My Reservations to your Affirmative Action

Swami’s article Affirmative action yes, reservations no is insightful in its recognition of the problem, but in its proposal of a solution it betrays an ignorance of 1) the true nature of government funding; 2) what ails government schooling and 3) restrictions to provide schooling and job markets. This reply would not have been so important but for the fact that his articles are foremost in “opinion leadership” and hence are prone to be taken very seriously. The purpose of this article is not to propose a solution for the upliftment of oppressed castes but that good policy-making should involve a thorough evaluation of the resultant costs and benefits. The most noble sounding polices often involve the greatest unintended consequences.

First things first, government regulations have had a deterrent impact on good schooling. For confirmation look no beyond than the govt’s own stable of mis-managed schools and scarcity of supply of quality schooling. If the government’s ventures of Jawahar Navodaya Vidyalayas and the Kendriya Vidyalayas have been successful, it has been on account of extravagant funding and relative autonomy in place. Figure out the cost-benefits of the 506 JNVS which siphon off more than Rs 500 crores annually out of the govt budget (they nevertheless have a drop-out average of 22 percent at the Plus Two level) with the more than 5 lac fund-starved govt and municipal schools across India.

Again, the government will never transfer funds to a third party without attaching conditions. These conditions may be changed to suit the one disbursing the funds. This would lead to the apparent benefit of a few schools but may spell doom for the overall emergence of good schooling. Assume a CII or a government subsidized school is built and schooling is offered for free here to the SC/STs. There are seven direct consequences of this policy.

One, there is no downward pressure on this school to lower its costs, increase efficiency and keep producing better and better results.
Two, since it has a license for liability-accumulation this school will have an unfair competitive advantage over any other player who wishes to offer schooling to this niche market of SC/STs.
Three, hence players who would want to offer competitive schooling will leave the market or not enter it at all. Four, consequent of there being no provision of private schooling at this stage, the govt will ask for more funds to be pumped in.
Five, but with no direct pressure on its quality, (since the school does not have to earn its funds but has them earmarked) the number of schools will expand but offer little quality schooling.
Six, these students do not have any other option since the private schools have been crowded out and they don’t have the choice in their hands to change to a better school.
Seven, these schools slowly turn into a “sink” for students who cannot afford better schooling or lack previous quality schooling or those who enter this school will soon drop out for lack of retention powers of the institution.

This has been the story behind most government schools for the poor that produce impoverished schooling.

I won’t single out CII or FICCI. I will take them to represent reputed private bodies. Advocating govt funding to “reputed private bodies” and their opening of diverse schools in every state capital and district, apart from smacking of the ghost of central planning, lacks an understanding of the malaise of govt schooling. The key factor that leads to decrepit government schooling inspite of numerous opening of schools is lack of an accountability to the consumer — the parent/ student. This is well known. But by insisting on funding to move from a govt body to a private body will weaken the chain of accountability and bring on incentives on the private body to garner to the government and not to the consumer. A better method or rather the only other method is to give the funding to the hands of the student — give him a voucher (analogous to the proposed food stamps in the Budget) which can be encashed by the school of his choice. This makes the school accountable to him. But what of an area which does not have schools? Try giving the vouchers to the students and then see the emergence of private schools which cater to the requirements of students. A single enterprise of putting the purchasing power in the hands of the consumer will directly impact provision of good schooling. This not only generates quality at the school level but leads to emergence of schools for all categories of consumers with varying purchase powers. The govt may offer information to the parents through a rating system for schools.

The focus has also to shift from “what the govt should do more” to an analysis of “what the govt has been doing so long”. An analysis of the impact of government’s presence may well give the answers to some of the policy solutions that we are seeking. A look at the dangerously vestigial license permit raj for opening of schools and insistence on education as “not for profit” has flogged this sector to death, among others.

Emphasis may be made towards removing regulatory restrictions for job markets and educationally empowering the poor rather than directed benefit to a few based on caste/ tribe which leads to distortions.

Handing the platter of “affirmative action” to a govt will soon lead to “aggressive action” and what may not be a law (private sector reservations) may well soon become one. There are two ways to approach the issue of job reservations in the private sector. One, the idea is good but it would not be implemented well given the government’s dismal track record and consistent failure of job reservations in government services. Two, whether a government which is contemplating passing a law to make reservation compulsory in private sector, can in principle, One Fine Day make it compulsory for us to have home servants only from the SC/STs in order to provide employment opportunities or can charge a SC/ST cess on us to provide funds to them. The focus has to shift from an issue-based approach to a more principle-based approach. Good policies involve sound principles rather than firefighting issues on an ad-hoc basis.