The Hindu Business Line : Universal tax for universal education

An educational fund can be created by taxing two common products of consumption: Salt and refined sugar. A surcharge of Re 1 and Rs 2 on every kg of salt and sugar produced should yield Rs 120 crore and Rs 300 crore respectively. Commodity taxes are inequitable, as their burden is proportionately larger on the poor, but consider the national pride of every individual making some sacrifice to put the 59 million children in the 6-14 age group in school and keep them there.

CLOSE ON the heels of winning the Supreme Court's endorsement of capping the fees in the Indian Institutes of Management (IIMs), the Human Resource Development (HRD) Minister, Mr Murli Manohar Joshi, is reported to have kicked off two more initiatives.

He would like to generate funds from Parliamentarians, philanthropists and the corporate sector for the government's universal education programme — the Sarva Siksha Abhiyan (SSA). Also, the electorate willing, Mr Joshi would like to create a Centrally sponsored and monitored education fund, seeded through a surcharge on the corporate sector.

The Minister's rationale for this tax is that his Ministry has run out of funds for the universal education programme this year and needs more allocation in the coming years.

It may be recalled that the SSA was announced in 2001 by the BJP Government with the ambition of getting every child in the 6-14 age group in school by the end of 2003, complete five years of schooling by 2007 and eight years of schooling by 2010.

Mr Joshi has often come in for severe criticism for some of his radical ideas, including the rewriting of text-books, but he may not be wrong when he moots an education fund, though the proposal merits refining.

Education is a Concurrent subject being handled by the Centre and the States. One would have a better idea of what is being allocated and spent under this head if one looks at the Central and State allocations, but there may be pointers to what is happening in education by just looking at the Central figures.

The Budget documents show that the allocation for education has nearly doubled over the seven-year period starting 1997-98 from about Rs 4,500 crore to about Rs 9,500 crore. Further, the disaggregate data for primary and secondary education shows that Plan expenditure is higher at the primary school level, while non-Plan expenditure is higher at the secondary school level. This possibly reflects two facts. The salaries of primary school teachers are lower than secondary school teachers and that the Central government is adding more educational infrastructure at the primary rather than the secondary school level.

This is broadly in keeping with what the government should and would do, considering that the dropout rate during the transition from primary to secondary schools is high. A higher wage bill at the secondary school levels is also not unexpected, as better-qualified teachers teaching higher class would be paid more. The wage bill also represents a substantial part of the Education Ministry's budget is understandable. As schools without buildings will show, teaching in more about teachers than educational infrastructure.

The Budget document also points out that like many other Ministries, the HRD Ministry has also not been able to spend all that has been allocated to it. The excuse of an inability to absorb — or the inability to spend — all that has been allocated has often been used by the Finance Ministry to cut Budget allocations in the following year for most ministries. However, as with Defence, this does not seem to be the case with education, where the allocations have gone up with every successive Budget, despite some funds lapsing at the end of the year.

However, having said that, it also needs to be said that the Government's initiative for education is inadequate. Funding is an important issue, as is the need to bring all the eligible students to the schools and retain them with the schooling system till at least a reasonable level.

Some would argue that vocational education is a solution to India's problems and that basic literacy is enough for a carpenter or a smithy to successfully ply his trade. Still, experience the world over and in States like Tamil Nadu shows that education is the greatest sterlising factor. The government may, thus, be wise investing in education than any other sector to check the burgeoning numbers.

Further, the Tamil Nadu model has clearly shown that incentivising attendance through schemes such as the mid-day meals works. The Centre may actually be better advised to devise a national model under the SSA which would replicate the mid-day meal schemes in all government run schools across the country to bring and keep children in schools.

Another issue is one of disparity between the State and Central government schools in terms of infrastructure, quality of education and reach. One could keep on arguing that the States should be self-sustaining and pay for their social infrastructure, but fact remains that the inability of many States to do so only hampers the growth of the country.

The only way to elevate the level of education in all schools is to raise the standards in state run schools to the levels of the centrally-run Kendriya Vidyalayas, and of the latter to that of the public schools. Such pulling up of the educational system by the boot-straps, as it were, and to ensure that children who enter school remain there require additional funding. This could be done by creating a dedicated fund. The road sector has already proved that dedicated funds spur focussed spending in a sector and few other sectors need such minute attention as universal education in India.

Thus, Mr Joshi's suggestion for the creating a dedicated fund for education is a commendable. However, his suggestion that fund should be seeded with a cess on the corporate sector needs to be refined. Politicians are generally comfortable with taxing companies in order to sugarcoat the bitter pill of a tax, but the ground reality is that companies never pay these taxes. They pass it on to consumers by pushing up prices.

A better alternative would be to have a universal tax to fund universal education. Experience has already proved that education is an empowering tool and poverty anywhere is a detriment to progress everywhere. Hence, the corpus of an educational fund should be created by taxing two of the most common products of consumption, salt and refined sugar.

The average per capita consumption salt in the country is 12 kg per annum of sugar it is 15.6 kg per annum. The government should impose a surcharge of Re 1 and Rs 2 respectively on every kg of salt and sugar produced. That should roughly yield Rs 120 crore through salt and Rs 300 crore thorough a sugar.

In terms of pain, every individual across the country would spend Rs 12 additionally per year on salt while the average individual budget would go up by Rs 30 per year on sugar. The selection of salt and sugar as items of tax ensures that though everyone pays for the additional national education effort, the burden in slightly higher on the rich than on the poor, assuming that the latter do not consume sugar.

Some would argue that commodity taxes are inequitable, as their burden is proportionately larger on the poor who earn less. Yet, look at the kind of national pride that such a measure would generate when every single individual makes some sacrifice to put the 59 million children in the 6-14 age group in school and keep them there for a minimum of eight years.

(The author, a freelance writer, can be contacted at jayanthiiyengar1@yahoo.com)