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After months of discussion,  the issue of FDI in retail is being deliberated in the Lok Sabha today.  In September 2012, the Cabinet had approved 51% of FDI in multi-brand retail (stores selling more than one brand).  Under these regulations, foreign retail giants like Walmart and Tesco can set up shop in India.  Discussions on permitting FDI in retail have focused on the effect of FDI on unorganised retailers, farmers and consumers. Earlier, the central government commissioned the Indian Council for Research on International Economic Relations (ICRIER) to examine the impact of organised retail on unorganised retail. The Standing Committee on Commerce also tabled a report on Foreign and Domestic Investment in the Retail Sector in May, 2009 while the Department of Industrial Policy and Promotion (DIPP) released a discussion paper examining FDI in multi-brand retail in July, 2010.  Other experts have also made arguments – both in support of, and in opposition to, the move to permit FDI in retail sales. The table below summarises some of these arguments from the perspective of various stakeholders as collated from the above reports examining the issue.

Stakeholder

Supporting arguments (source)

Opposing arguments (source)

Unorganised retail
  • No evidence of impact on job losses (ICRIER).
  • The rate of closure of unorganised retail shops (4.2%) is lower than international standards (ICRIER).
  • Evidence from Indonesia and China show that traditional and modern retail can coexist and grow  (Reardon and Gulati).
  • Majority of small retailers keen to remain in operation even after emergence of organised retail (ICRIER).
  •  Unorganised retailers in the vicinity of organised retailers saw their volume of business and profit decline but this effect weakens over time (ICRIER).
  • Other studies have estimated that traditional fruit and vegetable retailers experienced a 20-30% decline in incomes with the presence of supermarkets (Singh).
  • There is potential for employment loss in the value chain. A supermarket may create fewer jobs for the volume of produce handled (Singh).
  • Unemployment to increase as a result of retailers practicing product bundling (selling goods in combinations and bargains) and predatory pricing (Standing Committee).
Farmers
  • Significant positive impact on farmers as a result of direct sales to organised retailers.  For instance, cauliflower farmers receive a 25% higher price selling directly to organised retailers instead of government regulated markets (mandis).  Profits for farmers selling to organised retailers are about 60% higher than when selling to mandis (ICRIER).
  • Organised retail could remove supply chain inefficiencies through direct purchase from farmers and investment in better storage, distribution and transport systems.  FDI, in particular, could bring in new technology and ideas (DIPP).
  •  Current organised retail procures 60-70% from wholesale markets rather than farmers. There has been no significant impact on backend infrastructure investment (Singh).
  • There are other issues like irrigation, technology and credit in agriculture which FDI may not address (Singh).
  • Increased monopolistic strength could force farmers to sell at lower prices (Standing Committee).
Consumers
  • Organised retail lowers prices. Consumer spending increases with the entry of organised retail and lower income groups tend to save more (ICRIER).
  • It will lead to better quality and safety standards of products (DIPP).
  •  Evidence from some Latin American countries (Mexico, Nicaragua, Argentina), Africa (Kenya, Madagascar) and Asia (Thailand, Vietnam, India) reveal that supermarket prices for fruits and vegetables were higher than traditional retail prices (Singh).
  • Even with lower prices at supermarkets, low income households may prefer traditional retailers because they live far from supermarkets, they can bargain with traditional retailers and buy loose items (Singh).
  • Monopolistic power for retailers could result in high prices for consumers.

Source: ICRIER [1.  "Impact of Organized Retailing on the Unorganized Sector", ICRIER, September 2008]; Standing Committee [2.  "Foreign and domestic investment in retail sector", Standing Committee on Commerce, May 13, 2009]; Singh (2011) [3. "FDI in Retail: Misplaced Expectations and Half-truths",  Sukhpal Singh, Economic and Political Weekly, December 17, 2011];  Reardon and Gulati (2008)  [4. "Rise of supermarkets and their development implications," IFPRI Discussion Paper, Thomas Reardon and Ashok Gulati, February 2008.]; DIPP [5. "Discussion Paper on FDI in Multi-brand Retail Trading", Department of Industrial Policy and Promotion, July 6, 2010]


The National Education Policy (NEP) 2020 was released on July 30, 2020.  It will replace the National Policy on Education, 1986.  Key recommendations of the NEP include: (i) redesigning the structure of school curriculum to incorporate early childhood care and education, (ii) curtailing dropouts for ensuring universal access to education, (iii) increasing gross enrolment in higher education to 50% by 2035, and (iv) improving research in higher education institutes by setting up a Research Foundation.  In this blog, we examine the current status of education in the country in view of some of these recommendations made by the NEP.

Universal access to Education

The NEP states that the Right to Education Act, 2009 has been successful in achieving near universal enrolment in elementary education, however retaining children remains a challenge for the schooling system.  As of 2015-16, Gross Enrolment Ratio was 56.2% at senior secondary level as compared to 99.2% at primary level.  GER denotes enrolment as a percent of the population of corresponding age group.  Further, it noted that the decline in GER is higher for certain socio-economically disadvantaged groups, based on: (i) gender identities (female, transgender persons), (ii) socio-cultural identities (scheduled castes, scheduled tribes), (iii) geographical identities (students from small villages and small towns), (iv) socio-economic identities (migrant communities and low income households), and (v) disabilities.  In the table below, we detail the GER in school education across: (i) gender, and (ii) socio-cultural identities.  

Table 1: GER in school education for different gender and social groups (2015-16)

Level

Male

Female

SC

ST

All

Primary (I-V) 

97.9%

100.7%

110.9%

106.7%

99.2%

Upper Primary (VI-VIII) 

88.7%

97.6%

102.4%

96.7%

92.8%

Secondary (IX-X) 

79.2%

81%

85.3%

74.5%

80%

Senior Secondary (XI-XII) 

56%

56.4%

56.8%

43.1%

56.2%

Sources: Educational Statistics at Glance 2018, MHRD; PRS.

Data for all groups indicates decline in GER as we move from primary to senior secondary for all groups.  This decline is particularly high in case of Scheduled Tribes.  Further, we analyse the reason for dropping out from school education.  Data suggests that the most prominent reason for dropping out was: engagement in domestic activities (for girls) and engagement in economic activities (for boys). 

Table 2: Major reasons for dropping out (Class 1-12) for 2015-16

Reason for dropping out

Male

Female

Child not interested in studies 

23.8%

15.6%

Financial Constraints 

23.7%

15.2%

Engage in Domestic Activities 

4.8%

29.7%

Engage in Economic Activities 

31.0%

4.9%

School is far off 

0.5%

3.4%

Unable to cop-up with studies 

5.4%

4.6%

Completed desired level/ Class 

5.7%

6.5%

Marriage

 

13.9%

Other reasons

5.1%

6.2%

Note: Other reasons include: (i) timings of educational Institution not suitable, (ii) language/medium of Instruction used unfamiliar, (iii) inadequate number of teachers, (iv) quality of teachers not satisfactory, (v) unfriendly atmosphere at school. For girl students, other reasons also include: (i) non-availability of female teachers, (ii) non-availability of girl’s toilet.
Sources: Educational Statistics at Glance 2018, MHRD; PRS.

The NEP recommends strengthening of existing schemes and policies which are targeted for such socio-economically disadvantaged groups (for instance, schemes for free bicycles for girls or scholarships) to tackle dropouts.   Further, it recommends setting up special education zones in areas with significant proportion of such disadvantaged groups.  A gender inclusion fund should also be setup to assist female and transgender students in getting access to education. 

Increasing GER in Higher Education to 50% by 2035

The NEP aims to increase the GER in higher education to 50% by 2035.  As of 2018-19, the GER in higher education in the country stood at 26.3%.  Figure 2 shows the trend of GER in higher education over the last few years.  Note that the annual growth rate of GER in higher education in the last few years has been around 2%.    

Figure 1: GER in Higher Education (2014-15 to 2018-19)

image                                                                                                     

 

 

 

 

 

Sources: All India Survey on Higher Education, MHRD; PRS.

Table 3: Comparison of GER (higher education) with other countries

Country

GER (2017-18)

India 

25%

Brazil

51%

China

49%

Indonesia

36%

South Africa

22%

Pakistan

9%

Germany

70%

France 

66%

United Kingdom

60%

Sources: UNESCO; PRS.

The NEP recommends that for increasing GER, capacity of existing higher education institutes will have to be improved by restructuring and expanding existing institutes.  It recommends that all institutes should aim to be large multidisciplinary institutes (with enrolments in thousands), and there should be one such institution in or near every district by 2030.   Further, institutions should have the option to run open distance learning and online programmes to improve access to higher education.  

Foundational literacy and numeracy

The NEP states that a large proportion of the students currently enrolled in elementary school have not attained foundational literacy and numeracy (the ability to read and understand basic text, and carry out basic addition and subtraction).  It recommends that every child should attain foundational literacy and numeracy by grade three.  

Table 4 highlights the results of the National Achievement Survey 2017 on the learning levels of students at Grade 3 in language and mathematics.  The results of the survey suggest that only 57% students in Grade 3 are able to solve basic numeracy skills related to addition and subtraction.  

Table 4: NAS results on learning level of Grade-3 students

Learning level (Grade 3)

Percentage of students

Ability to read small texts with comprehension (Language)

68%

Ability to read printed scripts on classroom walls such as poems, posters (Language)

65%

Solving simple daily life addition and subtraction problems with 3 digits (Mathematics)

57%

Analyses and applies the appropriate number operation in a situation (Mathematics)

59%

Sources: National Achievement Survey (2017) dashboard, NCERT; PRS.

To achieve universal foundational literacy and numeracy, the Policy recommends setting up a National Mission on Foundational Literacy and Numeracy under the MHRD.  All state governments must prepare implementation plans to achieve these goals by 2025.  A national repository of high-quality resources on foundational literacy and numeracy will be made available on government’s e-learning platform (DIKSHA).   Other measures to be taken in this regard include: (i) filling teacher vacancies at the earliest, (ii) ensuring a pupil to teacher ratio of 30:1 for effective teaching, and (iii) training teachers to impart foundational literacy and numeracy.

Effective governance of schools

The Policy states that establishing primary schools in every habitation across the country has helped increase access to education.  However, it has led to the development of schools with low number of students.  The small size of schools makes it operationally and economically challenging to deploy teachers and critical physical resources (such as library books, sports equipment).  

With respect to this observation, the distribution of schools by enrolment size can be seen in the table below.  Note that, as of September 2016, more than 55% of primary schools in the country had an enrolment below 60 students.   

Table 5: Distribution of schools by enrolment size

Strength (Grade)

Below 30

31-60

61-90

91-120

121-150

151-200

More than 200

Primary schools (Class 1-5)

28.0%

27.5%

16.0%

10.3%

6.3%

5.6%

6.4%

Upper primary schools (Class 6-8)

14.8%

27.9%

18.7%

15.0%

8.4%

7.2%

8.0%

Upper primary schools (Class 1-8)

5.7%

11.6%

13.0%

12.1%

10.4%

13.4%

33.8%

Sources: Flash Statistics on School Education 2016-17, UDISE; PRS.

While nearly 80% primary schools had a library, only 1.5% schools had a librarian (as of September 2016).  The availability of facilities is better in higher senior secondary schools as compared to primary or upper primary schools. 

Table 6: Distribution of schools with access to physical facilities

Facilities

Primary schools (Class 1-5)

Upper primary schools (Class 1-8)

Higher senior secondary
 schools (Class 1-12)

Library

79.8%

88.0%

94.4%

Librarian

1.5%

4.5%

34.4%

Playground

54.9%

65.5%

84.3%

Functional computer

4.4%

25.2%

46.0%

Internet connection

0.9%

4.2%

67.9%

Sources: Flash Statistics on School Education 2016-17, UDISE; PRS.

To overcome the challenges associated with development of small schools, the NEP recommends grouping schools together to form a school complex.  The school complex will consist of one secondary school and other schools, aanganwadis in a 5-10 km radius.  This will ensure: (i) adequate number of teachers for all subjects in a school complex, (ii) adequate infrastructural resources, and (iii) effective governance of schools.

Restructuring of Higher Education Institutes

The NEP notes that the higher education ecosystem in the country is severely fragmented.  The present complex nomenclature of higher education institutes (HEIs) in the country such as ‘deemed to be university’, ‘affiliating university’, ‘affiliating technical university', ‘unitary university’ shall be replaced simply by 'university'.

According to the All India Survey on Higher Education 2018-19, India has 993 universities, 39,931 colleges, and 10,725 stand-alone institutions (technical institutes such as polytechnics or teacher training institutes).  

Table 7: Number of Universities in India according to different categories

Type of university

Number of universities

Central University

46

Central Open University

1

Institutes of National Importance

127

State Public University

371

Institution Under State Legislature Act

5

State Open University

14

State Private University

304

State Private Open University

1

Deemed University- Government

34

Deemed University- Government Aided

10

Deemed University- Private

80

Total

993

Sources: All India Survey on Higher Education 2018-19; PRS.

The NEP recommends that all HEIs should be restructured into three categories: (i) research universities focusing equally on research and teaching, (ii) teaching universities focusing primarily on teaching, and (iii) degree granting colleges primarily focused on undergraduate teaching.  All such institutions will gradually move towards full autonomy - academic, administrative, and financial.  

Setting up a National Research Foundation to boost research

The NEP states that investment on research and innovation in India, at only 0.69% of GDP, lags behind several other countries.   India’s expenditure on research and development (R&D) in the last few years can be seen in the figure below.   Note that the total investment on R&D in India as a proportion of GDP has been stagnant at around 0.7% of GDP.   In 2018-19, the total expenditure on R&D in India was Rs 1,23,848 crore.  Of this, Rs 72,732 crore (58%) of expenditure was by government, and the remaining (42%) was by private industry. 

Figure 2: R&D Expenditure in India (2011-12 to 2018-19) 

image     

 

 

 

 

 

 

Sources: S&T Indicators Table 2019-20, Ministry of Science and Technology, March 2020; PRS.

Figure 3: Comparison of R&D expenditure in India with other countries (2017)

image

 

 

 

 

 

 

 

 

 

Sources: S&T Indicators Table 2019-20, Ministry of Science and Technology, March 2020; PRS.

To boost research, the NEP recommends setting up an independent National Research Foundation (NRF) for funding and facilitating quality research in India.  The Foundation will act as a liaison between researchers and relevant branches of government as well as industry.  Specialised institutions which currently fund research, such as the Department of Science and Technology, and the Indian Council of Medical Research, will continue to fund independent projects.  The Foundation will collaborate with such agencies to avoid duplication.

Digital education

The NEP states that alternative modes of quality education should be developed when in-person education is not possible, as observed during the recent pandemic.  Several interventions must be taken to ensure inclusive digital education such as: (i) developing two-way audio and video interfaces for holding online classes, and (ii) use of other channels such as television, radio, mass media in multiple languages to ensure reach of digital content where digital infrastructure is lacking.

In this context, we analyse: (i) the availability of computer and internet across households in India, and (ii) ability to use computer or internet by persons in the age group of 5-14.  As of 2017-18, the access to internet and computer was relatively poor in rural areas.  Only 4.4% of rural households have access to a computer (excludes smartphones), and nearly 15% have access to internet facility.  Amongst urban households, 42% have access to internet. 

Table 8: Access to Computer and Internet across households (2017-18)

Access to ICT

Rural

Urban

Overall

Households having computer

4.4%

23.4%

10.7%

Households having internet facility

14.9%

42.0%

23.8%

Note: Computer includes desktop, laptop, notebook, tablet.  It does not include smartphone. 

Sources: Household Social Consumption on Education (2017-18), Ministry of Statistics and Programme Implementation, July 2020; PRS.

Table 9: Ability to use Computer and Internet across persons in the age group 5-14 (2017-18)

Ability to use ICT

Rural

Urban

Overall

Ability to use computer

5.1%

21.3%

9.1%

Ability to use internet

5.1%

19.7%

8.8%

Note: Ability to use computer means to be able to carry out any of the tasks such as: (i) copying or moving a file/folder, (ii) sending emails, (iii) transferring files between a computer and other devices, among others. Ability to use internet means to be able to use the internet browser for website navigation, using e-mail or social networking applications.

Sources: Household Social Consumption on Education (2017-18), Ministry of Statistics and Programme Implementation, July 2020; PRS.

Public spending on education to be increased to 6% of GDP

The recommendation of increasing public spending on Education to 6% of GDP was first made by the National Policy on Education 1968 and reiterated by the 1986 Policy.  NEP 2020 reaffirms the recommendation of increasing public spending on education to 6% of GDP.  In 2017-18, the public spending on education (includes spending by centre and states) was budgeted at 4.43% of GDP.  

Table 10: Public spending on Education (2013-2018)

Year

Public expenditure (Rs crore)

% of GDP

2013-14

4,30,879

3.84%

2014-15

5,06,849

4.07%

2015-16

5,77,793

4.20%

2016-17

6,64,265

4.32%

2017-18

7,56,945

4.43%

Sources: 312th Report, Standing Committee on Human Resource Development, March 2020; PRS.

Figure 4: Comparison of public spending on Education in India with other countries as % of GDP (2015)

image

 

 

 

 

 

 

 

 

 

Sources: Educational Statistics at Glance 2018, MHRD; PRS.

In the figure below, we look at the disparities within states in education spending.  In 2020-21, states in India have allocated 15.7% of their budgeted expenditure towards education.  States such as Delhi, Rajasthan, and Maharashtra have allocated more than 18% of their expenditure on Education for the year 2020-21.  On the other hand, Telangana (7.4%), Andhra Pradesh (12.1%) and Punjab (12.3%) lack in spending on education, as compared to the average of states. 

Figure 5: Budgeted allocation on Education (2020-21) by states in India

image

Note: AP is Andhra Pradesh, UP is Uttar Pradesh, HP is Himachal Pradesh and WB is West Bengal.
Sources: Analysis of various state budget documents; PRS.

For a detailed summary of the National Education Policy, see here