ASSESSING EFFICIENCY OF PUBLIC SPENDING ON ELEMENTARY EDUCATION IN INDIA: A COMPARATIVE ANALYSIS POST-IMPLEMENTATION OF THE RIGHT TO EDUCATION (RTE) ACT

Abstract

This study aims to evaluate the efficiency of public sector spending on elementary education in India. Adopting a positivist philosophy, the research focuses on observable phenomena and employs a mono-method approach using quantitative analysis. It follows a deductive approach, aiming to test established theories and variables widely discussed in the existing literature. Given the strong correlation between public spending and educational outcomes, along with the varied educational achievements across Indian states, the study analyzes spending efficiency in sixteen major states.

To achieve this, the study applies Data Envelopment Analysis (DEA) and the Malmquist Index to assess the efficiency of educational spending during the five years preceding and following the implementation of the Right to Education Act (RTE), 2010. The analysis compares DEA efficiency scores and Malmquist Index-based growth efficiency scores across the pre- and post-RTE periods. The findings indicate an overall improvement in spending efficiency, which rose from 83% to 93%. However, the Malmquist Index reveals a decline in the growth rate of efficiency—from 7.1% to 2.3%—suggesting that although efficiency improved, the rate of improvement has slowed.

The primary objective of enhancing spending efficiency is to maximize educational outcomes. In the second part of the study, the influence of other variables—such as governance quality, maternal education, and school location (rural vs. urban)—on educational outcomes is examined. Regression analysis confirms the significant impact of governance, school location, and maternal education on educational performance in the Indian context.

This study fills a critical research gap in several ways. It not only provides efficiency estimates for elementary education in India but also compares efficiency before and after the implementation of the RTE Act. It contributes to the existing literature by applying the Malmquist Index in conjunction with DEA, thereby capturing not just static efficiency levels but also the rate of change in efficiency over time. The use of the Malmquist Index represents a novel contribution to the Indian context, as earlier studies have not employed this method to estimate efficiency growth rates.

Moreover, the study offers a practical framework for policymakers to assess spending from an efficiency standpoint. It further highlights the need to focus on governance quality, school location, and maternal education when analysing the reasons behind inter-state differences and below-par performance in educational outcomes.