The role of government in education is the third topic I’d like to address. There are three important facts we have to keep in mind. First, at the core of the system of education is a human being, an individual, a person. He or she learns skills during the process of education and becomes a more useful member of society. Education thus makes the individual more productive and therefore promotes general social welfare. Education therefore has both private and social returns. So, it is in the interest of society to make sure that everyone is educated to the degree that one has the ability to.
Professor Kaushik Basu talked about it in the morning – that we underinvested in basic education post- independence. In fact, I was talking to a friend and he put it very well. He said all we had to do in India post- independence was to educate one generation of Indians well. If you are educated, then you will ensure that the next generation probably will get more education than you. But, we did not do that well.
Second, the returns to education takes time. The investment has to be made first and then some years later the benefits arise. Because of the time lag between the investment, the net present value of the future gains, depends on the rate one uses to discount the future, which is related to paying for it now and enjoying the returns later.
This leads us to the third fact – that some people are poor enough, they cannot afford to invest in education. If they had the money, they could have paid for education now and recovered their investment later.
These facts define what the role of government fundamentally has to be in education. The role is simply this – to make funds available to those who don’t have the ability to invest in education.