It is being increasingly recognized that the participation of a vast majority of population in our much vaunted economic resurgence would hinge essentially on our ability to provide an effectively functioning education system. Indeed access to quality education is crucial for creating a reservoir of human resources for subsequent absorption in jobs and in the process lift a multitude of people out of poverty. It is in this context that effective resource deployment for improving the output from education has become more a necessity than an option.

Against this backdrop, the question is have adequate resources been deployed for improving the education system, especially at the state level where the impact is most pronounced? Preliminary estimates indicate that the share of expenditure devoted to education and allied activities has declined in a majority of states in the new millennium. The cumulative expenditure of state on educational services as a percentage of total expenditure has dropped. There is also a significant deepening of inter-state differences in per capita education spending across states.

There is a decline in fund flow to this sector is leading to a deterioration of education infrastructure at the primary and secondary level in the states. There are reports of inadequacy of government schools, especially in the rural areas and acute shortage of trained and motivated teachers. What is also worrisome is that there is a moderate to sleep fall in education spending even among high growth states with strong pro-reform credentials. What is surprising is that a slowdown in government spending in key areas of education infrastructure in many of these states has happened despite a marked improvement in the fiscal performance of most of these states. This is in sharp contrast to the post 1997 period when a fall in education spending could be attributed to paucity in government finances due to deteriorating fiscal health of states.

In the prevailing milieu, fiscal consolidation in states has resulted in higher expenditure on services such as housing and social security to the detriment of crucial areas such as education. There is a correspondence between per capita education spending and rate of growth at the state level. Indeed, the progressive states have generally done better than the poorly performing states when it comes to education. The richer states where per capita resource deployment for education was among the highest in 2005-06 include Maharashtra, Delhi, Haryana, Karnataka and Kerala. It is well known that many of these states have a majority of their population engaged in the manufactur-ing and services sectors, both of which are largely dependent on the availability of professionally qualified human resources.

The states with low growth like Assam, Meghalaya, etc, while UP, Bihar and MP are in the low growth-low per capita education spending groove. In such a scenario, what is disturbing is that the state governments continue to spend more on non-merit subsidies rather than utilizing available funds for asset creation and maintenance of existing facilities in the areas of education. Doubtless, investment in education does not always bring about satisfactory results mainly on account of inefficient bureaucracies, waste and corruption. It must be acknowledged that augmenting expenditure on education as well as better utilization of allocated funds is an essential component of the developmental strategy of the state in order to fulfill its long-term priorities of development.