ACKNOWLEDGEMENTS

This project has given me immense personal satisfaction and helped me understand

my country better. I profusely thank my Macroeconomics professor Dr. N. Kubendran

for giving us this opportunity to do (what I think is) a wonderful project. I thank the

Economics department and BITS Pilani for this wonderful framework which has made

this project possible.

I am thankful to my family and friends for the support that they have given to me in the

completion of this project.

TABLE OF CONTENTS

1. Introduction ............................................................................................................... 1

2. Significance Of Study ............................................................................................... 2

3. Research Questions ................................................................................................. 3

4. Research Objectives ................................................................................................ 3

5. Period Of Study ........................................................................................................ 3

6. Tools Of Analysis ..................................................................................................... 4

7. Limitations Of The Study .......................................................................................... 4

8. Chapter Plan ............................................................................................................ 4

9. Literature Review ..................................................................................................... 5

10. Educational Inequality ........................................................................................... 7

11. Regional Divide In Education .............................................................................. 10

12. Impact Of Public Policy ....................................................................................... 12

Government Spending .............................................................................................. 13

Literacy Rates ............................................................................................................ 14

Inequality Across States ............................................................................................ 15

13. Conclusions ........................................................................................................ 16

14. References .......................................................................................................... 17

1

1. INTRODUCTION

India is diverse. Cultures, backgrounds, languages, the very way in which people live

vary more across regions India than they do across countries in many parts of the

world. States in India have started off at different levels of development and developed

at different rates due to various reasons. Public policy has, since independence, laid

huge importance to education, one of the most important indicators of human

development. Since 1976, when education was rightly placed on the concurrent list (it

was exclusively the States’ responsibility before), the Indian Governments have actively

tried to tackle the illiteracy problem in the country.

However, due to various reasons, different states have had different rates of success in

this field, and there appears to be a small divide between the states of India when it

comes to education. This project aims to emphasise this divide, investigate the

presence of a regional divide in literacy rates in India and study the impact of public

policy on the divide and on overall literacy rates.

This project considers data from various sources, and using the Lorenz Curve and Gini

Coefficient tools, tries to show the inequality prevalent across states in India. Also, the

trend for Gini Coefficient over time is shown. The concentration of literate individuals in

different parts of the country is examined. Finally, the impact of Fiscal policy on

education and educational inequality in India is examined.

2

2. SIGNIFICANCE OF STUDY

As India ploughs on at high rates of growth, keeping a check on inequality is of

foremost importance. Our forefathers stressed this hard, and our country and

administrators has always been mindful of the inequality. There are many studies on

Economic Inequality in the country. However, educational inequality is a topic barely

touched upon. Particularly, cross-state inequalities are rarely measured. With diversity

comes disparity; and poverty in one of the most important indicators of human

development, education, is not desirable. Thus, this study aims to investigate the cross

state educational inequality and concentration of literates in various regions of the

country. More importantly, impact of public policy on the above factors is studied.

3

3. RESEARCH QUESTIONS

The report aims to answer the following questions:

1. What is the cross state educational inequality (using Gini coefficients) in India

over time? Is there a regional divide in literacy rates in India?

2. How has public policy impacted the literacy rates and educational inequality in

India?

4. RESEARCH OBJECTIVES

The objectives of the report are:

1. To find cross state educational inequality in India using Lorenz Curves and Gini

Coefficients and investigate the presence of a regional divide in literacy rates in India

2. To study the impact of public policy on the literacy rates and educational inequality in

India and to make policy suggestions based on the same.

5. PERIOD OF STUDY

The period of study has been limited to the years 1991-2011 primarily due to the

unavailability of data for the other periods. Also, 1991, 2001 and 2011 are the years

when the Census provides substantial, critical data.

4

6. TOOLS OF ANALYSIS

The study uses secondary data obtained from a host of websites, data banks and

studies. Analysis and graphing of the data has been done on Microsoft Excel. Lorenz

Curves, Gini coefficients, etc. have been found for the data sets considered.

7. LIMITATIONS OF THE STUDY

1. The study is limited due to the availability of data. It only considers the data for

years 1991-2011. Also, in some cases, the only data available is for the years of

the census in this period - 1991, 2001 and 2011.

2. The study employs Gini Coefficients as an indicator of inequality. The gini

coefficients, though intuitive, have the following disadvantages:

a. it is not additive across groups, i.e. the total Gini of a society is not equal

to the sum of the Ginis for its sub-groups

b. Cannot explain some exceptional cases where income inequality could

be different but the Gini coefficients could be the same.

3. Data obtained from different sources, sometimes for the same variable, for

different years (due to unavailability of data). Thus, consistency issues could

arise.

8. CHAPTER PLAN

The report consists of 3 main chapters discussing the following:

Educational inequality across states

Concentration of literacy rates among various regions of India

Impact of public policy on the above and policy suggestions.

5

9. LITERATURE REVIEW

There are very few studies with respect to the topic chosen. However, the following

related studies have been reviewed:

De, A., & Endow, T. (2008). Public Expenditure on Education in India: Recent Trends

and Outcomes – The paper examines the progress made over the years in financing

education by the governments by central, state and local governments. The paper

examines the level and composition of public expenditure on education and the

mechanisms of resource sharing, allocation and utilization. The paper utilises

secondary data from various sources and exhaustively analyses the trends in

government expenditure, the various public policies that have been implimented which

have led to the aforesaid expenditure and the share of this expenditure between the

central and state governments over the years. The paper finds that the though the

expenditure in real terms increased in 1990s it has remained approximately constant

since then. The central government has been playing an increasingly important role in

education in India since the 1976.

Motiram, S., & Sarma, N. (2011, June). Polarization, Inequality and Growth: The Indian

Experience – The paper analyzes polarization in India using consumption expenditure

data. Polarization is a different from inequality and has its own advantages. The paper

shows that the country has become increasingly polarised since the 1990s. This is in

contrast with the earlier periods when the polarisation was decreasing. The paper

suggests that the reforms and liberalisation processes since 1990s have accentuated

the disparities in the country with respect to caste, rural urban, state, region, etc.

However, it does say that the inequality has shown different trends in some cases.

6

Gehring, K., & Kulkarni, K. G. (2006, June). Economic Growth and Income Inequality in

India – This working paper tries to see the impact of the exponential growth of India’s

economy over time in the face of many obstacles such as widespread poverty, limited

natural resources, and a large population. The paper studies economic inequality over

time in India. It employs the Gini coefficient as a tool for studying the inequality over

time. It examines the role of the government in maintaining low levels of inequality.

Also, the paper pays particular attention to the role of the software industry in India’s

growth and whether the industry has impacted inequality in India. The paper finds that

the inequality in India has been low over time, disobeying Kuznet’s inverted U

hypothesis. The paper says that since the country has reformed gradually, the sectors

such as software sectors were able to bloom without any substantial effect on the

general public as a whole.

Thomas, V., Wang, Y., & Fan, X. (2000, December 15). Measuring Education

Inequality: Gini Coefficients of Education – The paper uses education Gini index to

measure inequality in educational attainment. The paper shows us two methods – a

direct and indirect method to calculate the Gini index to measure inequality in

educational attainment. The direct method employs the mean of of all possible pairs of

differences between educational attainment of people. The indirect method involves

finding the Lorenz curves, and finding the Gini coefficients using that. The findings of

the paper indicate that educational inequality has been declining for most countries.

Also, educational inequality is negatively correlated to average years of schooling. The

paper has found that gender gaps are associated with high educational inequality.

7

10. EDUCATIONAL INEQUALITY

The educational inequality in the country was calculated using the literacy rate data of

all the states from the 1991, 2001 and 2011 census data. The Lorenz curves were

plotted for the three years using the data from Table 4 (Appendix). The equality line

represents the egalitarian concept where all the states are equal in their education.

From data, Kerala has continually had the best literacy rates in the country while Bihar

has continually had the worst literacy rates.

Figure 1 – Lorenz Curve 1991

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8

Figure 2 – Lorenz Curve 1992

Figure 3 – Lorenz Curve – 2011

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9

Also, the trends of the Gini Coefficients over the years is as shown:

Figure 4 – Gini Coefficient trends

The study thus shows us that the educational inequality across states has been

decreasing over the years, particularly after 2001, and in 2011, the Gini coefficient

comes down to 0.06. This fall has been attributed to the various Central government

plans which have been implemented, particularly the Sarva Shiksha Abhiyan and the

Mid-day meal scheme.

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Gini Coefficient

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10

11. REGIONAL DIVIDE IN EDUCATION

To check the presence of a regional divide in literacy rates in the country, the four

administrative regions of the country,

The Northern Zonal Council, comprising the States of Haryana, Himachal Pradesh,

Jammu & Kashmir, Punjab, Rajasthan, National Capital Territory of Delhi and Union

Territory of Chandigarh;

The North-Eastern Council (NEC), comprising Assam Valley, Arunachal Pradesh,

Manipur, Tripura, Mizoram, Meghalaya and Nagaland;

The Central Zonal Council, comprising the States of Chhattisgarh, Uttarakhand, Uttar

Pradesh and Madhya Pradesh;

The Eastern Zonal Council, comprising the States of Bihar, Jharkhand, Orissa, Sikkim

and West Bengal;

The Western Zonal Council, comprising the States of Goa, Gujarat, Maharashtra and

the Union Territories of Daman & Diu and Dadra & Nagar Haveli; and

The Southern Zonal Council, comprising the States of Andhra Pradesh, Karnataka,

Kerala, Tamil Nadu and the Union Territory of Pondicherry.

(Part-III of the States Reorganisation Act, 1956)

The state wise literacy rate data for 2011 for these states were grouped according to

the respective regions:

11

Figure 5 - Mean Literacy (Population Weighted)

The study shows that there is very little difference between the regions in terms of

literacy rates. However, the Eastern states, particularly Bihar, show trends of low

literacy rates, and the Western states show a high literacy rate. Other studies have

shown that there is an East-West divide in the literacy rates in India (rather than a North

South divide). (Asadullah & Yalonetzky, 2010)

64

66

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North NE Central Eastern Western Southern

Lite

racy

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%)

Region

Mean Literacy (Population Weighted)

12

12. IMPACT OF PUBLIC POLICY

Public policy has changed drastically in favour of education since 1976 when education

was put on the concurrent list. The Center has been playing an increasingly important

role in share of expenditure on education. Primarily, the central government of India

formulated the National Policy on Education (NPE) in 1968 and in 1986 and also

reinforced the Programme of Action (POA) in 1992.

Sarva Shiksha Abhiyan (SSA) is the Government of India's flagship programme for

achievement of Universalization of Elementary Education (UEE), making free

and compulsory Education to the Children of 6-14 years age group, a Fundamental

Right.

The Right of Children to Free and Compulsory Education Act or Right to Education Act

(RTE), which was passed by the Indian parliament on 4 August 2009, describes the

modalities of the importance of free and compulsory education for children between 6

and 14 in India.

The Mid day meal scheme was started in the 1960s in India. However, the policy only

became effective after the landmark Supreme Court order in 2001, after which most

states are implementing the scheme.

The above policies are the most important of the government policies aimed at

complete literacy.

13

Government Spending

The government spending from all departments have been plotted:

Figure 6 - Expenditure on Education

The above graph shows the marked increase in spending on education since the year

2000. This is reflected correspondingly in the literacy rates.

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Expenditure on Education

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14

Literacy rates

The literacy rates over the years have been studied. The following trend lines were

observed.

Figure 7 - Literacy Rate

As is shown, there is a marked increase in the literacy rate. This shows that the

schemes implemented by the government have been tremendously successful in

increasing the literacy rates across the country.

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Literacy Rate

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15

Inequality across states

The following figure is Figure 4 from the previous analysis.

The Right to Education has successfully decreased the inequality across states. The

Gini Coefficient has fallen from 0.11 in 1991 to 0.6 in 2011. The marked improvement is

due to the education for all philosophy taken up by the central government.

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16

13. CONCLUSIONS

The following conclusions were reached according to the above analyses:

1. The Lorenz Curves for education were plotted for the years 1991, 2001 and 2011

and the Gini coefficients were found to be 0.11, 0.10 and 0.06 respectively. Also,

Eastern states were found to have the least literacy rate for the year 2011 while

Western states were found to have the highest.

2. It was found that the public policies implemented in the 1990s and 2000s have been

very effective and the literacy rates have spiked since 2001. Also, the spending on

education has been able to bring about equality in education across states and the Gini

coefficient has seen a huge dip since 2001.

Based on the above, simple, conclusions, it could be suggested that the Government

continue its spending patterns on the Sarva Shiksha Abhiyan and the Mid-Day Meal

scheme, its flagship programmes. Increased spending has had positive impacts on the

literacy rates and we can expect it to continue having such an impact.

17

14. REFERENCES

1. Analysis of Budgeted Expenditure on Education, Ministry of HRD. (n.d.).

2. Asadullah, M. N., & Yalonetzky, G. (2010). Inequality of Educational Opportunity

in India.

3. De, A., & Endow, T. (2008). Public Expenditure on Education in India: Recent

Trends and Outcomes.

4. Economic Survey, 2011-12. (n.d.).

5. Gehring, K., & Kulkarni, K. G. (2006, June). Economic Growth and Income

Inequality in India.

6. Motiram, S., & Sarma, N. (2011, June). Polarization, Inequality and Growth: The

Indian Experience.

7. Primary Census Abstract : Census of India 2001. (n.d.).

8. Registrar General & Census Commissioner of India for Population 1991 data.

(n.d.).

9. Thomas, V., Wang, Y., & Fan, X. (2000, December 15). Measuring Education

Inequality: Gini Coefficients of Education.

18

15. APPENDIX

Literacy Rate Population Literates

Mean Literacy, Population weighted

North Haryana 76.64 21144564 16205194

Himachal Pradesh 83.78 6077900 5092064.6 Jammu & Kashmir 68.74 10143700 6972779.4 Punjab 76.68 24358999 18678480 Rajasthan 67.06 56507188 37893720 Delhi 86.34 13850507 11958528

132082858 96800766 73.28791

NE Arunachal Pradesh 66.95 1097968 735089.58

Assam 73.18 26655528 19506515 Manipur 79.85 2166788 1730180.2 Meghalaya 75.48 2318822 1750246.8 Mizoram 91.58 888573 813755.15 Nagaland 80.11 1990036 1594217.8 Tripura 87.75 3199203 2807300.6

38316918 28937306 75.52096

Central Chattisgarh 71.04 20833803 14800334

Uttarakhand 79.63 8489349 6760068.6 Uttar Pradesh 69.72 166197921 115873191 Madhya Pradesh 70.63 60348023 42623809

255869096 180057401 70.37091

Eastern Bihar 63.82 82998509 52969648

Jharkhand 67.63 26945829 18223464 Orissa 73.45 36804660 27033023 Sikkim 82.2 540851 444579.52 West Bengal 77.08 80176197 61799813

227466046 160470528 70.54702

Western Goa 87.4 1347668 1177861.8

Gujarat 79.31 50671017 40187184 Maharashtra 82.91 96878627 80322070 Daman and Diu 87.07 158204 137748.22 Dadra and Nagar

Haveli 77.65 220490 171210.49

19

149276006 121996074 81.72517

Southern Andhra Pradesh 67.66 76210007 51563691

Karnataka 75.6 52850562 39955025 Kerala 93.91 31841374 29902234 Tamil Nadu 80.33 62405679 50130482

223307622 171551432 76.82292

Table 1 – Region wise literacy rates

Source: Economic Survey, 2011-12, Office of the Registrar General : 2011, Ministry of

Home Affairs

Period Expenditure on Education (Curr Prices) As % of GDP

1990-91 20491 4.01

1991-92 22394 3.8

1992-93 25030 3.72

1993-94 28280 3.62

1994-95 32606 3.56

1995-96 38178 3.56

1996-97 43896 3.53

1997-98 48552 3.49

1998-99 61579 3.85

1999-00 74816.09 4.19

2000-01 82486.48 4.28

2001-02 79865.71 3.81

2002-03 85507.33 3.78

2003-04 89079.25 3.51

2004-05 96694.1 3.26

2005-06 113228.71 3.34

2006-07 137383.99 3.48

2007-08 155797.27 3.4

2008-09 189068.84 3.56

2009-10 242504.82 3.98

2010-11 272137.44 3.8 Table 2 – Expenditure on education 1990-2011

Source: Analysis of Budgeted Expenditure on Education, Ministry of HRD

20

Year Literacy Rate

1991 54.55247428

2001 54.50925212

2011 73.69244573 Table 3 – Literacy rates over the years

State C Pop C Lit

0 0

Bihar 8.577524 7.428409

Arunachal Pradesh 8.691772 7.532203

Rajasthan 14.36202 12.69212

Karnataka 19.41334 17.32788

Andhra Pradesh 26.40937 23.75122

Jharkhand 29.13342 26.2922

Uttar Pradesh 45.62512 41.89491

Maharashtra 54.91066 50.79456

Chhattisgarh 57.02108 52.82902

Assam 59.59664 55.38668

Orissa 63.06281 58.84144

Mizoram 63.15296 58.93378

Kerala 65.91184 61.76407

Himachal Pradesh 66.4784 62.35329

Punjab 68.76764 64.73534

West Bengal 76.31583 72.63051

Dadra & Nagar Haveli 76.34416 72.66037

Haryana 78.43912 74.91502

Uttarakhand 79.27509 75.81834

Meghalaya 79.52001 76.08373

NCT of Delhi 80.90435 77.58863

Tamil Nadu 86.86529 84.08648

Sikkim 86.91551 84.14249

Manipur 87.14041 84.39552

Jammu & Kashmir 88.17735 85.5744

Andaman & Nicobar Islands 88.20874 85.61116

Goa 88.32919 85.75228

Chandigarh 88.41634 85.8545

Puducherry 88.51918 85.97527

Daman & Diu 88.53925 85.99899

Gujarat 93.52883 91.91669

Tripura 93.83218 92.27789

Nagaland 93.99584 92.48128

Madhya Pradesh 99.99468 99.99322

21

Lakshadweep 100 100 Table 4 – Table used to make the Lorenz Curve - 2011

Source: Primary Census Abstract : Census of India 2001, Registrar General & Census

Commissioner of India for Population 1991 data, 2011 Census, Other sources for

literacy rates

Year Gini Coefficient

1991 0.112473514

2001 0.098087831

2011 0.055710156 Table 5 – Gini Coefficients