Per-Student Expenditure In Most States Way Below The Desired Amount

A recent report by the National Institute of Fiscal Policy and Research (NIFPR) released in July 2017 reveals that economically backward states like Bihar, Jharkhand and Odisha spend less than half of the desired requirement for each student at the elementary level on an annual basis, when compared to more prosperous states like Tamil Nadu and Uttarakhand.

The NIFPR report estimates requirements for twelve States using the set of norms defined in the RTE Act and other official documents. In the process of doing so, the report created a ‘normative’ frame of reference essential to judge financial adequacy.

There is clear evidence of substantial gaps and under-spending in per student resource requirements (estimates are in a reasonable range). “The obvious implication of these finding is the need for higher allocations with due consideration for equity aspect as the deficit is clearly concentrated in the poorer States of India”, the report reads.

The report sets out to calculate the gap between actual expenditures and ‘ideal’ expenditures on students at the elementary level to provide education for all and achieve the spirit of a right to free and compulsory education.

By calculating this gap, the report concludes that states like Bihar spend only 31 per cent of their what they ought to spend on each student per year. Similarly, Jharkhand and Odisha are spending 44 per cent of the funds they ought to divert to students. This deficit persists in most states such as Madhya Pradesh, which spends a little more than a half of its requirements at 52 per cent.

States with above average per student expenditure are Uttar Pradesh at 78 per cent and Uttarakhand at 91 per cent, yet the prize goes to Tamil Nadu which spends a whopping 108 per cent of its total requirement on students on an annual basis.

Uttar Pradesh performs better than expected, and this could be because of the relatively lower gap between actual and required expenditure due to the prevalence of children in the private unaided sector, which reduces public investment requirements. Another likely reason for the number is the higher pay scale for regular teachers in the state, which conflates the numbers.

The contour map represents the comparison between required and actual expenditure across States.

It can be seen that ‘per student actual expenditure’ lies well within the boundaries of per student requirements. The larger the distance between the red and blue lines, greater the gap. The green line shows the recurrent cost per student in Kendriya Vidyalayas (KVs) in the year 2015-16. At Rs 32,698 expenditure per student in 2015-16, the green line lies outside the other two lines by a large margin , except for Uttarakhand.

Several researchers, according to the report, have noted that the Sarva Shiksha Abhyaan (SSA) treats the better-off States and the backward States equally except the north-eastern or special category States, and all States are to provide equal matching shares under the scheme.

Comparing the per-student expenditure, Geetha Rani notes, “Himachal Pradesh reported the highest per student expenditure of Rs 18,509 and Bihar spent Rs 2,684 in 2010-11. The increase in per-student cost additionally on account of SSA was Rs 2,668 in Himachal Pradesh, while the amount itself was the per student cost in Bihar! The additional per student cost that Bihar could reap was Rs 1,872.

The report concludes by saying that the issue of equalisation needs immediate attention within SSA as well as in the overall framework of Centre-State finances. And careful strategic planning is needed to prioritise public expenditure on elementary education and giving due consideration to equalisation.