic skills tests of arithmetic, reading comprehension, and spelling for a sample of 65,000 urban and rural grade 5 students was 46 percent. Students correctly answered fewer than half the questions on an arithmetic test in 19 of the 23 states, and fewer than half the questions on a reading comprehension test in 16 states. They correctly spelled fewer than half the words on a spelling test in 15 of 21 states. Yet all the skills tested were skills that students are expected to achieve by the end of grade 4. Recent studies in 43 low-literacy districts in eight states found even lower levels of learning achievement. School Quality 1.31 The quality of rural schooling is often inadequate, as reflected in low levels of learning achievement and high dropout rates. But there is a good base of accomplishments on which efforts to improve quality can build. Primary teachers have a higher education than their counterparts in many developing countries. Virtually all  12 India: Primary Education Achievements and Challenges enormous accomplishments, and crucial resources. But the quality of these key learning resources could be substantially improved. Teachers are not trained for the challenges of teaching young children, teaching multiple grades, or teaching in small rural schools. Textbooks often are too difficult for students-and sometimes for teachers-to read, and supplemental instructional materials are in short supply. Rural schools often are in poor repair, lack water supply and sanitary facilities, and have an average floor space per pupil well below norms. These issues are addressed in chapter 4. Assets 1.32 India faces these challenges with four assets. The first is an expanded primary education system that has put the basic elements of schooling in reach of many children. The second is a strong policy framework that has significant commitment from the central and state governments. The third is an innovative and initially well-financed reform program aimed at strengthening primary education, with a principal focus on improving the quality of schooling. The fourth is an educational research and development community that is increasingly engaged with the problems of primary education. The Basics of Reform: Specific Challenges 1.33 To stay the course, and increase the pace of improvement, the central, state, and local govenmments will need to keep a clear focus on the basics of school reform: what is required to get children into school, to keep them for the full primary cycle, and to enable them to learn. The specific challenges are many, but the following stand out as having considerable early priority. Each is taken up in the chapters that follow. Understanding the economic and social outcomes of primary education. Political support for primary education has never been higher in India. Yet the full private and social benefits of primary education are not widely understood. Broader public discussion of the outcomes of primary education, buttressed by additional research, could do much to foster broadly based social support in an era of increasing fiscal constraints. Improving access and efficiency. With a basic system in place, attention should now turn to enrolling the 33 million primary age children presently out of school and to keeping those children in school for the full cycle. The key is to increase family demand for education and improve school quality. Some reanalysis of the strategies in place to increase demand may be needed. Enhancing learning achievement. Raising the very low levels of learning achievement in rural schools is essential if children are to gain basic skills. This will require sustained attention to improving the quality of key inputs and of school management-including community participation.  Chapter 1. Introduction and Overview 13 Reducing gaps in enrollment, retention, and achievement. Equity objectives receive high priority in national policy, including education policy. Targeted strategies for girls and scheduled caste and scheduled tribe children-strategies based on research and carefully monitored-can help in achieving these goals. Improving teachers' performance. Improving the ability of teachers to fumction effectively in small rural schools with students of widely ranging ages is the central challenge in raising learning achievement. In-service training, stronger participation by community organizations and local governments, and more effective and efficient preservice education for teachers are all promising approaches, though none is easy to implement. Improving the quality of textbooks and the efficiency of their production. Textbooks carry the curriculum and are the principal source of knowledge and instructional guidance for students and teachers alike. Having accomplished the massive task of providing textbooks to virtually all students, educational authorities now face the challenge of improving the quality of textbooks and the efficiency of their production. Building managerial and institutional capacity. The devolution of responsibility for primary education to local communities, and the increasing recognition of the importance to school performance of good school management, place management of change squarely on the reform agenda. Developing management systems, and managers, for this new kind of work is a formidable task. Increasing financing for primary education. Although states finance by far the largest share of the costs of primary education, the central government is rapidly taking the lead in financing the investment costs of the reform program. But providing higher-quality primary schooling to all children will require additional resources, and both levels of government will face important financial challenges. In an era of fiscal stabilization, providing the resources for universal schooling will require both sustained political will and a better analytical understanding of present-and possible-patterns of education finance. 1.34 The following chapters draw on a wide range of sources-including original analytical work by Indian researchers and others-to summarize what is known about each of these key challenges, to recommend directions and modifications for the reform program, and to identify important remaining gaps in knowledge.   2 Economic and Social Outcomes Justify Investing in Primary Education 2.1 Over the past thirty years, much effort has been expended in quantifying the effect of education on social and economic development. The results clearly justify greater investment in education. Two findings are particularly important. Education leads to broad economic and social benefits for individuals and for society-higher productivity, lower infant and child mortality rates, better health. And these benefits are greatest once a broad coverage of primary education is reached across the population. This chapter summarizes the evidence from India, showing the significant returns to basic education in that country and, more important, highlighting the costs of not moving more rapidly toward its universal coverage.5 2.2 Substantial benefits from universal schooling were perceived decades-in some cases, centuries-before the recent attempts to quantify them. Arguments for expanding education have been based on three main beliefs: that an educated population is more productive than an uneducated one, that literacy is essential for modem societies to function (and increasingly so in this era of rapid global integration), and that schools and the curriculum play an essential part in transmitting national and-in the case of India, state-cultures to all children and in furthering national and social integration. 2.3 In India, the proponents of universal basic education go beyond arguments of its potential benefits for labor productivity and health status, giving equal or greater importance to the wider social and cultural dimensions. The foflowing discussion emphasizes the economic and social outcomes of education. While it considers some issues for the education system as a whole, the focus is on primary education. It is important to emphasize that the approaches used and the definitions of outcomes focused on in this chapter arn very nawrow.  16 India: Primary Education Achievements and Challenges Economic Outcomes 2.4 The economic outcomes of education have been estimated using a range of techniques, including aggregate production functions, enterprise-based production functions, and rate-of-return analysis. All show positive returns to education in India. * Aggregate production functions suggest that a one-year increase in the average education of the workforce can raise output by 13 percent-and that the increased educational level has contributed around one quarter of the increase in economic output. * Farm-based production functions show that in agriculture, education helps increase outputs, primarily by increasing the adoption of new technologies and farming practices. * Rate-of-return analysis and earnings functions suggest that private and social returns to education can range up to 8-9 percent. Aggregate Production Functions Show That Output Rises with Education 2.5 Recent measures of the economic outcomes of education have increasingly focused on the broad macroeconomic impact through estimates of aggregate production functions. These estimates attempt to capture the effects of mechanisms through which education raises the productivity of the entire workforce. Several cross-country studies have highlighted the significant impact of education, particularly primary education, on economic growth rates (Barro 1991; Lau and others 1993; Nehru and Dewasar 1994). 2.6 A study of particular relevance for India examined eight East Asian export-led economies (World Bank 1993).6 Its results show that increasing enrollment in primary education-and later, secondary education-has been significant in explaining these economies' sustained high levels of growth. Since 1960 these economies have grown twice as fast as the rest of East Asia, three times as fast as Latin America, and faster than the industrial economies. And because this growth has been accompanied by equitable distribution of its benefits, poverty has fallen dramnatically. 2.7 Macroeconomic models indicate that primary enrollment was the largest contributor to predicted economic growth rates over the past three decades in these countries, accounting for between 58 percent (Japan) and 87 percent (Thailand) of predicted growth. (Physical capital accumulation was the second most important factor, responsible for between 35 and 49 percent of predicted growth.) Simply expanding enrollment is not enough of course. The quality of education also matters. So do efficient, flexible, and responsive labor markets. 6 The economies are Hong Kong, Indonesia, Japan, Republic of Korea, Malaysia, Taiwan, Singapore, Thailand.  Chapter 2. Economic and Social Outcomes Justify Investing in Primary Education 17 2.8 In an attempt to overcome some of the inevitable data equ'ivalence problems associated with such cross-national aggregate production function studies, Lau and others (1993) estimated a production function for a single country, Brazil, using longitudinal data from each of its states. They found that roughly a quarter of Brazil's economic growth rate in the 1970s (equal to 2.6 percent a year) could be attributed to the increase in the average education of the workforce, and that one additional year of education for the workforce, on average, would increase real output by about 20 percent. 2.9 Loh (1995) replicated the methodology of the Brazil study for India, using data for the fourteen most populated states. This essentially exploratory study is subject to the same criticisms that are directed to all production function studies. But its results are in line with those for other countries. 2.10 The study estimated that, for the period 1961-8 1, one additional year of education of the workforce, on average, was associated with a 15 percent increase in economic output. Dividing the period into two subperiods, 1961-71 and 1971-81, produced very different results, however. For the earlier period the association between education and output is not significant. This finding may be due to data measurement problems. But it might also result from distortions to the standard effects of capital, labor, and human capital inputs normally captured in the aggregate production function-distortions stemming from the planning and economic control exercised by the central and state governments during that period. 2.11 For 1971-81, however, the results are significant and striking. They show that increasing the average education of the workforce by one year would raise output by 13 percent. The results also suggest that over the 1970s, the increased schooling level of the labor force accounted for 27 percent of the predicted growth in output, while increases in primary schooling alone accounted for 20 percent. These findings are supported by the relation between the growth rates for average years of schooling of the workforce and state domestic product in each state (figure 2-1). 2.12 The study's results suggest that, while secondary and higher education should not be ignored, moving to universal basic education should be given high priority. In 1981 India's labor force had an average of 1.93 years of primary schooling. Only in Kerala was the average over three years.7 7Publication of the 1991 census results will allow an updating of this essentially exploratory analysis.  18 India: Primary Education Achievements and Challenges Figure 2-1. Increased schooling-particularly primary schooling-brings increased output Annual percentage growth in educational attainment snd state domestic product in selected Indian States, 1971-81 Growth in state domestic product 5.00 4.50 MA PU HA 4.00 3.50 AS GU 3.00 j WB K P BI UP 2.50 200 OR TN 1.50 4 1.00 0.50 0.00o RA 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 Grovth in awerage years of schooling of the workforce Source: Loh 1995. 2.13 A. Mathur (1993) undertook a separate exercise relating stocks of human capital to levels of economic development. For 306 districts in 1971, Mathur correlated stocks of human capital ("pure" labor and by education level) with an index of development.9 The association was greater when comparisons used total human capital stocks rather than human capital stocks of the "productively employed" and the differences were largest for the "just literate" and for primary education, decreasing with higher educational levels. Mathur suggests that the differences correspond to the development outcomes from those not in the enumerated labor force (mainly women) and that these "externalities" are heavily concentrated among people who are literate and who have completed primary school. Mathur also found that the association between human capital and development is stronger at increasingly higher education levels. Mathur concludes that while higher levels of education may have a greater direct impact on economic development, primary and middle schooling are important in widely distributing the conditions conducive to development. 2.14 The level of educational development influences poverty reduction as well as economic growth. Datt and Ravallion (1995) recently attempted to explain the unevenness in changes in rural living standards and poverty across Indian states between 1957 and 1991. Higher agricultural yields, lower inflation, and higher state spending on development programs raised living standards. But these factors only partially explain the a The index comprised 9 measures relating to the labor force, agricultural development, and physical infrastructure.  Chapter 2. Economic and Social Outcomes Justify Investing in Primary Education 19 differences among states. Initial conditions also mattered. States with better infrastructure and higher literacy levels at the beginning of the period had significantly higher long- term rates of both consumption growth and poverty reduction. 2.15 The relation between poverty and social deprivation on the one hand and educational attainment on the other is very strong in India, as the 1987-88 National Sample Survey results for Maharashtra shows. Of the scheduled caste population above the age of six, 53 percent of rural males were illiterate, compared with 25 percent in other castes. For females, the figures were 80 percent and 56 percent. Whether low incomes are seen as a cause or a consequence of low education, the association is strong. In the poorest 20 percent of rural households, 44 percent of males are illiterate, compared with 15 percent in the richest 20 percent; the rates for females are 73 percent and 43 percent. In the poorest and richest urban households the illiteracy rates for males are 22 percent and 3 percent, and for females 44 percent and 8 percent. Farm Productivity Also Rises with Education 2.16 The evidence is strong that primary education plays a major part in fostering economic development and reducing poverty in India, as in other countries. The question is how. 2.17 Over the past fifteen years a number of increasingly sophisticated studies has looked at the effect of primary schooling on practices and productivity in agriculture, where most primary school graduates work. Focusing on high-productivity areas of the Punjab, Haryana, and Uttar Pradesh in 1961-72, Chaudhri (1979) argued that general education up to the secondary level has a significant effect on the diffusion of technology and the agricultural productivity of cultivators. He also argued that the wages of landless agricultural laborers are positively associated with their education level. Nautiyal's (1989) detailed studies in Uttar Pradesh identified high correlations between education level and both the adoption of improved farm practices and the yields of major crops. Rosenzweig (1990) compared the relation between the schooling levels and gross incomes of farmers in Integrated Agricultural Development Programme (IADP) districts where the effects of the "green revolution" were expected to be very strong with that in other districts. The contributions of schooling to gross income were higher at each schooling level among farm households in IADP districts than in non-IADP disticts, but significantly so only for those with primary school education. 2.18 The most recent detailed studies of the effects of education on technical change in agriculture have been based on data collected from a national probability sample of more than 5,000 households in 1968-69, 1971-72, and 1981-82. Using data from the earlier two periods, Foster and Rosenzweig (1994) calculated that for every Re 1 increase in profit due to the effects of exogenous technical change, households with primary schooling received an additional Rs 1.38. They found that schooling had a much greater effect than extension services in increasing farmers' profitability from high-yielding varieties of  20 India: Primary Education Achievements and Challenges grain. They concluded, however, that high returns to schooling require' an environment of technical change: "The returns to investment in technical change will in general be higher when primary schooling is accessible, and the returns to investment in schooling will be higher when technical change is more rapid" (p. 23). 2.19 Foster and Rosenzweig (forthcoming) undertook an equally important analysis of the effect of a farmer's schooling on the profitability of neighboring farmers-an assessment of externalities. They concluded that information externalities were important in the early stages of the adoption of new technologies, with farmers with low schooling benefiting from the human capital of neighboring farmers with more schooling, who were the first to use the new seeds. Over a five-year period the profits of a farmer with no schooling were four percent higher if his neighbor had completed primary school than if he had not. Farmers with more schooled neighbors also adopted new seeds earlier. Reviewing all the studies based on these data sets, Behrman, Rosenzweig, and Vashishtha (1994) concluded that: - While the level of schooling had little effect on productivity in an area prior to technical change, it had independent and positive effects on subsequent growth in areas adopting new technology. - Schooling produced externalities by helping to diffuse knowledge about new agricultural technologies to nonschooled farmers. 2.20 Together, these conclusions suggest that where the schooling of the farm population has not reached a certain threshold, the potential benefits of technical change in agriculture will not be fully realized, confirming earlier international studies (Lockheed, Jamison, and Lau 1980). Rate-of-Return Analyses and Earnings Functions Show Positive but Low Returns 2.21 This section reviews the results of several analyses of the economic rates of return to schooling based on comparisons of education costs and differences in earnings by age and education (to reflect differences in labor productivity) in India. Unfortunately, none of these analyses is based on data more recent than for 1978. Studies for other Asian countries are equally dated. Of the five full sets of social returns reported by Psacharopoulos (1994) for Asia, only one is based on data more recent than 1975. 2.22 An alternative approach to calculating returns is through the estimation of earnings functions, which attempt to isolate such factors as education and work experience to explain variations in earnings. For Asia such studies tend to be based on slightly more recent data than those used in the more elaborate rate-of-return studies. The results of eight of these, cited by Psacharopoulos, suggest that the average private rate of return to one additional year of education is 9.6 percent. Social returns would be lower. These studies tend not to differentiate between levels of education.  Chapter 2. Economic and Social Outcomes Justify Investing in Primary Education 21 2.23 The most recent, and sophisticated comprehensive set of rates of return to education in India was estimated by Tilak (1987) based on special sample data (covering about 1,000 individuals in rural and urban settings) for one district of Andhra Pradesh in 1977. Tilak calculated a range of returns on the basis of different sets of adjustments, including wastage (defined as grade repetition and dropout), economic growth, unemployment, labor force participation rates, and student ability (Table 2-1). The returns were higher in rural than in urban areas and higher for women than for men. Table 2-1. Rates of Return to Education in Andhra Pradesh, 1977 (percent) Assumption (1)a Assumption (2)' Education level Private Social Private Social Primary 15 13 8 7 Middle 19 15 9 6 Secondary 3 <0 <0 <0 General degree 9 8 7 6 a. Adjusted only for wastage. b. Adjusted for wastage, unemployment, nonparticipation in the labor force, and student ability. Source: Tilak 1987. 2.24 Wastage in schools considerably reduces the returns to investment in education. This implies that reducing wastage would produce substantial social returns-even if it required additional resources. When returns are adjusted only for wastage, those for primary and middle schooling are significantly greater than those for higher levels of education. With the full set of adjustments, however, the returns are generally lower (8-9 percent for the elementary cycle) and become similar for all the levels except secondary education, where they are negative. As in the several studies based on 1960s data, in Tilak's study the differences between social and private returns are relatively small- particularly with the full set of adjustments. Unadjusted rates were generally higher for women than for men, but once allowance was made for differences in labor force participation rates, the pattern was reversed. Returns were higher for scheduled than non- scheduled castes at the primary level, but lower for middle and secondary schooling. 2.25 The agricultural studies of Chaudhri and Nautiyal and the rate-of-return studies of Tilak point to differences in benefits by caste group. But the effect of education on earnings is nevertheless strong for all groups, and the unadjusted rates of return for primary schooling (though not for other levels) are reported to be higher for backward castes than for others. Mehta (1990) considered this issue further through a sample of 200 households in and around Lucknow in Uttar Pradesh. He reported that for members of both general and scheduled castes, earnings increased by about 50. percent following completion of primary schooling. For middle schooling, the increment over primary schooling was 41 percent for general castes and 64 percent for scheduled castes. 2.26 Acharya (1995) used data from the 1988 National Sample Survey for Maharashtra to investigate many aspects of women's behavior and experiences in the labor market. As one part of his analysis, he estimated earnings functions for women and men, using data  22 India: Primary Education Achievements and Challenges covering 7,692 urban and 5,560 rural individuals. Rough calculations based on the coefficients indicate that the private returns are higher for urban areas than for rural, slightly higher for females than for males (except for rural primary), and higher for primary schooling than for middle (except for rural females, for whom the returns at the two levels are similar) (table 2-2). The returns are not very different from the fully adjusted rates calculated by Tilak using data from the previous decade-8 percent for primary schooling and 9 percent for middle (Tilak 1992). Table 2-2. Private Rates of Return to Education in Maharashtra, 1988 (percent) Education Level Rural male Ruralfemale Urban male Urbanfemale Primary 5.5 4.5 8.0 8.3 Middle 3.5 4.5 5.9 7.0 Source: Acharya 1995. Reconciling and Interpreting the Results 2.27 How can the rather low rates of return to primary schooling in India (particularly those based on earnings functions) be reconciled with the often higher results reported from other countries? Despite some claims that returns to primary education are invariably high across countries of Africa, Asia, and Latin America, there is growing skepticism. The work of such authors as Behrman and Birdsall (1985), Hinchliffe (1986), Knight and Sabot (1990), and Glewwe (1991) suggests that calculations have often incorporated upward biases. This has led Weale (1993) to argue that social retuns to education will only rarely be in double digits. If that is the case, the results for India could be viewed as normal. 2.28 Reconciliation of the low returns and the positive results of the studies focusing on broad macroeconomic change may lie in the conclusions of the agricultural productivity studies. First, returns are high where technical change is rapid and low where new technological opportunities are few. Parts of the Indian economy were operating in a context of rapid technological change during the 1980s, but some were not-possibly including the areas in Andhra Pradesh and Maharashtra from which the rate-of-return data came. Second, the externalities documented by the surveys are not caught by conventional rate-of-return studies, though they could have a strong effect on overall economic growth. 2.29 Consideration of externalities raises a further important issue. Both the Brazil study (Lau and others 1993) and the agricultural productivity studies in India (Foster and Rozenzweig 1994 and forthcoming) emphasize the importance of a threshold average level of schooling across the community or labor force below which the effect of education will be muted.9 More generally, based on cross-country analysis, Azariadis and 9The threshold may vary across sectors, and within sectors over time, depending on the dominant level of technology.  Chapter 2. Economic and Social Outcomes Justify Investing in Primary Education 23 Drazen (1990) suggest that there are increasing retums to scale for human capital investments when the quality of labor attains a critical mass or threshold level. Lau, Jamison, and Louat (1990) found some evidence for a threshold level of average education for the labor force of between three and four years. In India in 1981, the primary schooling of the labor force averaged less than three years in every state but Kerala and less than two years in six of the largest states. 2.30 The concept of a threshold suggests that the level of investment required in education before it has much effect on output may be high and the gestation period long. But it also suggests that the benefits can be large and, because of the durability of human capital, persistent. And for India it suggests that, as long as its net primary enrollment ratio remains at around 70 percent, and 50-60 percent in the largest northern states, economic development will be constrained. 2.31 The concept of an average threshold of education raises another issue. What is the optimal distribution of this average education? Is it more effective for half the labor force to have six years of education and the other half two years, or for everyone to have four years? Both the production function study and the agricultural impact studies for India suggest that the broader distribution is better. To explain why, Lau and others (1993) use the example of a telephone system in which the benefit to both the subscriber and the society increases with the total number of subscribers. Similarly, for education to have the maximum effect, an educated worker must have other educated workers to interact with. This argument is even stronger when it comes to the effect of literacy and education on social outcomes. 2.32 How long would it take to raise the average level of primary education to four years in India, given the current distribution of education? In 1971 the average for the labor force was 1.66 years, and in 1981, the latest year for which data are available, 1.93 years. For 1992-93, according to the National Family Health Survey, the median for all males over age six was 4.8 years and for all females, zero (IIPS 1995). For illustrative purposes, it can optimistically be assumed that the average in 1990 was 2.4 years. If starting in that year, all children entered primary school and completed five years, the primary schooling of the labor force would not average four years until around 2012. But because primary schooling has not yet become universal, this target will not be met until much later. In such states as Bihar, Rajasthan, and Uttar Pradesh the average level of schooling (1.51-1.68 in 1981) is considerably less than the average across the country. In these states the average level of primary schooling would not reach four years until after 2020, even if universal schooling were to occur immediately. Social Outcomes 2.33 Despite the commonly used term social rates of retum, measures of the economic retums to education have been largely restricted to the productivity effects in wage and nonwage market activities. Over the past decade, however, a large body of intemational  24 India: Primary Education Achievements and Challenges evidence has accumulated suggesting that education, particularly of girls, also results in higher productivity in a variety of other activities that increase household welfare. For example, the schooling of girls alters behavior in ways that, later in the girls' lives, reduce fertility and infant and child mortality rates, improve household health by influencing nutritional and health care practices, and improve their children's school performance. Several of the benefits from the behavioral changes accrue to society: for example, reductions in the incidence of communicable diseases. Particularly important in all this is primary education. Improved Reproductive Health 2.34 Cross-country evidence that increased schooling is positively associated with reduced fertility is strong. Results from the World Fertility Survey in the early 1980s show that the effects were strongest in Latin America and the Middle East. They were also significant in Asia, where the total fertility rate averaged 5.81 for women with no education, 5.89 for those with one to three years of education, 5.66 for those with four to six years of education, and 3.70 for those with seven or more years of education (Cochrane and Farid 1984). While a full primary education had a small impact on fertility (reducing the total fertility rate by 0.15), secondary schooling had- the largest effect (reducing fertility by 2.96). Subbarao and Raney (1995) came to a similar conclusion in a more recent cross national study. 2.35 In India the total fertility rate also falls with increasing education. According to the 1980 Census, total fertility was 5.1 for women with no education, 4.5 for those with some primary education, 4.0 for those with upper primary education, 3.1 for those with secondary education, and 2.1 for those with higher education (India 1993a). A 1989 study in four districts of Gujarat State shows that the number of children ever born to mothers with no education averaged 3.6, with primary education 3.3, with less than full secondary education 3.0 and with secondary education 2.4 (adjusted for age of mothers) (Vissaria 1993). 2.36 These studies again suggest that reductions in fertility are greatest for those women completing a secondary education. But the recently published results of the 1992- 93 National Family Health Survey for all major states, which provides a greater level of detail than previously available, confirm the strong effects of primary schooling. For example, survey data for Uttar Pradesh and Tamil Nadu show a striking relation between illiteracy and both the total fertility rate and the crude birth rate: Uttar Pradesh, with a higher illiteracy rate among females in the households sampled, also has higher total fertility and crude birth rates (table 2-3).  Chapter 2. Economic and Social Outcomes Justify Investing in Primary EducatIon 25 Table 2W3. Illiteracy, Total Fertility Rate, and Crude Birth Rate in Uttar Pradesh and Tamil Nadu, 1992-93 State Illiteracy Total fertility rate Crude birth rate UttarPradesh 69 5.1 36.2 Tamil Nadu 44 2.2 20.7 Source: IIPS 1995. State reports. 2.37 Equally strong is the relationship between both the total and desired fertility rate and the level of women's education within each state (figures 2-2 and 2-3). Figure 2-2. The Total Fertility Rate Falls as Women's Education Level Rises... Total fertility rate 6 54 5 4.2 4 3.8 3 2.8 2.5 2.6' 2.2 2 2 I 0 Illiterate Less than middle Middle complete Secondary and above Women's education level *Uttar Pradesh 3Tamil Nadu Source: IIPS 1995. State reports. Figure 2-3.... So Does the Desired Fertility Rate Desired fertility 4 ate 3.6 3.5 3 2.7 2.5 2.2 2.1 2 24 1.9 2 1.5 0.5 0 Illiterate Less than Middle Secondry middle complete and above Women's educational level |UttarPradesh 0TamilNa&| Source: IIPS 1995. State reports.  26 India: Primary Education Achievements and Challenges 2.38 While these comparisons do not take into account the effects of intervening factors associated with higher levels of education-such as higher income-the relation between education level and both desired and actual fertility rates appears robust. The effect of literacy and some elementary education is particularly evident. But stronger than the effect of successive levels of education for women within a state is the effect of the average level of education in that state. In Uttar Pradesh, while the fertility rate for women with at least a secondary education is half that for illiterate women, it is still higher than the rate for women who have not completed even an elementary education in Tamnil Nadu, where the average education level is higher. 2.39 This finding is in line with Caldwell's (1980) argument, based on data for South India (and elaborated by Hinchliffe 1986), that it is the proportion of the community receiving some education, rather than the average duration of schooling of those who have attended school, that chiefly determines when a society undergoes a fertility transition. Such arguments strongly support the provision of mass primary education. And they call into question the efficiency of the educational structures in the many Indian states that have relatively high secondary enrollment ratios but far less than universal primary and middle school completion rates. 2.40 The determinants of differences in fertility rates are complex and not fully understood (Hobcraft 1993). But one intervening factor is probably women's age at first marriage, which is related to level of education in both Uttar Pradesh and Tainil Nadu (table 2-4). Again, while the age of marriage increases with level of education in both states, in Uttar Pradesh the age of marriage for women who have completed elementary education is lower than that of illiterate women in Tamil Nadu. Table 2-4. Women's Average Age at First Marriage in Uftar Pradesh end Tamil Nadu, 1992-93 (years) Education Level Uttar Pradesh Tamil Nadu Illiterate 14.8 17.5 Less than middle 16.5 18.2 Middle 17.4 19.3 Secondary and above 20.5 22.1 Note: Includes women between twenty-five and twenty-nine years of age. Source: IIPS 1995. State reports. 2.41 Another intervening factor is the use of modem methods of birth control. According to the results of the National Sample Survey of 1986/87, 33.9 percent of rural couples in which the wife had received a full primary education used contraception (including sterilization), compared with 21.3 percent of couples in which the wife was illiterate. For couples in which the wife had completed secondary schooling, the coverage was only marginally higher, at 33.4 percent. More recently, Basu (1992) showed that, among a sample of urban women, 28 percent of those with some education had ever used modem contraceptive methods (excluding sterilization), compared with 8 percent of those  Chapter 2. Economic and Social Outcomes Justify Investing in Primary Education 27 with no education. The National Family Health Surveys provide more information (figure 2-4). Figure 2-4. Women's Use of Birth Control Rises with Education Level Women using any method (percent) 50 47.6 48.5 45 ~~~~~~~~~~~~~~~~~~~40.6 40 36.8 35 30 27.2 27.9 25 20 14.5 15 10 5 0 Illiterate Less than Middle Secondary middle complete and above Women's education level Uttar Pradesh 0Tamil Nadu Source: IIPS 1995. State reports. 2.42 In Uttar Pradesh, women's use of birth control increases dramatically with education level. In Tamil Nadu, however, contraceptive use even among illiterate women is higher than that for all groups in Uttar Pradesh. Once coverage is around 40 percent, education level appears to have no further effect. In both states sterilization (mainly of women) is the main form of birth control but the use of temporary methods of birth control increases significantly with women's level of education. 2.43 When fertility rates fall, private benefits accrue to parents and also to their children (particularly boys, according to Jeejeebhoy 1993): when there are fewer children in a family, they receive higher investments in the form of schooling and parents' time. Lower fertility rates are also generally regarded as economically beneficial to society in countries, such as India, that have high rates of population growth. Benefits result from the effect on public and private savings rates, from higher returns to investments in the quality of human capital, and from women's increased labor force participation. Through these effects, investment in schooling produces benefits to society beyond those captured by individuals. The results of the National Family Health Surveys suggest that these societywide benefits will be greatest when education reaches a particular threshold across the community (rather than a threshold for the individual). Behavioral changes resulting from enough education of enough people influence others with less education.  28 India: Primary Education Achievements and Challenges 2.44 Declining fertility rates also change the required amount and distribution of resources for education. Consider Southeast Asia, where in 1965 primary school enrollments in most countries were significantly higher than would be expected on the basis of per capita income (Behrman and Schneider forthcoming; World Bank 1993). Over the following 25 years the share in the population of children below the age of 15 fell significantly, for instance, from 43 percent to 26 percent in the Republic of Korea and from 46 percent to 34 percent in Thailand. During the 1980s the growth rate of the age group 6- 1 was very low, and in many countries in the region the absolute number in this group fell. 2.45 With declining or slowly growing school-age populations, a country can increase spending to provide more years of education or better-quality education. Or it can reduce spending as a proportion of GDP while still maintaining current enrollment ratios and standards. If Korea's school-age population had been as large a share of the total population in 1988 as Kenya's, the Korean government would have had to spend 5.6 percent of GDP on basic education to achieve its high enrollment ratio, rather than the 2.8 percent it actually spent. Conversely, if Pakistan's school-age population had grown at the low rate that Korea's did over the past 25 or so years, the government could have increased enrollment rates by 50 percent for the same level of spending. These figures suggest the very large financial savings that accrue from reductions in birthrates. 2.46 The total population in India in 1991 was 846 million, of which 303 million (35.8 percent) were in the age group 0-14 (World Bank 1993). Current projections suggest that by 2025, the share of this age group in the population will have fallen to 23.9 percent (World Bank 1993, table 26). But the number in this age group will nevertheless increase (to 326 million), and for the near future the school-age group will continue to grow. In 1990, the age group 6-14 numbered 163 million and is projected to increase to 171 million by 2000 (Annex Ia,b). Further reductions in fertility will be required just to stabilize the size of the elementary school age group. (Variations between states are described below.) Better Child Health 2.47 Schooling also has a strong effect on behavior in health care, particularly child health. Cross-country studies have shown that, even after adjusting for economic factors, mothers' schooling of one to three years is associated with a 20 percent fall in the risk of childhood death and this effect increases with further educational attainiment. 2.48 Analyzing 1981 census data on child mortality by state in India, Bourne and Walker (1991) found a strong relation between mothers' education and various measures of child mortality. Interestingly, they suggest that mothers' education has an even greater effect on the survival of daughters than on that of sons. In northern India mothers with a secondary education experienced 77 per thousand fewer deaths among sons under age five-and 96 per thousand fewer deaths among daughters under five-than mothers who  Chapter 2. Economic and Social Outcomes Justifyi Investing in Primary Education 29 were illiterate. Basu's (1992) study of urban women suggests child mortality rates of 82 for mothers with no schooling and 34 for those with some schooling. Again, the determinants of these associations are not clear. But Dasgupta's (1990) study of 1,800 women in the Punjab in 1984 led her to conclude that schooling improves a mother's basic child care skills, domestic management of ill health, efforts at preventive care, and use of modem medical services. 2.49 The National Sample Survey data for 1986-87 show that the share of rural mothers registered for postnatal care increased with schooling level, from 9.1 percent for illiterates to 20.5 percent for primary graduates to 23.7 percent for those with secondary schooling and above. Immunization rates (triple antigen) also increased with mothers' schooling level from 10.6 percent to 28.1 percent to 34.9 percent. Basu's study corroborates these data-22.7 percent of children of urban mothers with some schooling were vaccinated, compared with just 7 percent for those with none. The 1992-93 National Family Health Survey again provides the most complete and recent evidence on these issues (figures 2-5 and 2-6). Figure 2-5. Mothers' Education Has a Dramatic Effect on Infant Mortality Infant mortality rate 140 127.4 120 100 89.1 83 ii 80 72.7 61.6 60 52.1 54.6 40 3. 20 Illiterate Less than Middle Secondary middle complete and above Mother's education level |Uttar Pradesh 0 Tamil Nadu Source: IIPS 1995. State reports. 2.50 The pattern of results is similar to that for changes in fertility. Within states infant and child mortality rates are lower for mothers with higher levels of education. And at each level of mothers' education infant and child mortality rates are lower in Tamnil Nadu than in Uttar Pradesh, again suggesting a general threshold effect of schooling.I0 '