Economics and Policy Design- Right to Education

The Right of Children to Free and Compulsory Education Act, 2009, popularly known as the Right to Education (RTE) Act, came into being in India from April 1, 2010 and is expected to lead to revolutionary change in the education delivery through schools in India. RTE mandates every child from 6 to 14 years of age has a right to free and compulsory education in a neighborhood school till completion of elementary education. The economics of education rests on the fundamental premise of education being an investment.  Education is a good and has social benefits.  But pricing of education leaves the population groups unable to afford these fees outside the system. The market failure is visible and the government has to step in. There are four ways in which the government can influence the allocation of resources. In his celebrated ‘Code’ Larry Lessig presents the modes of Law, Market, Norms and Architecture to ensure the allocation or non – allocation of a resource. Let us take each of these in terms of education. Education is a public good that justifies no exclusion.  RTE is the government intervention through law to ensure the provision of education across the sections of society. Let us consider alternative scenarios.

The market scenario can also be visualized. The government could provide subsidies to private schools. These subsidies could be in form of reimbursing costs of education of the children of the weaker sections of the society. Alternatively certain tax holidays ( by and large schools are exempt from taxes anyways), utilities being offered at cheaper rates, land being offered at concessional rates etc could work out. Further students of well-to – families can be charge higher (price discrimination) but these higher fees can offset by tax concession to the parents of these children to the extent of fees paid. Student aid facilities or even bank loans can be another method of market intervention.

Social norms could be in the form of development of community schooling. Adult education to certain extent has depended on social norms and this can extended to primary schools. The social pressures on parents to educate their children and development of community led teaching can easily inspire the growth at-least at the primary level. The rise of open source software communities or even wiki communities can actually be foundations for similar developments in the education sector. This of course will be in the physical space than in the virtual space.

With the diffusion of computer and the internet and strengthened by the Generativity of the PC or the internet can lead to architectural changes to the education system. E-learning centers depending on community centers and teachers could change the way the students are thought. The diseconomies of scale or decreasing returns to scale present in the physical world can be eliminated in this approach.

Yet irrespective of the criticisms about its limitations, the Act is an attempt to solve the fundamental question of allocation of resources given the scarcity of the good.  But alternative approaches like social norms and architectural models can be looked to hasten the inclusive process in education.