Introduction
Education inflation in India is experiencing a
significant, rapid surge, with costs for school and higher education doubling
approximately every 6 to 7 years. While general consumer price inflation (CPI)
hovers around 5–6%, education inflation often ranges from 8% to 12%, outpacing
standard cost-of-living increases. This scenario poses a critical challenge to
the affordability of quality education, creating a scenario where public
spending must either increase exponentially or result in a growing dependence
on private household funding.
Pace of Public Spending vs. Education Inflation
Education Inflation Rate: Costs are doubling every 6–7
years due to factors like increased tuition fees (8–12% annually), high
operating costs for private institutions, and rising expenses for materials and
technology.
Public Spending Trend: Public expenditure on education
in India has remained relatively stagnant as a percentage of GDP, hovering
around 4% (3.6%–4.6% in recent years). While total public expenditure increased
from Rs. 22,393 crore in 1991-92 to over Rs. 10.9 lakh crore in 2022-23 (in
nominal terms), it has not consistently outpaced the accelerated inflation of
education costs.
Comparison: If education inflation doubles costs in ~6
years (approx. 12% CAGR), public expenditure must also increase by 12% annually
just to maintain the same real-value service level. If public spending lags
behind this, the real purchasing power of public education funds is declining,
requiring households to bridge the gap through private spending.
Is Public Spending Keeping Pace?
Public spending is not keeping pace with the rapidly
rising cost of education.
Private vs. Public Surge: Private expenditure on
education in India increased from Rs. 9,667 crore in 1991-92 to over Rs. 7.28
lakh crore by 2022-23. The share of private expenditure has consistently grown,
with households in urban areas increasingly relying on private schools, where
costs can be over 10 times higher than government institutions.
Stagnant GDP Share: Despite the 6% target set by the
1966 Kothari Commission, public spending has failed to cross that mark, staying
below 5% for decades.
Conclusion on Relevance: The rising cost of education
has made it the largest expense for many families after housing, indicating
that private costs are outpacing public investment in quality, creating a
"complementary" relationship where households must spend more to fill
the void left by public funding.
Long-Term Implications
Increased Financial Strain on Households: Families
must allocate a massive 40–80% of their income to education in some cases,
forcing them to exhaust savings or take on high-interest loans.
Higher Education Debt: The reliance on education loans
is increasing, which may reduce future consumer spending and financial
stability for graduates.
Inequality in Access: Quality education is becoming a
luxury, with elite private institutions becoming inaccessible to lower- and
middle-income families, deepening socioeconomic disparities.
Shift in Priorities: Parents are delaying retirement
planning and home purchases to manage tuition fees, which could lead to
long-term economic instability for households.
Quality Gap: If public spending remains stagnant while
inflation hits 10–15% in the private sector, public institutions may struggle
to keep up with necessary technological and infrastructure upgrades, creating a
two-tier system.
Conclusion
The rapid doubling of education costs every 6 years
far exceeds the pace of public spending, placing immense pressure on
households. As education inflation continues to outpace general inflation, the
reliance on private funding has increased, turning education from a public good
into a significant financial burden. Without a dramatic increase in public
investment to match this inflationary pace, the long-term, structural, and
social implications point towards increasing educational inequality and a
high-debt scenario for households.
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