Opinion A bicycle built for many
Bihar shows how conditional cash transfers can be game-changers
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In Nitish Kumars Bihar,there is a Mukhyamantri Balika Cycle Yojana,now covering madrassas too. It was a scheme started in 2006. Through this,girls who pass Standard VIII are given bicycles,once they enrol in Standard IX. More accurately,girls who pass Standard VIII are disbursed (through schools) Rs 2,000 to purchase bicycles and Rs 700 for uniforms. In three years,from 2007-08 to 2009-10,871,000 girls have got bicycles. It is a universal scheme,no debates about BPL (below the poverty line),the only criterion being enrolment in Standard IX,with the submission of receipts for cycles and uniforms. So far,there havent been any allegations about leakage through this conditional cash transfer. A survey found that in 92 per cent of instances money disbursed has been used to purchase cycles. Since other girls in school possess cycles and uniforms,peer pressure ensured that the funds were not diverted. At worst,inferior uniforms and cycles may have been bought. This is spliced with cash awards and scholarships for girls who pass board examinations or score 60 per cent. Take the Annual Status of Education Report. The last one is still for 2009. Consequently,it doesnt capture the entire impact of the cycle revolution. Nevertheless,drop-out rates for girls in the 11-14 age-group in Bihar dropped from 17.6 per cent in 2006 to 6 per cent in 2009.
This is nothing short of phenomenal. When bicycles became safe and popular,transcending penny farthings in the 1890s,women took to them and feminists dubbed them freedom machines. It was said bicycles accomplished more for womens sensible attire than all reform movements put together. The mid-term appraisal of the Eleventh Five-Year Plan has the following congratulatory words: The Sarva Shiksha Abhiyan,in combination with the Mid Day Meal Scheme,has succeeded in achieving near universal enrolment in primary schools. It then laments high drop-out rates and low retention. The number of out-of-school children has indeed sharply dropped (2.8 million in 2008-09). The MDMS is different. But it is doubtful the SSA proper has done much to boost primary school enrolment. Without getting into definitions of what is truly private school,58 per cent of enrolment in urban India is in private schools and the figure is 32 per cent in rural India. Therefore,demand has been spliced with choice. The Right to Education Act imposes high compliance costs on budget private schools and drives them out. It thus hinders,rather than furthers,the cause of school education. But that is a separate point. Budget analysis (such as by the Haq Centre for Child Rights) shows most SSA expenditure has been on civil construction and teachers salaries.
Enrolment (and even drop-outs) is fundamentally a girl-child problem,especially in formerly backward states like Bihar. It is no ones case that cycles alone led to success. If nothing else,a cycle scheme has to be administratively delivered. West Bengal announced a similar cycle scheme for 11 blocks affected by Maoist violence in Midnapore district. But not a single cycle has been delivered. For girls,transport infrastructure (not just cycles,but roads),presence of women teachers and separate toilets are important. There were between 300,000 and 400,000 vacancies for school teachers and,with 50 per cent reservation for women,around 100,000 have been filled. Government schools have begun to function and the MDMS is actually delivered. In addition to cycles,the Bihar government itself ascribes success to other schemes that improve schools,apart from better roads. There are other schemes that directly provide subsidies to women who need them. There is an implicit assumption that market failures exist and state provisioning is the only answer. There is a difference between state financing and state provisioning and subsidies (through conditional cash transfers) to those who need them are not antithetical to introducing choice,competition and efficiency.
Take education as a test case. Several states have education vouchers,with differing conditions. Uttarakhand has Pahal,with a stipulation that there cannot be a government school (or Education Guarantee Scheme centre) within 1 km of the habitation. Rajasthan has two separate schemes Gyanodaya Yojana (where new secondary schools are set up by the private sector and state-funded vouchers are used) and Shikshak Ka Apna Vidyalaya (where trained and unemployed teachers set up schools in backward areas and vouchers are used). It is early days,but Uttar Pradesh proposes vouchers for poor students who wish to study in English-medium schools. Madhya Pradesh has a scheme known as Paraspar,where Rs 3,000 is transferred to private schools for students from economically weaker sections. There are pilot schemes in Delhi too. One way to interpret the RTE Act is that the government has recognised the public education system cannot deliver. Girls in Bihar wear uniforms and ride bicycles,but still mostly to government schools. The reason is that private schools still dont exist. Thats because there are serious entry barriers to setting up private schools. Once roads are built and such licensing restrictions eased,the moral of the bicycle story is that one should transit towards education vouchers. But,as mentioned earlier,the RTE Act doesnt ease licensing restrictions. It makes them tougher.
Fifty years ago,Friedrich Hayek wrote a book titled The Constitution of Liberty. This is what it said: It would now be entirely practicable to defray the costs of general education out of the public purse without maintaining government schools,by giving the parents vouchers covering the cost of education of each child which they could hand over to schools of their choice. It may still be desirable that government directly provide schools in a few isolated communities where the number of children is too small (and the average cost of education therefore too high) for privately run schools.
Obviously,this doesnt imply the absence of regulation. Cross-country literature on conditional cash transfers isnt unambiguous. Success is a function of the segment. However,when there is significant private sector presence,they work better. Education is a case in point,not just in India,but globally. It isnt likely to work that well for health,not yet. Whenever one thinks of conditional cash transfers,one invariably thinks of food. A couple of months ago,Kaushik Basu authored a paper published by the finance ministry. This was titled The Economics of Foodgrain Management in India and advocated food stamps. This may work for fruits,vegetables and other food items. But it is unlikely to work for foodgrains,where public procurement and high prices drive out private grain trade and unreasonable prices granted to fair price shops build leakage into the system. Once those are scrapped,it might work. Efficiency requires not just direct subsidisation,but also the easing of governmental controls.
The writer is a Delhi-based economist express@expressindia.com
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