Primary education in India - Applying entrepreneurship

Every one is gung-ho about the Indian economy. In the quarter ending Sept ‘06, the GDP grew by 9.1%. India is part of the BRIC (Brazil, Russia, India, China) economies, considered the most promising ones for the next 50 years. Asia, it is increasingly believed, is running on two engines – China and India; and these twin engines are expected to pull the world economy to new heights over the next few decades. Indian IT industry is making waves, and is continuing to grow at a robust pace. And, they are now undisputed world leaders in their space. At long last, manufacturing too is beginning to grow fast. Indian Telecom industry is healthy and has shown strong growth – among the fastest growing in the world today. Large investments are happening on infrastructure. $ 300 Billion is getting pumped into the infra sector in the near future. The new generation Indians don’t have the defeatist attitude of the earlier generation. The entrepreneur is driving the nation forward. There is hope and enthusiasm everywhere. There is a new “can do” spirit. With the developed nations getting older and running out of workers, Indian demography seems to have suddenly become an advantage. Is this going to be a “happily lived ever after” story?

Well, there are some dampeners – the most serious is education. The available data implies a very poor state of affairs indeed. I confess, I have not done a very serious research on the subject. A casual research on the web brought out the following data. I don’t want to split my hair on how accurate some of these are; but the general conclusion is very clear. We have a serious problem! And, I come from a very small village myself; I went to school every day walking 6 KMs each way as a child. And when I go back to my village today and see the school, I feel very sad because the quality of education today is far worse than what I received 30 years back.

2001 census concludes that our literacy rate has reached 65%. Every second woman in India is illiterate. And, nearly every third man is illiterate. It means a huge population can’t even read or write their names.

How do we stack up against others countries? Even within Asia, most are ahead of us. South Korea at 98%, Japan at 95%, Vietnam at 93%, Srilanka at 91%, Indonesia at 87%, China at 85%,...every one has done better. We can feel better only by comparing with Pakistan at 43% and Afghanistan at 36%. In Infant mortality, we are behind Pakistan, China, Brazil, and even Nigeria. Literacy rate among Schedules caste and schedules tribes – one of the poorest sections of Indian society is 42% and 35%. There is wide disparity between states - Bihar has 38.5% literacy (comparable to Afghanistan), while Kerala has 90% literacy. States like Andhra Pradesh, Madhya Pradesh, Uttar Pradesh, Rajasthan and West Bengal still have several districts where female literacy is less than 30 %.

According to the findings of the Public Report on Basic Education, the PROBE report, (Please see a brief summary in ashanet), only one to five per cent of out-of-school children are actually involved in earning significant wages. Many of the children working up to eight hours a day were not earning any significant income as they were involved in jobs like looking after their siblings, cattle grazing etc. and not in wage-earning labor. One heartening finding was that 98 % of parents felt that education was necessary for boys, and 89 % felt it was necessary for girls. It is not factual, therefore, to cite poverty and ignorance as the main causes for poor school attendance and large-scale drop outs. The increase in drop out rates is mainly due to the unattractiveness of the school and teaching processes. The PROBE report recorded startling data about the lack of or dysfunctional state of basic amenities in many schools. As many as 52% of the schools lacked playgrounds, 89% did not have toilets and 59% did not have drinking water. As for teaching aids, 26% did not have blackboards, 59% had no access to maps and charts, 67% lacked any kind of teaching kits, 75% had no toys for the small children, and 77% of the schools had no libraries. Absenteeism is rampant among teachers.
For a country that has such a large stake in winning the battle against illiteracy, India's expenditure on education is extremely low (3.5% of GNP). While it may be argued that decline in central spending is a step towards decentralisation, there is a general fear that in the new economic climate, government spending on primary education will remain stagnant, or even decrease. This will put education out of the reach of the poor families. Please see Infochange India.

And by the way, what is the definition of literacy? It is not obviously a school pass! The National Literacy Mission defines a literate person as one who can "with understanding, both read and write a short simple statement on his/her everyday life." However, it is true that in many cases, literacy ends with being able to sign one's name. As per the Indian HRD ministry data, the present illiteracy is ONLY 37% or 430 million people, while as per UNICEF and UNDP it is nearly 60% or 650 million people. Education is a state subject – the centre only gives policies. The implementation is bad in some states. More than 50% of kids drop out of school by the time they reach 5th standard.

Buoyed by stellar economic performance over the past few years, the mood in the top echelon of the country is defiantly self-congratulatory. India almost wants to grow up overnight and shed all the baggage of the past. Powered by a press, that like everywhere else in the world, reports only from the booming city centers, India is seen as chugging ahead full-steam – a land of engineers and management graduates.

From an agriculture based economy, the world has moved to industrial economy early in the 20th century and become knowledge economy now. The new millennium is dominated by knowledge, and we have a huge population of illiterates amongst us who will find it very difficult to participate in this. If we do not make them productive, the GDP can’t grow at the true promise and poverty will be slow to disappear. Even if the GDP does grow at a decent rate, and create a large consuming middle class, it will leave behind a huge mass of people – who can not grow with the economy, who will continue to be hungry, who may very well take up extremism at the one end or suicide at the other. Reservations, the easy tool for the political class, is not going to help solve this problem.

Well, I really didn’t want to depress you. But the status is pretty bad.

So what is the cause of all this? Looking at the data, it doesn’t need an Einstein to conclude the cause of all this: Poor quality; poor execution; poor funding and to sum it all, poor management of the education system.

Education is in the hand of the Govt. And Govt. has to take a large part of the blame. In India, Govt. means, poor accountability. If you are lucky, you get a Sreedharan to run Delhi Metro, a Sam Pitroda to run Telecom, a Vittal to run Dept. of Electronics, an Abdul Kalam to run the missile program, a Seshan to run the Election Commission and then something good happens; They leave a lasting impact. But, it is by sheer chance! In the last NASSCOMM conference, I was listening to a senior official from the Govt. in a panel discussion on rural education. The official was listing out a series of problems and gave a vague picture of what is happening to rural education. I was very uncomfortable listening and couldn’t stop wondering if someone is really in charge! As Rajiv Gandhi’s famously and correctly concluded, in India, only 15 paise out of every rupee spent by the Govt. truly reaches the real intended end use. We may take a few more decades and still house the world’s most illiterate population. We will have some of the world’s richest people and will also have a lot of the world’s poorest people. This is not acceptable.

OK, so we agree. There is a serious problem. What can we do about it? What could be a workable solution? Pushing and bashing the Govt. alone won’t help. The problem is too important and too big to be simply left to the system.

Now, there are some good lessons from how India created a large pool of engineering human resources. Every year, we now put about 450,000 engineers into our engineering education system. In view of what we see in primary education, this is a remarkable achievement! How did this miracle happen? Govt. had done good job in creating a few elite IITs and RECs. These institutions, while excellent themselves, produce only a small fraction of the total engineering manpower the country needed. Entrepreneurs entered the “business of education” with pure profit motive. Most of these engineering colleges are in south India. Historically South Indian families were more job minded (though it seems to be changing now with increasing number of entrepreneurs coming from the south) and parents were ready to spend money to buy decent higher education for their children which will fetch them a good job. Some of today’s well known private engineering colleges in India started as pure money making ventures. Some of them were pathetic operations to start with. But, slowly, they got better over time and gathered quality. While they are not exactly IITs, many of them produce pretty good quality. Many of the newest colleges today produce barely passable quality though. But, they too will get better over time. If not, they will be forced to disappear by the market forces. I suspect, no one – Govt. or private - really visualised this as a well thought strategy to produce large engineering manpower. There was and is a license raj in education. Whatever happened was in spite of that. Market forces simply took over. May be politicians were part of the market driven forces that helped achieve this. Many politicians run engineering and medical colleges. And they probably helped ensure that the trend continued. It is these colleges that truly powered India’s IT growth.

So, entrepreneurship did work in higher education. But, will that work for primary schools? It is not a straight forward comparison. Villagers do not have too much money to shell out. There is no great profit to be made in short to medium term. Massive investment is required across the country. But, I think it is possible. Let me explain how..

My view is to use entrepreneurship again as solution. The country excels in entrepreneurial spirit. It is one of the greatest strengths of the nation. Now, how to bring entrepreneurship to rural education?

The idea is to build a social entrepreneurship program which has the potential to significantly contribute. Helping a few schools while useful by itself does not have a big impact. There is a need to build something distributed and highly scalable. This concept evolves out of a small rural school I have been running through a social initiative of my first start up venture, Deccanet. The special child labor eradication school is in Laxmipuram, a village in Krishnagiri district, one of the more backward districts in India. We ran the school in collaboration with a Govt. of India program against child labor. It has so far put about 500 children through the program. Now, with the Govt. initiative in this village coming to an end, I decided to continue it on my own. This time, to build something more scalable and by playing a more active role.

The proposed program has four key components: (1) Profit motive to bring an entrepreneurial spirit, (2) Use of effective management techniques to deliver quality education, (3) Good branding to attract quality teachers and ensure more parents are attracted as "clients", (4) Adequate funding from non Governmental independent sources (so that, we complement rather than fight for scarce funds for education earmarked within Govt.).

Over the last 4 years, in Laxmipuram, I found a committed young person who is the teacher and manager of the school. His name is Sivaprakasam. Siva is a graduate; is a conscientious, passionate and hard working guy - a doer. Now and then, he wonders at a corner of his mind, if he should have gone to the city and made a better living. He could easily get a good job in the city and move on; but he wouldn’t. His commitment to the village keeps him going while many others come and go. Our program is around him, and many more such committed young people. When I suggested the idea to him, he got excited and brought the village head and a few others expressing support. When we started looking for a well located land for the school, one of the parents came forward to sell his property at a reasonable price. Incidentally, he was grateful for the school to have saved the life of his young son. (A routine health check organised by Deccanet three years back had revealed a very serious growth in the child’s kidney which we got quickly removed by surgery in a Bangalore hospital). Over the time we had won a strong support system in the village.

Laxmipuram will now have a regular school starting with a funding of about Rs 2,500,000 (about $ 50,000) which I contribute through a non-profit foundation. This funding is for capital expenses as well as operating cost for early period. We acquired a piece of land in the village and it is proposed to build a little school that would support about 100 children to start with. The school will have staff quarters that will accommodate about four dedicated high quality teachers. The teachers will receive a decent fixed salary and a performance linked reward. By providing a house right in the school compound we will ensure a good quality of life for the teachers; they need not travel to a nearby town every day. We can also attract quality teachers retired from regular schools and who now want a peaceful life.

We will work with other NGOs to ensure good training and teaching aids. Obviously, the “investors” (currently it is just me) will never make any money out of this. But the idea is to make Siva make a decent profit as a social entrepreneur. We provide the funding for him. He will run the school like an “entrepreneur.” Parents are his customers, education is a product he provides. If he keeps the quality and productivity high, and satisfy his clients, he will do well and make a decent living.

How does this work? Firstly we create the school infrastructure. Keeping scalability in mind, the school will be designed to get maximum for every Rupee spent. Good class rooms, playground, teaching aids, adequate staff quarters, toilets, blackboards, toys, reasonable computer systems, library, etc. will constitute initial capex. The operational expenditure will be essentially teachers’ salaries and other small running expenditure. We start by subsidizing the opex 100% during the first year. Then how does entrepreneurship work with subsidy?

From a centralised effort common to all schools in the program, we will help ensure effective management of the school. Siva will get good inputs in management. This will include identifying and hiring quality teachers, training the teachers, defining metrics to measure the quality and productivity, collection and analysis of MIS data, regular reviews and root cause analysis of problems, monitoring the hygiene, audits on the operations and finances, periodic evaluations, analysis of dropout trends, staff motivation, modern teaching practices, accounting and cash flow management, branding the school, increasing parental involvement, and others. At the end of the 1st year, Siva’s job is to ensure a good quality of education. And consequently, by the 2nd year, he should be able to begin to charge something nominal from the parents - may be Rs 25 ($ 0.5) per month per child to start. The payments may be in the form of rice, corn, vegetables or whatever. Siva will gradually reduce the subsidy he takes from the foundation and increase the contribution from the parents. As the Indian economy gets better, and branding of school improves, we expect the parents to pay the Rs 200 to 250 ($ 4 to 5 per month per child) as fees. We continue to work with Siva by giving management inputs – which the Govt. schools acutely lack today. With the cost structure so low, we expect it is possible for Siva to make profits at a reasonable level of fees from parents. We will ensure that Siva doesn’t over charge the rural parents.

The foundation will fund the project with a non-profit motive. A number of my friends are very eager to participate when the project takes off. I realy think if we can show this to work well, funding will be no problem. We are really betting on little Siva’s healthy profit motive combined with his desire to provide service to make the day-to-day management of the school very effective. He is expected to keep lowering the subsidy and reach a point when the school is fully self-funded. Based on an evaluation system, the lower the subsidy he takes and the higher the quality he delivers the more rewards we will give him. Eventually - may be in 3 to 4 years, when he takes no subsidy at all, he will start making a decent money for himself –enough to make him not to regret going to the town. He could open a branch school in a neighboring village and increase his income. There are a lot of idealistic young men out there who want to contribute and make a difference. People like Siva are very committed and hard working young men. I am sure he will succeed. Based on this experience, we propose to set up 100 new schools at the next stage – all in remote villages.

It is proposed to have a smart bunch of committed people as part of the central organisation, working on systems, processes, and all other management inputs. We will initially work with other agencies in all these. Eventually, we will brand this chain of schools and make some positive noise so that in future schools, parents come seeking us. It will require about $ 7.5 Million over a period of time to manage upto 100 schools and then scale it up and speared it all over the country. If done well, sky is the limit.

I met the young local collector of Krishnagiri when beginning to work on the project. I immediately saw an ally in him. Many young IAS officers all over the country want more people to get involved. Often, they are practical folks and are ready to give whatever support in getting school recognitions and other stuff. We will hopefully find strong allies among them.

Why do I believe this has a chance to succeed?
1. Profit motive of an entrepreneur: The social entrepreneur like Siva will make around Rs 15,000 a month from one school – 5 times his current salary. He will lose his sleep to make his school a success and work hard to realise the target – provide good quality education and let the “market forces” drive it. If he succeeds, he will scale up and manage a small chain of schools. He is entrepreneurial, he is local and he will marshal enough support. He is also committed. The choice of Siva is important.
2. Management inputs: The project will address management systems effectively with a central team working on it and helping to lay down systems and practices. This will ensure that the program is well managed. We may have smart MBAs supported by domain experts working on these at the central level - people who live and breathe effective management. We will invite eminent academicians, eminent thought leaders, successful entrepreneurs, and institutions to be associated with the project as it grows.
3. Funding and direction: “Investors” will make no profit out of it. The reward is only the satisfaction of paying back to the community. Initial funding will come from me and my close associates. Once we prove the concept, a larger funding will be arranged. My take on this is, if you prove first few school run well, funding the scaling up is not an issue. So many people and organization want to make a difference.
4. Set an example: By successfully setting up and running the initiative, we also set an example for others emulate. If some one copies the concept, it is good. More the better. It is a huge problem. Copy cats will be most welcome. We will share all our experiences and systems in due course with others for emulating the success across the nation.

This is a long haul project. A lot of patience and perseverance is required. For further progress on this, keep an eye on billionways > ventures > social entrepreneurship. If you wish to be put on my mailing list for being kept updated on the progress, please leave your comments and email address.