In India, historically and constitutionally, the fiscal spaces for states have been very limited because of their limited resource-generating capacity. However, Maharashtra is an exception. It is the wealthiest state in terms of its Gross State Domestic Product (GSDP). The growth rate of Maharashtra was 9.4% in 2016-17 – 2% more than the nation’s growth rate.

Not only GSDP, the available resources in the state’s exchequer is also one of the highest among all states and union territories (UTs). The resource envelop of Maharashtra has increased after the 14th Finance Commission’s (FFC) recommendation (2015-16) for the higher devolution of untied fund to states. Between 2014-15 and 2017-18, the state’s share in central taxes has increased by 85% and the total revenue receipt of the state has witnessed an increase of 35% during this period. Now, the question is, will the state channelise some of these additional resources to bridge the gaps in school education?

There are 2.5 crore school-going children comprising 24% of the total population of Maharashtra (Census 2011). During 2016-17, the state had 1,04,970 elementary schools (class 1 to class 8) in which 160 lakh children were enrolled. There were 25,737 secondary schools (class 9 to class 12) which enrolled 66.15 lakh children (Economic Survey, 2016-17).

Despite a substantial increase in enrolment and an improvement in the basic school infrastructure in the last few years, Maharashtra still grapples with a large number of out-of-school children, who are either likely to join the labour market or may end up in exploitative situations in the near future. The incidence of drop-outs is severe at the secondary level, as the gross enrolment ratio of 99.7 at the primary level drops to 67.8 at the secondary level. Despite the government recognising the need for investing in education, the pattern of allocation of resources to school education, especially secondary education, remains inadequate.

The share of school education budget in the total state budget, which also indicates the priority of school education in the state’s agenda, shows a declining trend for the last five years (refer figure below). In the pre-FFC period (2012-13, 2013-14 and 2014-15), while the share of expenditure for school education in the total state budget was around 19%, in the FFC period, it has reduced to 16.8% in 2016-17 and revived to 18.2% in 2017-18.

The decline in overall school education budget is due to the reduced share – both in elementary and secondary education. However, the increase in the per-child spending on school education (from ₹15,369 in 2014-15 to ₹21,115 in 2017-18) conveys the fact that state’s education budget has not declined in absolute numbers. However, it is the sector’s priority that has declined in the FFC period.

Figure: Share of School Education Budget in Total Budget (Percent)

Note: Elementary and secondary education includes expenditures made by the Department of Education and school education includes the expenditure made by the education department and other departments on school education (Class I-XII). (Source: Detailed Demand for Grants, Maharashtra State Budget)

In last year’s Budget, two major Centrally-sponsored schemes for school education, the Sarva Shiksha Abhiyan (SSA) and the Rashtriya Madhyamik Shiksha Abhiyan (RMSA), were allocated ₹1,649 crores and ₹66 crores – a 9% and 29% reduction from the allocation in the 2016-17 Budget, respectively. Today, the need is to develop an enabling ecosystem where inclusive, universal and quality education (till the higher secondary level) is available for all children. Only a higher investment in secondary and higher secondary education can further promote lifelong learning opportunities for children – and subsequently, contribute to the creation of a skilled workforce.

While the inadequate resource allocation for secondary education remains an issue, the debate is shifting towards the efficiency of private schools (over government schools) in terms of the quality of education. As a result, the number of private schools, vis-à-vis the enrolment in private schools, is increasing overtime. Between 2010 and 2015, while the share of enrolment in government primary schools has decreased by 25%, the same has increased by 27% in private schools.

The situation is also grave at the secondary level. Government-aided and government-unaided schools dominate the secondary school education system in Maharashtra, and only 18% of them are government schools. These private schools are an important beneficiary of government financing for school education. While privately-aided schools, both elementary and secondary, get grants (in the form of teachers’ salaries and other overhead costs like expenditure on teacher training, incentives, administration and management, curriculum development, examination system, etc.), government resources also go to private unaided schools as a reimbursement for children from econonomically-weaker sections under the RTE Act. On an average, the Maharashtra government spends around 35% of its school education budget for the government aided and unaided schools. With growing privatisation, this share is increasing overtime. In 2017-18, the school education department had allocated 37.4% of its total school education budget as assistance to private schools.

Last month, the Maharashtra state assembly passed a bill to amend the Maharashtra Self-Financed Schools Act, 2012. The Act now allows private companies to set up schools under Section 8 of the Companies Act, 2013. An increasing shift towards privatisation and the deregulation of schools may end up with teachers getting a lower pay and higher school fees for students.

As the Maharashtra government gears up to present its 2018-19 Budget in the coming months, it is time that the government plans extensively for school education to bring about transformational changes in the lives of children – and subsequently, social cohesion and sustained development along with a thriving economy. It therefore becomes vital to determine the trajectory of growth of private schooling and the state’s investment in the same.

An analysis of the state’s education budgets, with changes from the last year of the 13th Finance Commission (2014-15), and the first three years of 14th Finance Commission (2015-16, 2016-17 and 2017-18), does give us an early trend and deeper understanding of the shift in resource allocation. Undoubtedly, Maharashtra does have enough resources to channelise in Education. While planning for the 2018-19 Budget, the government should relook at and subsequently prioritise investment in education, especially secondary education, to decrease the drop-out rate, post primary education. An additional investment now and re-emphasising the value of public education systems will have positive, long-lasting effects on the large number of children in the state.