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Of schools, money, taxes, statues and handbags

Of schools, money, taxes, statues and handbags
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First Published: Tue, Oct 06 2009. 10 17 PM IST

Updated: Tue, Oct 06 2009. 10 17 PM IST
Why do we send our kids to school? Silly question. But let’s examine it. The education route that takes one out of poverty and backwardness is well signposted. Those outside the comfortable dome of a base level of income and lifestyle look at education as the entry ticket. Therefore the almost fanatical focus on schooling of upwardly mobile urban informal sector workers, usually first-generation migrants, to put their kids through school. They spend on getting tuitions, on books on anything that will get the child into the next level of social and economic life. For them the result of success is just across the lane, in the upmarket residential enclaves they service.
But for those who are inside, why do we send our kids to school? I know, to get them out of our hair. But more than that? A working paper from the National Bureau of Economic Research (NBER) by Philip Oreopoulos and Kjell G. Salvanes http://papers.nber.org/papers/W15339 says that schools impact not just future wealth prospects, but also the happiness quotient. Titled How Large are Returns to Schooling? Hint: Money Isn’t Everything, the paper concludes that schooling is more than an investment into labour with the aim of a lifetime of wealth. The whole studying, homework and exam routine generates non-money-related returns such as “more opportunities for self-accomplishment, social interaction and independence”. And we may not believe it, but it does improve our chances of getting a good spouse. “Better health, happier marriages and more successful children. It encourages patience and long-term thinking. To enjoy a good book and to manage the money they earned by getting so erudite in the first place.” Wish I knew all this as I battled by my schoolgirl years!
With urban mass affluence still new and not a full generation old, we still look at schools with the old view. It is not a choice but as much a part of the process of having a kid as the first BCG shot. But change is already visible to the old order, even as the class X exam is junked for a less stressful system. The next few years will see an increasing push towards “alternative” schools, home schooling and an education system that reduces pressure on the kids. What we want out of our schools has already begun to change policy. And we have the louder voices—in government, in media and policy. But will that be what is good for the whole country? Nachiket Mor, president of ICICI Foundation that works in the area of education, health and financial inclusion, has a contrarian point of view. He says that whereas the new rule of shedding the threshold exam works just fine for the urban affluent, it would be a disaster for those still at stage one of the equation, or outside the dome of wealth and opportunity where education is still the only road to opportunity. Without effective regular testing, the non-urban school system is producing Xth pass illiterates, who are unable to either read or write in any effective manner. The Annual Status of Education Report (Rural) 2008 (ASER), published by the NGO Pratham, reveals that about 44% of students in class V cannot read text prescribed for class II and around 60% are unable to perform simple divisions. Mor’s solution (described fully in a paper at http://bit.ly/SchoolQuality is a third-party-conducted national test for literacy and numeracy that will simply give an output matrix every year to every school. This testing, he says, will simply make performance measurable on a regular basis. One will not have to wait till class XII to find out if the child is literate or not. So, where parents like me may opt out of the cram-exam rat race for our children, this strategy may not work for somebody who is yet excluded in every sense of the word.
Behind the news
When is the last time your friend gifted you a car? Or a diamond set? Or a 2 BHK flat in south Mumbai? Um. Never. Right? Then why are you worried about the new tax on gifts in kind? The cross hairs of this tax are not for people like us, but rather people like them. They who collect crores in gifts, from “well-wishers” and “friends”. And then use them to buy iffy handbags. They sometimes also build statues. Of themselves. With the said handbags. If you were worried about the new “draconian” tax that would add the value of gifts in kind of Rs50,000 and more to your income, unwrinkle the forehead. Gifts in kind from those who legitimately have a need to give a gift without material strings (the emotional ones can’t be taxed. Ha!) such as spouse, sibling, your own or that of the spouse, uncles, aunts—the whole family tree can go on showering the goodies unfettered. Read the new tax code carefully and you see that it is actually aimed at those who get away with either extortion or bribes in kind and call them “gifts”. So, carry on gifting in the festive season. Unless, of course, you carry a handbag. And build statues of yourself. With the said handbag intact.
Monika Halan works in the area of financial literacy and financial intermediation policy. She is consulting editor with Mint and adviser PFRDA and can be reached at expenseaccount@livemint.com
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First Published: Tue, Oct 06 2009. 10 17 PM IST