“History is a race between education and catastrophe.”
H G Wells

“All who have meditated on the art of governing mankind have been convinced that the fate of empires depends on the education of youth.”
Aristotle

I think this is the first time I have started a write-up with quotes from famous people. I normally do not do that, because I usually feel so strongly and passionately about issues that I simply start writing and words just flow out in a torrent. But I am making an exception this time. And I have strong reasons for doing so.

Let me digress a little before stating them. This will be the 10th consecutive year that I have written and presented an ‘Alternative Budget’. This will be the 5th consecutive year that the ‘Alternative Budget’ appears in Business & Economy (Yes, your favourite magazine – when it comes to sharp, incisive and thought-provoking intellectual analysis – is about to complete 5 years!). For close to 10 years, I have been repeating ad nauseam that India can never hope to be a country that is respected in the 21st century unless there is a drastic and dramatic overhaul of social infrastructure. Apart from occasional good news on that front, budgets over the last decade have been largely disappointing when it comes to dealing with social infrastructure. Of course, lip service and wise quotes from historical personalities have always been offered by successive finance ministers. Of course, ambitious schemes with thousands of crores of budgetary allocations have been launched. Of course, well meaning policies have been designed and implemented. But has there been a really substantive improvement in outcomes? Do poor Indians actually have better access to healthcare now than they had when the 21st century began? Do they actually have better access to education? You know the answers as well as I do.

I have often been frustrated and dismayed by the answers. This prompted me to present an Alternative Budget in 2008 with a headline Ban the Budget. My logic was that too much needless attention was lavished on the Union Budget. My suggestion to the Finance Minister was to use the Union Budget to launch some path-breaking policies for the social infrastructure sector and let nitty gritty issues be handled through the year during the normal course. In 2009, I went a step ahead and presented an Alternative Budget with a headline Khao aur Khilao Budget. My logic was simple. I raised a fundamental question: How come China and South Korea with levels of corruption as deep and endemic as India have delivered fantastic outcomes in social infrastructure while India has failed to do so? I also argued that economics was all about incentives and if a Union Budget offered the right kind of incentives, stakeholders in India, too, could dramatically improve social infrastructure. Just in case you are interested in what the Khao aur Khilao Budget suggested, please visit www.businessandeconomy.org/09072009/storyd.asp?sid=4485&pageno=1.

Having digressed a little, let me come now to the theme and headline of my Alternative Budget this year. It is called A Budget for Three Idiots. You guessed it. It has been inspired by the iconoclastic movie that revealed how hollow our education system is. It also offered us hope and redemption. And it told us poignantly that the biggest challenge for India in the 21st century is to transform its education system. The quotes that appear right at the top of this write-up tell me that thinkers and philosophers throughout history have consistently argued that a society, a nation or a civilization simply cannot survive – far from flourish – without the right kind of education. Aristotle mused about the power of education to sustain an Empire more than 2,000 years ago. And in the 20th century, George Orwell, the author of timeless classics like Animal Farm and 1984 highlighted the importance of education in an equally compelling manner.

Of course, you don’t need to be a philosopher to understand the value and power of education to make or alternatively mar the future of India in the 21st century. And the way things are going at the moment, only the naïve will believe that India is on the cusp of an era where it will reap the much talked about ‘demographic dividend’. Just a few days ago, the international body UNESCO released a report called ‘Education for All Development Index’. It tracks the progress made by various nations on the key Millennium Development Goals of achieving universal education by 2015 from 1999 to 2007. The results in the report are sobering, if not disturbing for those who keep prattling childishly about India’s demographic dividend. The rank given to India is 105, below Bhutan, Zambia, Vietnam and Ghana to name just a few. That is not really surprising since India is consistently ranked pathetically when it comes to human development indicators; and justifiably so. More disturbing are results buried in some tables in the 300-plus page report. A staggering 49 percent of the children drop out of school before they reach elementary level. And before you start talking about some sinister western conspiracy to show India in a poor light, please remember that the report is based on government released statistics.

Let me present some data in a different way to puncture this triumphal talk about India’s demographic dividend. The total number of illiterates in India (as per the official definition of literacy) is more than the combined population of England, France, Germany, Italy Spain, Norway, Sweden, Denmark, South Korea and Japan. If you take a more realistic definition of literacy, the number of illiterates in India would be more than the entire population of the whole of Europe. Each year, the number of children in primary school who drop out altogether is more than the population of Australia. Each year, the number of Indian children who fail to go beyond class V is more than the population of South Korea. Each year, the number of Indian children who cannot cross the secondary school barrier is more than the population of Japan. Look at it in another way; the number of illiterates in India is more than the population of India in 1947, when Jawaharlal Nehru sought to make a tryst with destiny. What’s more, the number of places of worship currently stands at 2.4 million, whereas the number of places for education stands at 1.5 million! I am sure that things would not have improved since 2000, when the Planning Commission reported that almost 44% of all workers were illiterate and some 22.7% had done schooling till primary level! One would be really optimistic to talk about the demographic dividend in the face of such humiliatingly distressing data. And unless a drastic overhaul is launched right away, hundreds of millions of young Indians will be condemned to live on the margins by the beginning of next decade; and India will be condemned to remain a third rate power!

That brings me back to the Budget for Three Idiots. If things are as bad as they seem, how can Indians like me have even an iota of hope for the future? Actually we can, and we should. Every crisis is an opportunity, as they say, and this could be a game-changing opportunity for the Finance Minister. Often, the right set of people under the right leadership at the right time trigger changes that can have seismic impacts. It needed a Rajiv Gandhi in the 1980s to rope in Sam Pitroda from the United States to launch technology missions that could change India. Pitroda faced insurmountable challenges from vested interests and even quit in a huff. But it was his team at C-Dot that had sown the seeds of the telecom revolution that is sweeping across India. In 1991, on the verge of defaulting on its debt obligations, a shaky Congress regime under P. V. Narashima Rao made Manmohan Singh the Finance Minister and gave him a mandate to dismantle the license permit raj and unleash the entrepreneurial spirits of India. The results are there for you and me to see and marvel at. The current regime – the second term of the UPA – has a similar mix of people who can deliver change. In a stroke of inspirational genius, UPA Chairperson Sonia Gandhi and Prime Minister Manmohan Singh have made Kapil Sibal the Union HRD Minister. And with a pragmatic, seasoned and wise Pranab Mukherjee as the Union Finance Minister, one can definitely be hopeful.

For most of the past 20 years or so, the Arjun Singhs of India have been HRD ministers. And both you and I know what they did with and to the education system in India – running patronage networks that were doling out deemed university status to fly-by-night operators as if there was no tomorrow. As against that, just recently, Mr Sibal outlined his vision as the HRD Minister in an exclusive write up for The Sunday Indian dated February 7, 2010 (you can read his exclusive write up at www.thesundayindian.com). Quite clearly, Kapil Sibal has the mandate from Sonia Gandhi and Manmohan Singh to play game-changer. And in Pranab Mukherjee, he has an ally who can come out with the right mix of policy instruments and initiatives in his Union Budget. There is another fact I must not forget to point out. The UPA has appointed the same Sam Pitroda (the man behind the telecom revolution in India) as the Chairman of a newly formed Knowledge Commission. Predictably, he and the Knowledge Commission have been persistently hamstrung, criticized and sabotaged by vested interests. It is time now for Kapil Sibal and Pranab Mukherjee to examine and implement the proposals that have been suggested by the body in tandem.

And now for a Budget for Three Idiots. Who are the ‘Three Idiots’ who will play the key roles in this transformational exercise? The stakeholders, of course. The first set of ‘idiots’ would be the students (and their parents) who can actually help India reap the demographic dividend in the next two decades. The second set of ‘idiots’ would be the teachers and administrators, whose job is to ensure that Indian children and youth get the kind of education and skills that will make them human resource assets in the 21st century. The third set of ‘idiots’ would be the regulators whose job is to ensure that schools, colleges and universities – both in the public and the private sector – deliver the kind of education and skills that India needs in the future. As Finance Minister, Pranab Mukherjee can partner with his colleague Kapil Sibal and implement a set of bold policy initiatives that will simultaneously target all the ‘three idiots’. Piecemeal efforts targeted at one set of ‘idiots’ have been tried in the past. But clearly, they have failed. That is why the school dropout ratio remains so alarmingly high despite schemes like Sarva Shiksha Abhiyan and Midday Meals. The basic problem is, the latter two sets of ‘idiots’ simply haven’t been doing their jobs, leading to untold misery for the first set of ‘idiots,’ which is the students and their parents. Quite simply, in most cases in India, the teachers don’t teach and the regulators don’t regulate. As per reports, there is an estimated shortage of around 25 lakh teachers! Worse, the State has been perpetually reluctant and has been suicidal in withdrawing from its most fundamental duty – of imparting primary education.

So the Budget for Three Idiots should start with the basics and keep it simple. Though accurate data will be available after the actual Budget is presented on February 26, 2010, the government will spend approximately Rs.25,000 crore on Sarva Shiksha Abhiyaan and the Midday Meal scheme. In consultation with Kapil Sibal, the Finance Minister must quadruple the allocation to Rs.100,000 crores. You think that is too much? Think again. The National University of Educational Panning & Administration conducted a survey of 1.1 million primary and upper primary schools across 604 districts of India in 2007. The survey found that close to 100,000 such schools did not have a single functional classroom. About 14% of such schools in urban areas and more than 9% of schools in rural areas did not have any classroom. Another 100,000 schools were in desperate need of urgent repairs and were literally crumbling apart. How do you expect children to come to schools and get even a semblance of education without classrooms – forget about libraries, laboratories and toilets? And where would the midday meals be cooked and where would the children eat those meals? As such, our budgetary allocation on education, as a percentage of GDP, is a meagre 3%, whereas for a nation like Cuba, it is around 18%; clearly indicating the priority they attach to education as a whole.

The Finance Minister can tweak the crucial NREGA and make it mandatory for the funds to be utilized for productive assets like durable buildings and classrooms for the more than 1 million primary schools in India. Not only will at least one member of a poor family get 100 days of employment; but children of such families can then hope to go to functional schools with physical infrastructure. This is not a complicated policy initiative; but it will be game-changing. Functional schools with physical infrastructure will ensure that future generations of children will have access to schools, while their parents have earned a livelihood constructing those same schools. In effect, the actual allocation for Sarva Shiksha Abhiyaan and Midday Meal schemes will not be Rs.100,000 crores, as a large part of NREGA funds will be utilized for this. More importantly, since parents will understand that the very future of their children lies in those modest buildings, they will gladly take all help they can from activists to ensure that corrupt contractors do not cheat their children. It will be a classically win-win policy, even with the notorious corruption that is associated with the implementation of such schemes. The same model can be subsequently implemented for secondary schools too, where the problem is even more acute (as per World Bank, gross enrollment ratio in secondary education is lower than world average, even less then East Asia and Latin America) with the same transformational results - a classic mix of NREGA with Sarva Shiksha Abhiyaan.

Now that the first set of ‘idiots’ have a school to go to, the challenge is to make teachers and principals actually work in those schools. One huge and persistent problem has been the tendency of teachers and principals to simply not show up at schools. The best and most innovative way to tackle this is to use the same NREGA and Sarva Shiksha Abhiyaan funds to implement a carrot and stick policy. The Finance Minister should announce a cash incentive of Rs.1 lakh for teachers who deliver the best ‘pass’ and ‘student retention’ ratios in their classrooms. Similarly, an incentive of Rs.2 lakh should be announced for principals whose schools deliver the best ‘pass’ and ‘student retention’ results. There are about 4 million such school teachers and principals in India. Even if only one in 10 gets that kind of incentive, the total funds spent in a year would not be more than Rs.5,000 crore. And the fact that only one in 10 will get that incentive will make teachers and principals compete to deliver better quality education. And how do you check fudging? Quite simple actually – the incentives would be given only after 5 years of results have been demonstrated, both for primary and secondary schools. So, a teacher would get the incentive only after he or she has successfully steered students from class I through class V. It would be very simple for the UID project being piloted by Nandan Nilekani to keep and monitor the data.

These proposals, implemented through a Budget for Three Idiots, will actually lead towards universal primary education. But then, what will poor students do when they pass out of school and seek education that will help them build a career? Are there enough opportunities and capacities for higher education? Not really. Currently, around 10 million (according to the last report by Ministry of HRD, 2005-06) students apply to colleges every year. And there are only 20,769 colleges in all, and just 490 universities. And mind you, here we are referring to just general education. The situation gets worse when it comes to professional education. The second question is that can these poor students afford higher and professional education, even if the capacities are created? Quite simply, they cannot. The Budget for Three Idiots must increase the allocation for post-matric scholarships by more than 10 times to about Rs.20,000 crore. This will ensure that no poor student fails to get a decent professional education for want of money. Along with scholarships there should also be a provision for unsecured education loans through banks on relatively low interest rates. Probably India is the only nation in its league, which still offers education loans against collateral security!

And what about the third set of ‘idiots’. I am even more optimistic here because Kapil Sibal has already initiated steps to dismantle corrupt and dysfunctional regulatory bodies like AICTE and UGC with something better, more efficient and transparent. The Finance Minister just has to tweak a little and simply transfer the funds allocated for such bodies to a super regulator that will soon be in place.

Agreed, even though the proposals in this Budget for Three Idiots are simple, they will not be easy to implement because of vested interests. But I think if anyone can do this, it is the current team! And please don’t even think of whining about where the money will come from. I have been saying ad nauseam for almost a decade that abolishing direct and hidden subsidies for the middle class and the rich will easily generate the funds required by a Budget for Three Idiots.

Our education system has been churning out idiots for a few generations. Don’t you think it is time we changed that? All we need is the will to re-orient the existing programs like NREGA and Sarva Shiksha Abhiyaan. Really, it could be as simple as that. And India could well be on its way to miracle!