The United Progressive Alliance’s deficit hasn’t been only a fiscal one: After more than 100 days, there has been a gap between lofty campaign promises and what it has actually delivered.

But in one area in particular, it has gotten the ball rolling quickly: education reform. Union human resource development minister Kapil Sibal deserves praise for making actual, substantive changes to India’s education system.

Last week, Sibal unrolled a programme to kill class X exams, effectively shifting the focus of learning from exam preparation to regular, daily learning. This came on the heels of the Right to Education Bill.

While these reforms are well-meaning, the limiting factor in changing India’s culture of education will always be its educators. Quality teaching should figure central in any meaningful education reform plan, and Sibal must envision a programme to reward good teaching.

In a recent National Bureau of Economic Research working paper, “Teacher Performance Pay: Experimental Evidence from India”, Karthik Muralidharan and Venkatesh Sundararaman, economists from the University of California, San Diego, and the World Bank, respectively, find that linking teachers’ pay with their performance had significantly positive effects on student testing outcomes in a study in Andhra Pradesh.

The authors find some striking results: Individual bonus programmes for specific teachers—rather than for entire schools—exhibit the greatest effect on student performance outcomes. And there are significant spillover effects: students with an incentivized teacher in one subject also perform well in other subjects where their teachers aren’t incentivized.

This should all hardly come as a surprise, but is worth stressing: Educators, like other professionals, respond to incentives.

The key takeaway from the authors’ study is this: Spending money on performance-based teacher pay is a more cost effective way of increasing students’ test scores than standard education interventions such as money spent on classroom materials. If the purpose of an education budget is to educate our youth, no other spending should take priority over quality instruction.

Sibal has focused on curricular reform, which is important. But to reform India’s education system, he must consider incentivizing teacher pay to encourage the highest quality teaching.

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