India's Turn : When?

I remember a chapter in the second year titled 'India's Turn' that presented a rather startling fact - that India's  economic growth had started in the 1980s, well before the reforms initiated in 1990s. The narrative was as follows: Indira Gandhi, chastened by her defeat in 1977, now returned with a more pro-business attitude. This 'attitudinal shift' alone was sufficient to accelerate growth, and was followed by piecemeal reforms in the mid-1980s, following by full-blown reforms in the early 1990s. In this story, the reforms in the 1990s, at best, helped in sustaining the momentum that had already been built.

I have started reading the book 'India's Tryst with Destiny' by Jagdish Bhagwati and Arvind Panagariya. In the book, they state that growth during 1980-1987 was only 4.6% p.a, closer to the 'Hindu rate of growth' of 4% than to the growth rates we are now accustomed to. The 'high' growth rate of the 1980s was seen during the period 1988-1991, well after piecemeal reforms had been initiated and the fiscal deficit had started ballooning.

My problem is that, to make our education more holistic, we should be presented with an academic debate, rather than an academic piece of work. A debate would have enabled us to understand the issue in more depth and then form a perspective on it. At the very least, counter-views should have been suggested for further reading (and not testing). 

The Unequal Race

Economists, I say, are trained in the art of justifying everything. Perhaps that is what has enabled me thus far to justify inequality. Humankind has developed and flourished due to inheritance; inheritance is the raison d'etre of our race coming to dominate this world. Think of it, a tiger's life is no different from its mother's. A mother tiger teaches the offspring as much as she knew, and then the offspring passes on the same knowledge to its kid. Humans, however, are different in this aspect. Our collective knowledge is stored for eternity, and then added to by every generation. What our ancestors did enables us to do even more. Similarly, what our fathers and grandfathers did enables us to do even better.

For example, I wonder how different my life would have been had my father not decided to join the navy, and instead stayed on in Gorakhpur. There would have been no question of joining DPS, R.K.Puram, and hence no path leading to St. Stephen's. There would have been no exposure to debating and quizzing as much as I got at these two institutions. Probably, there would have been no economics in my life! I am reaping the benefits of a decision my father took. Between me and someone who is still living in a small town, there is not much difference in terms of what we have done. It is the different between what our parents did, their parents did, and so on. The difference between us would be one of inheritance. Perhaps this is what most of us call destiny, or kismat.

I have had the good fortune of being involved in Bandhan microfinance's education program. The more I think of it, the more impressed I am by Bandhan's recognition of the multi-dimensional nature of poverty and inequality. Here's a short film I had made back then (I apologize for the copyright violations, of course): Bandhan's development projects. This would give you a better sense of the inequality I'm talking about.

The fact that I can justify this inequality in educational opportunities doesn't necessarily mean that I support it.  While I have absolutely no moral issues with our educational system being competitive, I have a problem with the competition being unequal. Is the competition between a Delhi-educated student and a small town student, for admission into an IIT or an IIM, a competition between equals? I do not think so. This was, of course, the basic principle behind reservations.

The problems that reservations bring up are by no means small. Firstly, there is the problem of identification - a problem that plagues any social scheme in India. How does one identify people who are deprived of education opportunities? Our policymakers have taken an economic and caste viewpoint to this. While caste-based identification is an abhorrence to me, I am not too comfortable with economic selection too, especially in its implementation. Moreover, isn't inequality a question more of degree than of existence? For example, a person who is poor and rural is at a greater educational inequality than one who is rural but rich*. Thus, any policy that identifies people based on the existence of certain parameters is bound to be flawed. The less be said about people mimicking this parameter, the better.

How then can educational inequality be bridged? At a national level, I do not have anything of import to suggest. However, each one of us can contribute something to the cause. While I am usually skeptical of volunteerism, I cannot help but be impressed by Jalnidh's initiative Eclaire. We need more of this.

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* - this is similar to any economists' arguments against using the head count ratio (HCR) as an indicator of poverty. Head counts tend to mask the degree of inequality within the less privileged section.

Cut-offs : Fallacies of the critics

Just watched the following discussion on the Delhi University cut-offs (click here for the video). Apart from Chetan Bhagat's revealingly thoughtless accusations and assertions, there are several other clarifications that are in order. I am in no way defending status quo. However, what I am saying is that we could see the education system as a set of 'markets' or domains - the high school domain, the graduation domain, the post graduation domain and so on. There are several 'market failures' in each of the domain. Trying to set right one of the domains without correcting the failures in the other domains would be inefficient. The familiar theory of second best is inapplicable here because the failures in the other domains are not intrinsically immune to being corrected. With this in mind, I begin my discussion of the DU cut off system.

Firstly, the appalling suggestion by Chetan Bhagat that SRCC and other 'good' DU colleges should set up more campuses. At one level, it is hypocritical on his part ('excellence is exclusive', according to Bhagat. Click here for the video) to oppose dilution of quality in IITs and to suggest something similar in DU. However, I do not intrinsically subscribe to the fact that excellence is exclusive, and hence leave such a shallow argument at that. More importantly, to set up new campuses for SRCC, Hindu etc requires a whole lot of infrastructure. While we can talk about diminishing returns to a factor, we must consider what exactly is the limited factor we are talking about. In view of my previous discussion of market or (in the case of education, when 'market' doesn't sound all that right) domain failures, the domain failure that I see here is one of post graduation. 

It is the most obvious thing to any Economics student at Delhi University, for example, that even India's best economics degree suffers from a severe and crippling shortage of quality teachers. One of my co-interviewees at the Rhodes Scholarship interview confessed that even fresh postgraduates with no teaching experience and unverified aptitude would be invited to teach at one of the colleges. If we go about increasing the intake without considering such factors, we will just create a situation where Economics, for example, will be the new engineering - lots of third grade institutions that add nothing to the students. New colleges cannot be set up unless we increase the quality of output from our postgraduate institutions. Period.

Second is the system of cut-offs. I agree with critics that treating all state and central boards as equivalent is criminally objectionable, to state it mildly. However, we must realise that it is a court order that forbids colleges from taking out percentiles in each of the different boards (this is what I have read somewhere, but am unable to find a link right now). At best, Delhi University has committed a crime of inaction in not challenging such an order.

Secondly, to argue that we must de-link admissions from the Class XII boards is pointless. If admissions to even the liberal arts or pure sciences are de-linked from the boards, what is the purpose of having the boards in the first place? There is a domain failure in that the boards do not reflect the aptitude of students*. Do we correct it by making the boards more relevant, or do we correct it by having this pointless appendage called the boards, and then also have an entrance examination for various courses? Again, we must realise that there will be multiplicity of entrance exams, since an Economics (H) entrance exam will have to be different from a Philosophy (H) entrance exam and so on. The rot begins at the boards level, also because there is an incentive for state boards to inflate marks as as to better the lot of their students. Hence, basic economics demands that it is at this level that the problem must be addresses. Delhi University in this case is the victim, not the perpetrator.

Finally, we come to the suggestion of having interviews. Given my experience at St. Stephen's College, I believe that interviews are the best way of gauging suitability of a student for a particular course. I will not feign knowledge of why other colleges do not have interviews, for I am sure there must be some reason. In case the reason is some rule of Delhi University, then more autonomy must be granted to the 'institutes of excellence'. If there is some other reason, then we must address it.

A little footnote about media coverage of the issue. The way the media handles this issue year after year has something to say about the intelligence level of those running such shows. Remember the ruckus over the 100% cut-off at SRCC last year? Firstly, they failed to qualify the 100% cut-off. It was for science students who now wanted to pursue B.Com (H) now; hence, it was the result of a 4% gap between commerce students and science students that SRCC had committed itself to (this year's lower cut off, hailed by the media, is just a sleight of hand, with the 4% margin having been reduced). Even now, they say that the cutoff for science is 99.25% at Hindu, without qualifying that statement as to which course, and for students from which stream. Is such misleading coverage not worth condemning? Secondly, one student cleared the 100% cut-off this year. Even in my year when the science cut-off for the same course was 98.75%, only one science student cleared the cut-off (incidentally, my dear friend Manchit Mahajan). If one student cleared the cut-off anyway, how does it make a difference whether it is 98.75 or 100? The media certainly needs to be more intelligent.

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* - I have no hesitation in saying that my marks in physics and chemistry did not reflect my aptitude for the subject. The only justification I see is either that I worked hard, or that I severely over-estimate others' aptitude. However, hard work cannot always be a substitute for aptitude per se, as my CAT experience taught me.

IITs, IIMs and the Signalling Race

The first time I read an interview with this year's JEE topper, I felt a certain degree of deja vu. At the end of the day, any 'success story', be it the boards, JEE, Civil Services or CAT, bears a strong resemblance to each and every other 'success story'. Of course, much of it is due to the media trying to highlight the same set of attributes, and hence it would be unfair to blame the toppers for being conformists. However, when I talked to my friends about it, something struck me as especially alarming. While we all know that much of the intake of our top business schools comes from the top engineering colleges, what was striking was that this year's IIT topper said he wanted to go to an IIM even before he entered an IIT.

The tragedy, unfortunately, is that it is unfair to single him out for criticism. Perhaps lots of students have the same aim of going through the IIT-IIM route. There is certainly a tremendous 'brand value' associated with this route. Going to the best institutions in the country in their respective fields is certainly a very difficult task. It is perhaps the most effective signal that a person can offer to potential employers in the labour market. I can also think of how this is the best way to humour one's ego. In an education system that is geared towards mass production (and here I am not being critical of India in specific), the fraction of students who can qualify for both these institutions is indeed very, very small. Truth be told, I would have considered it an honour to be in such elite company.

That said, what I am unable to grasp is why somebody who wants to do an MBA eventually would want to spend four years studying engineering. My experience at the IIM interviews this year has convinced me that it is easier for a non-engineer with the same aptitude (read CAT score) to clear the interviews than it is for an engineer. What sense would it then make for someone who eventually wants to go to an IIM to spend four years at an IIT?

There are two reasons that I can possible think of. Firstly, the person might intrinsically enjoy engineering as a discipline and even though he does not want to pursue a career in it, he might enjoy studying it. I am not sure how far this is the case for engineers, and hence cannot make a statement on it. Secondly, being in an IIT might expose a student to a plethora of activities that are unheard of in other institutions. For starters, the scale of cultural events at IITs is far beyond what one can even imagine at Delhi University. Being able to access such opportunities can help an individual hone one's skills and hence not only improve his career prospects, but also help him grow as an individual. Hence, even though I doubt how many students actually rationalise it in this way, it does make sense individually to follow the IIT-IIM path.

Does it make for a social optimal? Most signalling devices are pareto inefficient - they are a drain on resources that are now used to create signals, but could have instead been used for productive purposes. An IIT is an effective, but expensive signal. The kind of money spent on a single IIT student is exceptional for a country at India's level of development. Certainly, this is a case of individually sensible decisions to become socially sub-optimal. There is thus a pressing need to devise better signals that drain fewer productive resources on those whose eventual aim is to get management education.

Imperfections in Education

Here is a thought-provoking article by Manan Vyas about how complete education is a luxury:

http://www.mananvyas.com/thoughts/why-complete-education-is-a-luxury/

There is certainly no disagreement about the fact that for most of our population, complete education is indeed a luxury. The purpose of this article is to further expand on what Manan says, and also introduce certain disagreements with the referenced article.

While I have no disagreement with the advocacy of a dual education system, it must be noted that there are two more fundamental market imperfections at play here, one of which supports the broad-based education system that we currently have.

Before I deal with those those issues, a subtle clarification must be sought: I am a firm believer in the fact that education has an intrinsic value - not only does it get me a good job, but it makes me feel good about life. Of course, the article does not seem to disagree with that at any stage. It accepts this by calling complete education a luxury, in the sense that this intrinsic value of education is important but out of reach for a majority of our population. However, it must be noted that a good (in this case, education) is not a luxury forever. At some point, with rising incomes, it becomes a necessity. Hence, are we arguing that the dual education system will be progressively dismantled over time as complete education ceases to be a luxury? Why is it that Germany, a fairly rich country, would still find complete education a luxury? It is the most basic of economic phenomena - the Engel's law - which will ensure that education cannot be a luxury forever. Why then do we see this paradox?

Now returning to the two market imperfections that I referenced to earlier.

Firstly, there is the issue of imperfect capital markets. Why can't Sushil borrow to finance his children's educational expenses and then use the higher income potential to pay off this loan either himself or through his children? Of course, such loans in themselves are a luxury for most Indians. However, it is an aspect of education that I saw was not discussed in the article. Rather than provide the agent with an X (broad-based education) or Y (vocational education) choice, financial inclusion will provide him with a whole gamut of choices. This change is, of course, not going to happen any time soon, maybe not even in the next quarter of a century. Moreover, given the long gestation period of such loans, it might even be difficult or impossible to enforce such contracts. However, my point is that it is theoretically possible for Sushil to want to send his kids to school, given his low current income.

Secondly, there will be imperfections even if financial market imperfections are removed. There are benefits from a well-educated workforce that an individual agent is unable to internalise. Of the top of my head, a person who is able to explain much of how the world around him works will be happier and more motivated - hence more productive. Even as a financial analyst, it would make someone happier when he knows himself how electricity works. However, since these positive externalities are not internalised by the agent, there will always be under-investment in education. Hence, leaving the agents to make choices on their own will produce a level of education that isn't socially optimal.

Another problem that I realised while writing this response, is one of agency. If you propose that a dual education system be introduced, do note that in the presence of imperfect information regarding the aptitude of the child and uncertainty regarding the job prospects after a particular stream (since all industries go through phases of growth and stagnation), some subjective choices need to be made. Who makes these choices? In a society such as India's, these decisions will often be made by the parent. It is not certain, and not even likely, that the agent's (parents') interests coincide with those of the principal (the child). Once introduced to a particular stream at a young age, the child faces high costs of making a switch. In such a case, having a monolithic educational system till the age of 16 might not be a bad idea. I am not, in any way, saying that this WILL happen. What I am saying is that this is another aspect to be considered. 

Reservations (Aarakshan)

Today in this ‘free’ country, I believe candidates who are more deserving should get the opportunity irrespective of his Religion and caste. What Aarakshan or Reservation does is that it gives opportunities to the candidates from socially backward classes at the cost of depriving the other candidates, who are not socially backward, the ‘equality of opportunity’. I don’t really understand why there is reservation in colleges, universities and centres of educational excellence.  Is it because the government wants to uplift the backward classes? Yes, the development of backward classes is an area of concern, but reservation as an instrument for this development speaks of the inability to impart better primary school-level education to everyone. The admissions should be completely on ‘merit’ basis. I would like to make it clear that I am not against reservation but I am against the kind of reservation. It was said in the movie ‘Aarakshan’- talk of ‘merit’ only when everyone starts from the same level. This is exactly what I think should be done. Often, it is seen that people make through good institutes through reserved seats without having adequate knowledge base to be able to cope up with the syllabus of these institutes which in a way leads to the decline in quality of education. So, it is essential to focus on building a strong base for ‘everyone’ and then allowing free competition to get admissions in colleges. In order to help those who are deprived, we must not deprive those with merit.

Here’s an example from my experience. In FIITJEE you are required to pay huge tuition fees even after getting some scholarship. This might not be affordable by backward classes. FIITJEE selected 40 students (after a test) under SC/ST/OBC categories and provided them coaching free of cost. So, everyone comes to the same level, getting access to same faculties. Now when the results of IIT comes, the one with 5000 AIR gets a low branch in a low ranked IIT and the one with AIR 6500 gets a good branch in one of the top IITs. Is it justified? Isn’t this injustice, inequality? The need of the hour is, to provide facilities to the backward classes (which can be in proportion to their merit?) at primary and secondary school level and NOT reservations in colleges and universities. Have reservations in schools, why only in colleges and universities? What colleges/IITs/management institutes do is help you develop on what you have acquired so far.

Till now I talked about reservations in general. Now, talking about some specific type/kind of reservation- the one in St. Stephen’s College. I am not in favor of the reservation based on Christian quotas. Those who make through these seats (most of them) are not educationally disadvantageous and hence I see no reason for the same. It is extremely difficult for general category students to get through. First, the cut-off is very high as against 15% less for those through quotas and then you need to be impressive in the interview. While it becomes extremely difficult for a person with 98% to be selected through general category, for a Christian with even below 95% it becomes relatively much easier. All this, in a future date, might break the virtuous circle of academic excellence for which St. Stephen’s is known for. I agree with the reservations for the visually challenged and handicapped people. I also agree with the sports quota for there is a cost in specializing in something and that should be considered. Ok, I am not against reservation for Christians, but look at the number of the seats reserved!

All I would say is reservation is a shortcut to achieve something that can easily be achieved if we focus on ‘small’ things which can lead to a big change, instead of hasty decisions to make a big change which will ultimately lead us nowhere!