This MCQ module is based on: State of Education in India — Expenditure & Achievements
TOPIC 10 OF 23
State of Education in India — Expenditure & Achievements
🎓 Class 11
Economics
CBSE
Theory
Ch 4 — Human Capital Formation in India
⏱ ~28 min
🌐 Language: [gtranslate]
🧠 AI-Powered MCQ Assessment
▲
📝 Worksheet / Assessment
▲
This assessment will be based on: State of Education in India — Expenditure & Achievements
Upload images, PDFs, or Word documents to include their content in assessment generation.
4.5 State of Human Capital Formation in India
India's human capital formation? is the outcome of investments in education, health, on-the-job training, migration and information. Of these, education and health are the two most important. India is a federal country: the Constitution divides functions across the union government, state governments and local bodies (Municipal Corporations, Municipalities and Village Panchayats). Expenditures on both education and health are therefore carried out simultaneously by all three tiers. Health is taken up in Chapter 8 of the textbook; this chapter focuses on the education sector.
4.5.1 Why Government Intervention is Essential
Education and health services create both private and social benefits. That is why both private and public institutions exist in these markets. But there are good reasons for government intervention:
Long-Term & Irreversible
Spending on education and health makes a substantial long-term impact and cannot be easily reversed. Once a child is admitted to a poor-quality school or clinic, substantial damage is done before any switch.
Information Gaps
Individual consumers do not have complete information about the quality and cost of services. Providers can therefore acquire monopoly power and exploit users.
Regulator Role
Government must ensure that private providers adhere to the standards stipulated and charge the correct price.
Equity
A large section of India's population lives below the poverty line and cannot afford basic schooling and health care. When these are treated as a citizen's right, the state must provide them free for the deserving and the socially oppressed.
4.5.2 Who Looks After Education and Health
In India, the union and state ministries of education, departments of education, and apex bodies like the NCERT?, UGC? and AICTE? facilitate institutions in the education sector. Likewise, the union and state ministries of health and apex bodies like the National Medical Commission and Indian Council for Medical Research (ICMR) facilitate institutions in the health sector. Both, the union and state governments, have been stepping up expenditure on education over the years, in order to attain cent per cent literacy and to raise the average educational attainment of Indians.
4.6 Education Sector in India
4.6.1 Growth in Government Expenditure on Education
Government expenditure on education is expressed in two ways: (i) as a percentage of total government expenditure and (ii) as a percentage of Gross Domestic Product (GDP). The first measure shows the importance the government attaches to education in its scheme of priorities. The second measure shows how much of national income is being committed to building the education sector.
📊 NCERT Numbers — 1952 to 2020
Education expenditure as a percentage of total government expenditure rose from 7.92 to 16.54, while education expenditure as a percentage of GDP rose from 0.64 to 4.47. Throughout this period the rise was not uniform — there have been irregular ups and downs. If private spending by households and philanthropic institutions is added, the total spend on education would be much higher.
4.6.2 Distribution Across Levels — Elementary vs. Tertiary
Elementary education takes the major share of total education expenditure; the share of higher / tertiary education (colleges, polytechnics, universities) is the least. Yet the per-student expenditure in tertiary education is higher than that in elementary, because building advanced labs, libraries and faculty is expensive. NCERT cautions that this does not mean money should be transferred from tertiary to elementary; teachers for school education themselves come from higher education, so spending on all levels must be increased.
4.6.3 Inter-State Variation in Per-Capita Spending
In 2020-21, per-capita public expenditure on elementary education differed sharply across states — from as high as Rs 96,968 in Sikkim to as low as Rs 10,710 in Bihar. This variation leads to wide differences in educational opportunities and attainments across states.
| Tier | State | Per-Capita Spend (Rs) |
|---|---|---|
| Highest | Sikkim | 96,968 |
| Lowest | Bihar | 10,710 |
| Implication | A child in Sikkim has ~9× more public resource backing per head than a child in Bihar — driving differences in school quality, learning outcomes and life chances. | |
4.6.4 Tapas Majumdar Committee & the Kothari Recommendation
One can judge the inadequacy of education spend by comparing it with the desired levels recommended by various commissions:
Education Commission (Kothari) — 1964–66
- Recommended that at least 6 per cent of GDP be spent on education.
- Aim: a noticeable rate of growth in educational achievements.
- Status: India still spends a little over 4 per cent — clearly inadequate against the 6% goal.
- The 6% target has been accepted as a "must" for the coming years.
Tapas Majumdar Committee — 1999
- Appointed by the Government of India in 1999.
- Estimated an expenditure of around Rs 1.37 lakh crore over 10 years (1998-99 to 2006-07).
- Goal: bring all Indian children in the 6–14 years age group under school education.
- Direct precursor to the legal right enacted in 2009.
4.6.5 Right of Children to Free and Compulsory Education Act, 2009
📘 RTE 2009 — A Fundamental Right
In 2009, the Government of India enacted the Right of Children to Free and Compulsory Education Act. This made free elementary education a fundamental right of all children in the age group of 6–14 years. RTE puts a binding duty on government schools to enrol, retain and provide quality education at no cost to the child or family.
4.6.6 Education Cess and Loan Schemes
To fund these commitments, the Government of India started levying a 2 per cent education cess on all union taxes. Revenues from this cess are earmarked for spending on elementary education. In addition, the government sanctions a large outlay for the promotion of higher education and runs new loan schemes for students to pursue higher education.
4.7 Educational Achievements in India
NCERT measures educational achievements through three indicators — adult literacy rate, primary completion rate and youth literacy rate.
| Indicator | 1990 | 2000 | 2011 | 2017–18 |
|---|---|---|---|---|
| Adult Literacy — Male (15+) | 61.9 | 68.4 | 79 | 82 |
| Adult Literacy — Female (15+) | 37.9 | 45.4 | 59 | 66 |
| Primary Completion — Male | 78 | 85 | 92 | 93 |
| Primary Completion — Female | 61 | 69 | 94 | 96 |
| Youth Literacy — Male (15–24) | 76.6 | 79.7 | 90 | 93 |
| Youth Literacy — Female (15–24) | 54.2 | 64.8 | 82 | 90 |
4.7.1 Education for All — Still a Distant Dream
Though both adult and youth literacy rates have risen, the absolute number of illiterates in India is "as much as India's population was at the time of independence". The Constitution, when adopted in 1950, said in the Directive Principles of State Policy? that the government should provide free and compulsory education for all children up to the age of 14 years within 10 years of the Constitution coming into effect. Had we achieved this, India would have had cent per cent literacy by now.
4.7.2 Gender Equity — Better than Before
The differences in literacy rates between males and females are narrowing — a positive sign for gender equity. Still, the need to promote education for women in India is "imminent" because:
Economic Independence
Education improves the economic independence and social status of women — a goal in itself.
Lower Fertility Rate
Educated women tend to have fewer children — a powerful and well-documented effect on population.
Better Child & Maternal Health
Women's education raises the quality of health care given to mothers and children, lowering infant and maternal mortality.
Miles to Go
We "cannot be complacent" — the upward movement is welcome, but the goal of cent per cent adult literacy is still distant.
4.7.3 Higher Education — A Few Takers
The Indian education pyramid is steep — fewer and fewer people reach the higher-education level. Worse, unemployment is highest among the most educated youth.
| Group | Unemployment Rate |
|---|---|
| Rural male graduates and above | 19 per cent |
| Urban male graduates and above | 16 per cent |
| Rural female graduates (most affected) | ~30 per cent |
| Primary-level educated youth (rural & urban) | only 3–6 per cent |
The situation has improved moderately, as indicated by the Periodic Labour Force Survey 2023-24. Even so, the puzzle remains: when compared to the less-educated, a large proportion of educated persons are unemployed. Why? NCERT urges the government to increase allocation for higher education and improve the standard of higher-education institutions so that students are imparted employable skills.
📌 Connecting the Dots
The gap between rising literacy and rising educated unemployment points to a quality rather than quantity problem. We are producing degrees — but not always skills. Part 3 will examine how the regulatory bodies and skill-development missions try to fix this.
4.8 Growth of the Education Sector — A Visual Picture
The literacy trend from 1951 (16.67%) to 2018-22 (78%) shows that India has expanded the education base sharply, but is still about 22 percentage points short of full literacy. Progress was slow till 1981 and accelerated after the 1990s — driven by Operation Blackboard, Sarva Shiksha Abhiyan, the 86th Constitutional Amendment (2002), and the RTE Act of 2009.
Activity 4.4 — Bodies that Run Schools and Colleges (Work This Out)
NCERT asks: identify the objectives and functions of NCERT, UGC, AICTE and ICMR.
- NCERT (1961): National Council of Educational Research and Training. Develops curricula, textbooks, teacher training; advises union and state governments on school education; conducts NAS surveys.
- UGC (1956): University Grants Commission. Coordinates and maintains standards in higher education; provides grants to universities and colleges; recognises degrees.
- AICTE (1987): All India Council of Technical Education. Plans and coordinates the development of technical (engineering/management/pharmacy) education; approves courses and intake capacities.
- ICMR: Indian Council of Medical Research. Apex body for biomedical research; sets ethical standards for clinical trials and funds research institutions across India.
Activity 4.5 — Dropouts and Child Labour (Work This Out)
NCERT asks: prepare case studies of dropouts at different levels — primary, Class VIII, Class X. Find out the causes. Also discuss: "School dropouts are giving way to child labour. How is this a loss to human capital?"
- Primary dropouts: poverty, distance to school, lack of toilets (esp. for girls), language of instruction, illness.
- Class VIII dropouts: economic compulsion to work, early marriage of girls, weak learning foundation from earlier classes, peer migration to towns for daily-wage work.
- Class X dropouts: board exam pressure, perceived irrelevance of curriculum, lack of vocational pathways.
- Loss to human capital: child labour locks the child into low-skill, low-paid work; depreciates the cognitive gains of schooling; cuts off pathways to higher education and higher earning power; perpetuates inter-generational poverty.
- Policy: RTE 2009, mid-day meals, scholarships and conditional cash transfers (e.g., Kanya Vidya Dhan) directly attack the dropout problem.
Activity 4.6 — IT-Based Services in Rural Areas (Box 4.2)
NCERT asks: there are some instances of villagers using e-mail and e-governance is projected as the way of the future. The value of IT depends on the existing level of economic development. Do you think IT-based services in rural areas will lead to human development? Discuss.
- Yes — supporting view: IT removes information asymmetry — farmers learn mandi prices, women access government welfare directly, students access free online courses (NPTEL, SWAYAM, Diksha).
- Caution: IT requires literacy, electricity, internet bandwidth and a device. Without these, services exclude the very poor instead of including them.
- India experience: JAM trinity (Jan Dhan + Aadhaar + Mobile) shows IT can deliver subsidies directly. CSCs and DBT have widened reach but the digital divide remains.
- Conclusion: IT in rural areas contributes to human development only when paired with basic schooling, electricity, and last-mile training — IT is an enabler, not a substitute for fundamentals.
📝 Competency-Based Questions — Education Sector in India
Source-based scenario: Between 1952 and 2020, education expenditure as a percentage of total government spending rose from 7.92 to 16.54, and as a percentage of GDP from 0.64 to 4.47. The Kothari Education Commission (1964–66) had recommended at least 6 per cent of GDP. The Tapas Majumdar Committee (1999) estimated Rs 1.37 lakh crore over 10 years to bring all 6–14 year-olds into school. The RTE Act 2009 made free elementary education a fundamental right. In 2020-21, per-capita elementary spending varied from Rs 96,968 in Sikkim to Rs 10,710 in Bihar.
Q1. India currently spends a little over 4 per cent of GDP on education. By how much does this fall short of the Kothari Commission goal?
L3 ApplyAnswer: (b) — Goal is 6%; actual is just over 4%; the gap is roughly 2 percentage points. NCERT calls this "quite inadequate".
Q2. Why does NCERT argue that financial resources should not simply be transferred from tertiary to elementary education?
L4 AnalyseAnswer: Higher-education institutions train the teachers who run schools. Cutting tertiary spending would, over time, reduce the supply and quality of school teachers. Per-student tertiary spending is naturally higher because of advanced labs and faculty. The right policy is to raise spending across all levels, not redistribute between them.
Q3. Evaluate the impact of the wide variation in per-capita education spending across Indian states.
L5 EvaluateAnswer: When Sikkim spends Rs 96,968 per child and Bihar Rs 10,710 — about 9× difference — children begin school life with vastly unequal resource backing. This produces wider gaps in infrastructure (toilets, classrooms), teacher availability, and ultimately learning outcomes. Such disparities raise regional inequality, fuel migration of skilled workers from poor states to rich states, and weaken the federal goal of equal opportunity. Equalisation transfers from the union government and stronger Finance Commission devolutions are needed to narrow the gap.
Q4. (HOT) Suggest one short-term and one long-term measure to ensure that rising literacy translates into rising employment for educated youth.
L6 CreateAnswer: Short-term: launch employability-focused short courses (3–6 months) under PMKVY in growth sectors — IT-ITes, healthcare, logistics, green jobs — for graduating students. Pair courses with apprenticeships at firms paying a stipend. Long-term: reform the higher-education curriculum to embed industry-aligned multidisciplinary skills (NEP 2020) — coding, data science, communication and critical thinking — and rate institutions on employment outcomes, not just exam pass rates. The student should connect both ideas to NCERT's note that "a large proportion of educated persons are unemployed" because of the skill gap.
🔗 Assertion–Reason Questions
Options: (A) Both A & R true, R correctly explains A · (B) Both true, R does not explain A · (C) A true, R false · (D) A false, R true.
Assertion (A): India enacted the Right of Children to Free and Compulsory Education Act in 2009.
Reason (R): The Act made free elementary education a fundamental right of all children in the age group of 6–14 years.
Answer: (A) — Both true; R correctly explains the Act's content. NCERT identifies the year (2009) and the age band (6–14 years) precisely.
Assertion (A): Per-student expenditure in elementary education in India is higher than in tertiary education.
Reason (R): The government, on average, spends less on tertiary education than on elementary education.
Answer: (D) — A is false: per-student expenditure in tertiary education is higher than in elementary, due to costlier infrastructure and faculty. R is true — total spending on tertiary is less; but unit cost per student is higher.
Assertion (A): The differences in literacy rates between males and females in India are narrowing.
Reason (R): Women's education has no measurable effect on fertility rates or child health.
Answer: (C) — A is true: NCERT confirms the gap is narrowing. R is false: NCERT states that women's education has a favourable impact on fertility rate and on the health care of women and children.
AI Tutor
Class 11 Economics — Indian Economic Development
Ready