Household expenditure on elementary education : implications for cost recovery mechanisms

This paper presents the pattern of household expenditure on elementary education according to types of schools (such as government, aided and private) for major states and all India. It is hypothesised that the household expenditure on education reflects household demand for education besides ability to pay for education. Households in the highest income group spend about three times more on children's education than households in the low income groups. Household expenditure on education is higher among the large landowners, the upper segment above the poverty line groups, minorities, cases where both parents are literate, and in 'developed' villages. India typically has a high expenditure elasticity and low marginal propensity to spend on education. Very high expenditure elasticity confirms the fact that the Indian expenditure behaviour is entrapped in the poverty syndrome, which makes education a superior good at any given level of income and price constraint. If the goal of education for all has to be realised in the near future, community financing is urgently required both to supplement government expenditure and to improve quality of education and to alleviate supply constraints. In spite of such efforts, children belonging to poorer households may not attend schools because of other direct costs and also because of the opportunity cost attached to child labour. This paper therefore discusses the mechanisms, that can help to ensure, both enrolment and continuation of pupils from the poorer classes at the local and village level in a system of education based on community financing and participation.