India has one of the highest school-going populations in the world. Lately, India has made some development in education as the national literacy rate crosses 70%. However, the reality is that India is facing a severe shortage of skilled human resources. The reason for this is extremely low quality of primary, secondary, and college-level education. Privatization of the educational system can help improve the quality of education and reduce costs. But to ensure access to education for all, the government must design an effective transfer-payment system.
A recent study by Pratham finds that only 53.4% children in Standard V can read a Standard II level text, and that nationally there has been a decline in the children's ability to do basic math! Another study by NASSCOM finds that 75% of technical graduates and more than 85% of general graduates are unemployable! This alarming situation is partly due to the lack of availability of skilled teachers and partly because of poor physical infrastructure. The deteriorating trend in the educational system continues because of the lethargy and mismanagement of the public schooling system which accounts for 80% of all schools .
Despite many efforts to revitalize the public system and make it more effective, the fact is that the quality of public education is falling, and, as a result, enrollment in private schools, colleges, and universities, is on the rise. A general realization is that the return on investment in the private schools/colleges is much higher as compared to the Government schools and colleges, with some notable exceptions.
The reason this is possible is the difference in approach between the two. The public educational system, following a top-down approach, is accountable to the Government machinery and bureaucracy. So even if the teachers in public schools don't deliver a good quality education, they don't suffer themselves because their jobs are secure. However, in the private schools, run through a bottom-up approach, the schools/colleges and the teachers are directly accountable to the respective parents. If they fail to deliver an expected quality of education, the parents would react, they might pull out the students from the school and the teachers would lose their jobs the next year. Consequently, their performance affects the schools' income and reputation.
Thus, on average, at a fraction of the expenditure on a government school or college, a private institution can provide a better quality of education than the public institutions.
So privatization of the primary and secondary educational systems, I think, will help ameliorate the situation by improving the quality of education while reducing the cost. But given India's poverty and inequality status (roughly 80% of the population lives below the national poverty line), only a few parents will be able to afford the cost of private education. So one can't advocate for a blanket privatization of the entire educational system. But given the present scenario, an alternative system which provides a better quality education while at the same time not burdening the poor parents needs to be put in place. Now the question is: What this system should look like?
One way is to privatize all the schools and maybe the colleges, too. The government should take care of the educational expenditure by disbursing the parents the cost through transfer payments rather than funding the schools and colleges directly. This way, private agencies will run the institutions, and the parents will be able to afford the cost. Since the parents will have control over the money, they can decide whether or not to send their wards to a certain school or college. The advantage of the bottom up approach remains intact. The government must develop a policy framework so that a higher efficiency can be achieved without losing the poorer section of the population.
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