Why education is underprovided in India

Gary Becker, a Chicago economist, has an opinion piece in the Business Week of Feb 16th titled What India can do to catch up with China.

Unsurprisingly, he makes the point that education is the primary requirement for India to lift itself out of grinding poverty.

To compete effectively in world markets, India needs to expand its secondary school education. It also has to vastly improve its health services. There is abundant evidence that returns on such investments in India’s human capital would be high.

Economists are deservedly known to disagree on many issues. But on one matter there is consensus: the absolute necessity of an educated population for an economy to develop. This fact has been known for ages by almost all who have ever pondered the question of economic development and growth. The puzzle therefore is to explain why education is broadly neglected in India. What is it about education that makes it a scarce good in any poor economy? I believe that there are two factors that explain this unfortunate phenomenon. First, education is a public good. And second, the socially optimal provisioning of public goods require collective action. India is particularly prone to a failure of collective action, which in turn leads to an under-provisioning of public goods, including the most fundamental of public goods — education.

It is important to distinguish between public goods and private goods. To start off, public goods are not goods that are provided by the public sector, although the public sector is often required to provide public goods. What makes a good a public good is not who provides it but rather the nature of the good itself. Public goods are best defined as goods that are not private goods. And private goods are those goods that are rival, excludable and do not have externalities in consumption. By contrast, public goods are nonrival, non-excludable, and have positive consumption externalities. These are terms that need to be defined precisely so that we can reason further why a collective action problem leads to an under-educated population. Only by fully understanding the causes of the failure can be begin to find a solution to the problem. I hope to investigate this more in the days to come.

5 thoughts on “Why education is underprovided in India

  1. Venkat Ramanan Thursday February 26, 2004 / 12:38 pm

    Good article, again focussing on the NEED of the hour, Improving the Education Scene in India. if not now, then we may have to repent again in the near future for having left behind in the Universal Race! Children in schools “hate” to go to school given the strict conditions in schools and over-burdening of them with loads of work, heavy subjects to read etc. Are Indian Educational Policy Framers real NUTS? (sorry to ask this) I ended up remembering a lot of what i read just for the sake of exams but not knowledge, but i suffer now and i also know this is the case with many of my fellow Indians… Teachers who used to be role models, are being feared by students. The Education System in India has to be completely revamped. students should be lured to “learn”, not “study or read” in schools. a ban on exams is not enough, because exams stimulate students to prepare for facing any tight corner in future, but students should be equipped to face the exams very boldly. the teaching methodology has to be revamped, to the like of US. we inherit a lot of things (mostly unwanted) from the west, but fail to follow a few of their marvellous systems, like education, technology reseacrh etc. Let us wake up now and do something or will be just graduate factories, churning out loads of graduates with doubtable qualities. I wish we see a better India in the future….


  2. himanshu Wednesday February 21, 2007 / 7:00 pm

    india is failed after independent!!!!!!!


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