STRUCTURAL POLICY COUNTRY NOTES

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1 STRUCTURAL POLICY COUNTRY NOTES India This Country Note is an extract from the Economic Outlook for Southeast Asia, China and India 2014: Beyond the Middle-Income Trap,

2 A. Medium-term economic outlook (Forecast, average) GDP growth (percentage change): 5.9 Current account balance (% of GDP): -3.9 Fiscal balance: -8.0 B. Medium-term plan Period: Theme: Faster, more inclusive and sustainable growth C. Basic data (in 2012) Total population: million* Population of New Delhi 16.8 million (in 2011) GDP per capita at PPP: (current USD)** India GDP growth rates (Percentage change) India (average) (average) Emerging Asia average Source: OECD Development Centre, MPF India ASEAN-10 average GDP per capita (PPP, current USD) Note: * Total population data for 2012 are estimate. ** IMF estimate Sources: OECD Development Centre, national sources and IMF. ASEAN-10 average Emerging Asia average OECD average Source: IMF Composition of exports, 2012 Percentage of total exports Composition of imports, 2012 Percentage of total imports Others 34% Vegetable products 8% Chemicals and allied industries 11% Mineral products 20% Stone/ glass 16% Textiles 11% Others 16% Metals 6% Chemicals and allied industries 8% Machinery/ electrical 13% Mineral products 40% Stone/glass 17% Source: Trademap. Source: Trademap. India s 12 th Five Year Plan growth that is faster, more inclusive and sustainable India s economy has developed quickly in the last decade, improving living standards and experiencing strong growth in such sectors of the economy as information and communication technology (ICT). Real gross domestic product (GDP) growth averaged 8.5% in the years leading up to the global financial crisis ( ) and poverty rates declined significantly. In recent years, however, circumstances have become less conducive to growth: macroeconomic conditions in the developed economies point to a prolonged external slowdown, while domestic constraints such as high inflationary 2 ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD 2013

3 pressure and rising fiscal and current account deficits have emerged. The result was a 5% growth rate for , the lowest in ten years. In recognition of the downturn, the country s 12 th Five Year Plan (12 th FYP) puts the onus on inclusion and sustainability, while seeking to meet the immediate issue of reversing the recent decline in growth and the structural challenge of restoring mediumterm real growth potential. The educational focus of the 12 th FYP is on teacher training, evaluation, and accountability. It also stresses the need for higher quality in research, infrastructure, teachers and curriculum content. India s medium-term policy challenge and response Improve teaching and national assessment systems to raise education standards Access to education has expanded rapidly India s educational system has seen significant progress, primarily thanks to the strategic programmes initiated by central government (see Box ). One such scheme, the Right to Free Education (RTE), has led to an increase in enrolments in many Indian states. Over 90% of children are now registered in primary school in most states, indicating that the country is close to achieving universal elementary school participation. Drop-out rates have fallen and literacy has risen it stood at 74% in There has also been an increase in the number of public and officially recognised private schools at elementary and secondary levels. ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD

4 Table Educational schemes initiated by the Indian government Target groups Programmes Year of launching Objective Outcomes All Saakshar Bharat (SB)/Adult Education Target of the 11 th FYP was to achieve 80% literacy nationwide. Target of the 12 th FYP is to raise the overall literacy rate to over 80% and reduce gender gap in literacy to less than 10% As per Census 2011, 74% literacy has been achieved. By March 2012, the programme has reached 372 districts in 25 states. Elementary education Right to Free Education (RTE), extension of the Sarv Shiksha Abhiyan (SSA) programme April 2010 Building on the SSA, every child between the ages of 6 and 14 has a right to free and compulsory education, and a commitment to ensure access to a neighbourhood elementary school throughout the country by One of the key elements of the RTE Act is the provision of 25% seats in schools to weaker sections and disadvantaged groups in the neighbourhood. By September 2012, new primary and upper primary schools were opened, school buildings were constructed, additional classrooms, drinking water facilities and toilets, supply of free textbooks to 8.32 crore children, appointment of lakh teachers and imparting of inservice training to lakh teachers. Elementary education Midday Meals (MDM) 2001 Raise the level of nutrition of children and enable them to develop in a healthy manner, cooked meals are provided to all children attending Classes 1-8 in government, local body, governmentaided, and National Child Labour Project schools. Expected to enhance enrolment, retention, attendance of children in schools apart from improving their nutritional levels. The scheme provides lunch to about 120 million children every school day, and as such, is the largest school meal scheme in the world. Although no rigorous evaluations of the impact of this scheme on children s school enrolment and attendance and on nutritional and health status, several micro studies suggest major increases in enrolment immediately after the introduction of MDMs. Secondary education Rashtriya Madhyamik Shiksha Abiyan (RMSA) March 2009 Aim to achieve universal lower secondary enrolments (up to and including grade 10) by 2017 and universal retention by Under the 11th FYP, new schools were sanctioned, existing schools were strengthened, additional classrooms were built, teachers were added, in-service training for all teachers were conducted, schools received annual grants, and schools had minor repairs. Other centrally sponsored schemes 1. Model Schools Scheme November Girls Hostel Scheme Scheme to set up high quality model schools to provide quality education to talented rural children. By December 2012, model schools in 22 states have been approved for construction ICT@Schools 4. Inclusive Education for Disabled at Secondary Stage 5. Scheme of Vocational Education 6. National Means-cum Merit Scholarship Scheme To award scholarships each year at Grade 9 stage. 7. National Incentive to Girls 8. Appointment of Language Teachers Vocational education National Vocational Qualification Framework (NVEQF) September 2012 Provide a common reference framework for linking various vocational qualifications and setting common principles and guildelines for a nationally recognised qualification system and standards. NVEQF pilot project was implemented in 2 states (Haryana and West Bengal). Sources: Government of India (2011a), Twelfth Five Year Plan ( ): Faster, More Inclusive and Sustainable Growth, Planning Commission, India; Government of India (2011b), Economic Survey , Department of Economic Affairs, Ministry of Finance, India; OECD (2011c), OECD Economic Surveys: India 2011, OECD Publishing, Paris. 4 ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD 2013

5 Overall educational quality still low and disparities persist Despite the government s efforts to increase enrolment and the provision of schooling, there is much room for improvement in other aspects of education particularly access to secondary school, persistent disparities, inadequate basic facilities, and low academic standards. Access to secondary and tertiary education First, the government should seek to further stimulate access to secondary and tertiary education, where Indian enrolment rates lag behind those of other countries, which includes China (see Figure ). There are also wide gaps between enrolment and attendance. In Bihar, for example, only 65% of the children enrolled in primary school in 2009 actually attended and of that 65% only 40% attended school regularly (Kingdon and Banerji, 2009). Drop-out rates at upper primary and secondary levels are high, too, rising from 27% at the end of primary school (grade 5) to 41% at the end of the upper primary level (grade 8) and 49% in secondary school (grade 10). The reasons were, reportedly, the cost of education, a lack of interest in schooling, and the need to work at home or outside to supplement the family income (Govinda and Bandyopadhyay, 2008). Drop-out rates, especially among disadvantaged groups such as scheduled castes (SCs) and tribes (STs), are higher than the national average. Figure Gross enrolment rates in secondary and tertiary education in India and other selected countries, 2011 % Secondary % Tertiary OECD Russian Federation* China Indonesia** India** Russian Federation* OECD China Indonesia** India** Note: *2009 figures; **2010 figures. Source: World Bank, World Development Indicators Persistent disparities in access to education Access to education in India is unequal. Disparities occur at all levels between states, urban and rural regions, genders, and communities. The World Bank (2009) reports that there is a 40 percentage-point gap in secondary enrolment rates between students from the highest (70%) and lowest (30%) expenditure quintile groups; a 20 percentage-point ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD

6 gap between urban and rural secondary enrolment rates; and a persistent 10 percentagepoint gap between secondary enrolment rates of boys and girls. In higher education, enrolment rates demonstrate similar discriminatory trends across gender, urban-rural density (Figure ), and socio-religious groups. With limited access to schooling, disadvantaged groups continue to lag behind in educational progress, which further restricts their earning ability and wealth. Figure Gross attendance ratio (GAR) in higher education in India, by urban and rural areas and by gender, Urban female Urban total Urban male All 17.2 Rural male 13.7 Rural total 11.1 Rural female % Source: Government of India (2011a), Twelfth Five Year Plan ( ): Faster, More Inclusive and Sustainable Growth, Planning Commission, India Inadequate basic facilities Supply-side constraints account for the large number of schools that do not have the minimum basic facilities, despite the expansion in school capacity. Over 63% of rural schools, for example, have no usable toilet facilities, which may make it difficult to retain girls (Government of India, 2011a). In higher education, 48% of universities and 69% of colleges are reported to be deficient in infrastructure (Ernst & Young, 2012). Furthermore, except for a few top-level institutions such as India s Institutes of Technology and the University of Delhi many colleges are deemed to be below standard. As of March 2010, only 159 universities (32.3%) and colleges (13.1%) had been accredited by the National Assessment and Accreditation Council (NAAC). Of the NAAC-accredited institutions, it was estimated that 62% of universities and 90% of colleges were average or below average (Ernst & Young, 2012). The demand for better quality education has led to the proliferation of private schools, many of which tend to be concentrated at the tertiary level. Teacher attendance rates, teaching quality and student performance are generally found to be higher in private schools despite the better pay and superior teaching credentials of public school teachers (Hill and Chalaux, 2011). 1 The private-public school divide with regard to learning outcomes could be another factor that contributes to socio-economic disparities, especially as private schools generally cater to more affluent students. 6 ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD 2013

7 Low academic standards Academic standards are another cause for concern. Not only does the out-of-date curriculum emphasise rote-learning, educational abilities remain low by international standards. Kingdon and Banerji (2009) cite the SchoolTells (Teacher Effectiveness and Learning Level of Students) survey of 160 sample schools in Bihar and Uttar Pradesh for the school year. It revealed that only 50-58% of children could write a simple sentence (with mistakes) by the end of grade 4. What s more, the results of the OECD Programme for International Student Assessment (PISA) in 2009, together with scores from the additional PISA 2009 Plus survey, 2 ranked the Indian states Tamil Nadu and Himachal Pradesh 73 rd and 74 th out of 75 countries. In addition, daunting challenges that worsen the low academic standards are the insufficient numbers and poor quality of teachers. Teacher shortages are especially acute in secondary schools and in the critical subjects of mathematics, science, and foreign languages (Government of India, 2011a). The problem is further compounded by the slow recruitment process of teachers by state governments for both new and existing positions. The result is a backlog of teaching vacancies in all states and teacher-pupil ratios that exceed the limits stipulated by the RTE and RMSA norms of 1:30 and 1:35 in many state schools at all levels. As a consequence, incumbent teachers often have to teach multiple grades (Figure ). State schools have also turned to employing teachers who do not have the qualifications required by the National Council of Teacher Education which oversees standards, procedures and processes in India s education system. These teachers, known as contract or para-teachers, are generally low-paid and untrained. Gelda et al. (2013) reported that 45% of rural primary education teachers had not studied beyond grade 12. Indeed, teaching standards need to improve. Teachers often do not receive the preservice or in-service training that allows them to deliver quality education. Their lack of accountability for schooling outcomes to either parents or the state further contributes to the problem. As a result, teachers are frequently absent. In the school year it was reported that 25% of primary school teachers in rural India were absent on any given day, aggravating the already severe understaffing in primary schools where there were, on average, no more than three teachers per establishment (Gelda et al., 2013). ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD

8 Figure Pupil-teacher ratio in primary schools in India, by state, 2011 Uttar Pradesh Bihar Meghalaya Haryana Rajasthan Chandigarh West Bengal India Delhi D and N Haveli Madhya Pradesh Daman and Diu Odisha Andhra Pradesh Manipur Maharashtra Chhattisgarh Assam Tamil Nadu Punjab Goa Uttarakhand Lakshadweep Kerala Jammu and Kashmir Arunachal Pradesh Nagaland Mizoram Puducherry Karnataka Tripura Himachal Pradesh Sikkim A and N Islands Right to Free Education (RTE) Programme norm 30: Source: Ministry of Human Resource and Development Improving the quality of education is of the utmost concern India s educational system continues to face the multiple challenges of access, equity and quality. It needs to improve on all three counts particularly in the standard of education, so that young adults graduating from school may find good jobs and so contribute to economic growth and poverty reduction. The current picture is particularly stark as the country s workforce is expected to grow exponentially over the next five years. The Indian government has estimated that the proportion of the working-age population between 15 and 59 years old is likely to rise from approximately 58% in 2001 to more than 64% by In other words, approximately 63.5 million new entrants from that age group will swell the labour market, between 2011 and The bulk of them will be in the younger year-old age bracket (Government of India, 2011b). 8 ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD 2013

9 Numerous industry reports cite the lack of market-ready skills and therefore the low employability of Indian graduates from higher education establishments. Employer surveys point to shortages of skilled workers in the fields of information technology, financial services, telecommunications, tourism, retail and skill-intensive manufacturing all sectors in which there has been employment growth over the past decade. Yet, because of the skills shortage, new private sector investment and growth is now faltering in these sectors (World Bank, 2009). Moreover, skills mismatches in technical and vocational areas have also forced Indian graduates into jobs other than those for which they have trained. The inequality of educational outcomes among socio-religious groups is accompanied by occupational stratification. The upper castes continued to dominate in professional jobs, while the lower castes and tribes are engaged primarily in agricultural labour (Sethi and Somanathan, 2010), which in turn perpetuates social and economic inequalities. Measures have been taken since the 11 th FYP Despite the dire shortcomings of India s educational system, the government has demonstrated its commitment to improving access, equity and quality in previous five year plans. Under the 11 th FYP, for example, changes to upgrade educational practices were introduced, while a number of bills were proposed to improve the quality and transparency of the education system. One such bill was the Higher Education and Research Bill (2011), designed to be the sole regulator of norms and standards for academic quality. The National Accreditation Regulatory Authority for Higher Education Institutions Bill (2010), for its part, aims to make accreditation and rating of all higher education institutions mandatory in India. Both bills are yet to come before Parliament. In line with the 12 th FYP s target of improving educational standards, the Indian Institutes of Information Technology (IIT) Bill was introduced in 2013 to create 20 more Indian IITs in various parts of the country. The budget speech also emphasised vocational training and development, stating that it is to be spearheaded by the National Skill Development Corporation, which will set the curriculum and standards for training in different skills that any institution may then offer. A stronger quality assurance system to improve educational outcomes The challenge for the Indian government today is to build on the considerable progress made in increasing school participation. Equally, if not more, important, it must improve the quality of educational outcomes (OECD, 2011c). A comprehensive policy on the governance and role of education, followed by clear articulation of learning goals, is a crucial first step. The 12 th FYP acknowledges the need for a clear, comprehensive policy as part of its intended strategy to provide quality schooling. Although the FYP focuses on elementary education, the effort to improve outcomes can be extended to all levels of education. The next stage is to put in place a system for setting standards of quality and institutions to enforce them. At present, a two-tier quality assurance framework exists in India: two main quality assurance agencies the National Accreditation and Assessment Council and the National Board of Accreditation evaluate and accredit new institutions and/or programmes (usually at the tertiary level) on a purely voluntary basis. The government intends to overhaul the system with strategies it proposes in the 12 th FYP that would make regular assessments (and possible accreditation) of educational ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD

10 institutions mandatory. It plans to introduce the practice in elementary schools and at secondary level with the School Quality Assessment and Accreditation System. It also intends to revamp the national accreditation system for higher educational institutions at the tertiary level. These systems would then be monitored by a national education agency or quality assessment regulator so as to better align quality standards across a student s time in schooling. Should a school fail to meet minimum requirements, there would be follow-up procedures involving mandatory corrective actions. Strengthening educational quality assurance may also have beneficial knockon effects on teacher quality. Compelled to improve their accountability and meet assessment requirements, schools may hire more teachers, recruit and promote better ones, and penalise those who are frequently absent. To further raise teaching standards, schools may also conduct diagnostic tests of student performance. To evaluate school performance, two-thirds of OECD countries have regulations that require lower secondary schools to be inspected regularly, while a slightly smaller number require schools to conduct periodic self-evaluations. In around three-quarters of OECD countries, school inspections and self-evaluations also strongly influence assessments of school governance and individual teachers. In more than half of all OECD countries, school inspections are also used to make decisions about whether or not to close schools. Periodic standardised assessments of students in compulsory education are conducted to obtain information on student performance in two-thirds of OECD countries, while in nearly half national examinations have a real impact on lower secondary school students, i.e. determining whether or not they may proceed to a higher level of education. Only a few countries, such as Belgium (in its Flemish Community), Chile and the Czech Republic reported that school inspections influenced decisions as to whether to financially reward or sanction a school (Schleicher, 2012). A final point is that the 12 th FYP s proposed action to improve access to education and raise standards require greater public spending. Public expenditure on education in India was 3.3% of GDP in It has been stood around that level since the late 1980s, with the government failing to increase spending despite widening access to a larger number of students. Goswami (2012) estimates that the result has been a 20% reduction of expenditure per student over the period, which in turn suggests that the overall quality of education has in fact declined. 10 ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD 2013

11 Box National quality assurance systems in tertiary education in selected OECD countries Quality assurance systems serve two main purposes: i) accountability, or to inform the public of educational establishments academic performance; and ii) improvement, with criteria and procedures aimed at promoting better future performance. The following summarises the approaches and key features of national systems of tertiary education quality assurance within the OECD area. Quality assurance systems in tertiary education in selected OECD countries Country Agency Approach and level Australia Austalian Universities Quality Agency x x x x Belgium Flemish Interuniversity Council x Chile Comisión Nacional de Acreditación x x Consejo Superior de Educación Croatia National Council for Higher Education x x Denmark Danish Evaluation Centre x x x x x Finland Finnish Higher Education Evaluation Council x x x x x France Comité national d évaluation indépendant x x x x Influence on contracts with govt Iceland Japan The Netherlands Portugal Spain Division of Evaluation and Supervision (Ministry of Education, Science and Culture) National Institution for Academic Degrees and University Evaluation VSNU (association of universities) Evaluation Council (Foundation of Portuguese Universities) Agencia Nacional de Evaluación de la Calidad y Acreditación x x x x x x x x x x x x x x Switzerland Accreditation and Quality Assurance Board x x x x United Kingdom Higher Education Quality Council owned by universities x x Funding councils x x x Note: The three main approaches to quality adopted by quality assurance systems are accreditation, assessment and audit. While accreditation and assessment monitor the quality of teaching and learning, audit focuses on internal procedures adopted by a higher education institute in order to achieve its objectives. Source: Kis, V. (2005), Quality Assurance in Tertiary Education: Current Practices in OECD Countries and a Literature Review of Potential Effects, contribution to the OECD Thematic Review of Tertiary Education and OECD Development Centre s compilation. ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD

12 Notes 1. Hill and Chalaux (2011) explain that teachers in private schools are held more accountable than their counterparts in state schools, which may explain significant differences in teacher attendance and student learning outcomes. Regular public school teachers are normally employed by state governments on permanent contracts and are unlikely to be dismissed, while teachers in private schools are employed on fixed-term contracts. The difference in incentives may be compounded by the fact that private school teachers are more likely to come from the local community and so have a greater stake in ensuring positive outcomes for students. 2. Sixty-four economies originally participated in PISA Ten additional partner participants, who were unable to participate within the PISA 2009 project timeframe, participated in the PISA 2009 study on a reduced and delayed timeline in This is known as the PISA project. The PISA economies are: Costa Rica, Georgia, India (Himachal Pradesh & Tamil Nadu), Malaysia, Malta, Mauritius, Venezuela (Miranda), Moldova, United Arab Emirates. PISA involved testing just over students across these ten economies, representing a total of about year-olds (Australian Council for Educational Research, participant-economies/). 12 ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD 2013

13 References Ernst and Young (2012), Higher Education in India: Twelfth Five Year Plan ( ) and beyond, FICCI Higher Education Summit 2012, Ernst & Young Pvt Ltd., India. Gelda, A., V. Narayan, M. Mudiyam, K. Raturi and N. Seshan (2013), Needs Improvement: Despite Progress, India s Primary Education System Has a Ways to Go, Knowledge@Wharton, University of Pennsylvania. Goswami (2012), Elementary Education in India: Quality or Quantity, RK University, 25 December, East Asia Forum. Government of India (2011a), Twelfth Five Year Plan ( ): Faster, More Inclusive and Sustainable Growth, Planning Commission, Government of India. Government of India (2011b), Economic Survey , Department of Economic Affairs, Ministry of Finance, India. Govinda, R. and M. Bandyopadhyay (2008), Access to Elementary Education in India: Country Analytical Review, National University of Educational Planning (New Delhi, India) and Administration, and Consortium for Research on Educational Access, Transitions & Equity, Brighton, United Kingdom. Hill, S. and T. Chalaux (2011), Improving access and quality in the Indian education system, OECD Economics Department Working Papers, No. 885, OECD Publishing. Kingdon, G. and Banerji, R. (2009), Addressing school quality: Some policy pointers from rural north India, Policy Brief No. 5, September 2009, Research Consortium on Educational Outcomes & Poverty, Cambridge, United Kingdom. Kis, V. (2005), Quality Assurance in Tertiary Education: Current Practices in OECD Countries and a Literature Review of Potential Effects, contribution to the OECD Thematic Review of Tertiary Education. OECD (2011c), OECD Economic Surveys: India 2011, OECD Publishing, Paris, surveys-ind-2011-en. Schleicher, A. (ed.) (2012), Preparing Teachers and Developing School Leaders for the 21 st Century: Lessons from around the World, OECD Publishing, Paris. Sethi, R. and R. Somanathan (2010), Caste Hierarchies and Social Mobility in India, Working Paper, May, World Bank (2009), Secondary Education in India: Universalising Opportunity, January 2009, World Bank. ECONOMIC OUTLOOK FOR SOUTHEAST ASIA, CHINA AND INDIA 2014: BEYOND THE MIDDLE-INCOME TRAP OECD