The casual budget observer could interpret the last decade as a bonanza for elementary education funding in India. Elementary education now constitutes 44% of the government’s education budget with allocations having risen in excess of fivefold since the launch of the Sarva Shiksha Abhiyan (SSA) in 2001. But closer scrutiny shows a sobering truth—that these large allocations have been spent poorly. Countrywide expenditure trends show that more than two-thirds of SSA funds are spent in the last few months of the fiscal year. Worse still, significant portions of the funds never get spent. In 2008-09, SSA started the fiscal year with an opening balance of Rs8,713 crore. At the end of the year, only 70% of the available funds had been spent.
The problem begins at the school level. The latest Annual Status of Education Report 2009 undertook, as part of the survey, PAISA (Planning, Allocation and Expenditure: Institutions Studies in Accountability)—the first ever countrywide analysis of school-level finances at the elementary level in rural India. PAISA tracked receipts and expenditures of SSA school grants—allocations meant for infrastructure and maintenance. Only 75% schools reported receiving their grants in 2008-09. This year, between October and December, when the survey was conducted, at least 50% schools had not received any money—a clear indication that funds flow slowly through the system and money arrives towards the end of the year.
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Delays are a consequence of many factors ranging from administrative complexity to administrative lethargy. Crucially, they are because of lack of transparency. Like most government programmes, regular information of fund flows is rarely collected and almost never disseminated. PAISA data indicates that in many schools even the headmaster is not aware of fund flow details. When quizzed about details on grant components, when they should arrive and what they ought to be spent on, most respondents did not have much information. And most often, even if the headmaster had this information, parents were unaware of these details.
Delays and lapses have important ramifications on the quality and effectiveness of expenditures. Unpredictable fund flows result in a mismatch between needs and expenditures. So, if a school needs funds to fix a leaky roof before the monsoon, but the money only arrives in December, the specific requirement remains unfulfilled. Late arrival of funds also results in schools rushing to incur expenditures to meet reporting deadlines without giving adequate consideration to specific needs and plans. Consequently, funds get spent poorly and often remain unspent.
All this creates perverse incentive structures that make accountability almost impossible. Precisely, to create local accountability, the SSA guidelines mandate the creation of education committees (at the school or panchayat level) tasked with monitoring expenditures and making plans. These plans are, in turn, aggregated at the district level and meant to be the basis of annual allocations and expenditures. But when funds don’t arrive or when they arrive so late they can’t be spent to meet the needs, plans become irrelevant, creating disincentives for meaningful citizen participation. So while de jure planning for SSA expenditures is meant to be bottom-up, de facto local level plans are rarely made and planning is done at the district level through an administrative process.
But even at the district, planning is weak. Planners need to have information about allocations, expenditures, learning needs, all of which require regular tracking and data collection. And information sources are the weakest link. As a result, plans are made without taking into consideration financial performance and capacities, and, as a result, inefficiencies from one year simply transfer on to the next fiscal.
Amid this bleak picture, there is some room for optimism. For one thing, there are significant differences across states. Rajasthan and Chhattisgarh have been consistently good spenders when compared with other states. Bihar, a traditionally poor spender, in 2008 launched a Rs30 crore campaign for schools to buy text books over a two-month period. With political weight behind the programme, funds travelled through the system at lightning speed and books were bought within two months. Clearly, improvements are possible and lessons can be drawn from their experience for other states. Moreover, despite large unspent balances, education infrastructure has improved with SSA. At least 200,000 new schools have been built since 2002-03, teachers have been hired and, consequently, enrolment’s increased—net enrolment across India is at 89%.
With the imminent operationalization of the Right to Education Act, the elementary education landscape is set to?grow manifold—the Act’s implementation is estimated to cost the government Rs40,000 crore in five years. To set the ball rolling, this year’s Budget is expected to see a significant rise in SSA allocations. If these increases are to yield results, steps must be taken to ensure that the mistakes are not repeated. Crucially, the delivery mechanism needs to ensure transparency and predictability in fund flows. Transparency will strengthen the ability of school management committees to monitor expenditures, make plans and demand accountability. Only then will we be equipped to deal with the real challenge—that of ensuring quality learning.
Yamini Aiyar is a senior research fellow and director of the Accountability Initiative of the Centre for Policy Research.
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