Topic: Voucher system:An alternative solution of poor performing
Government run schools
By: Ms Vishakha Goyal
Galgotias university,Greater Noida
In India education is considered to be a quasi-public good. It is a public good because the benefit
out of it affects society through human capital formation. However it is private good because it
provides a platform for individuals to generate regular income.
Historically the financial burden of education was borne by both state and central government,
but this amount has been reducing over the years and with increasing rate of population, thishas
created a huge investment gap. This trend in public expenditure has serious policy implications.
1. It has forced institutions to increase the cost per student in the form of sharp rise in
2. It encourages self financing institutions which charge tuition fees on full cost recovery
This creates imbalances in the fee structure of private education that deepens the development
divide. Though government of India has been trying various measures to improve the
accessibility of education by implementing the projects like educational quality zones, but still
the gap has been increasing. The paper asserts that the lessons to be learned from the experience
of developed countries like U.S.A, Holland, Canada and the developing country like Bangladesh.
Keywords: voucher system, elementary education system.
Education is central to the Human Resources Development and empowerment in any country.
National and State level policies are framed to ensure that this basic need of the population is
met through appropriate public and private sector initiatives. While government endeavors to
provide primary education to all on a universal basis, higher education is progressively moving
into the domain of private sector. With a gradual reduction in government subsidies higher
Education is getting more and more costly and hence the need for institutional funding in this
area. The scope of education has widened both in India and abroad covering new courses in
diversified areas. Development of human capital is a national priority and it should be the
endeavor of all that no deserving student is denied opportunity to pursue higher education for
want of financial support. Loans for education should be seen as an investment for economic
development and prosperity. Knowledge and information would be the driving force for
economic growth in the coming years.
The modern idea of educational vouchers is attributed to Milton Friedman (1955).according to
him the most feasible way about a gradual yet substantial transfer from government to private
enterprise is to enact in each state a voucher system that enable parents to choose freely the
schools/colleges ,their children attend. Hence there should not be any condition attached to the
acceptance of vouchers that interfere with the freedom of private enterprise to experiment to
explore and to innovate. Voucher schemes are flexible to a great extent and therefore adaptable
to a particular problem of a country, a region or a state. It is popular in developing countries like
Bangladesh, Chile, Colombia as well as in industrial countries like Poland, Sweden, U.K and the
U.S , Since there is no other direct government subsidy, each institution is in competition with
every other eligible institutions .The well performing ones will succeed according to their
performance and redeem many vouchers. Underperforming institutions/universities have to
improve or close down. At present voucher system prevails only up to school education but it
can be a successful model for university and especially technical education.
Few successful examples of voucher system in operation in secondary school education
Bangladesh’s Female Secondary School Assistance Project (FSSAP) is a similar example of a
voucher program; it illustrates a successful attempt of providing monetary incentives for girls to
reduce the direct cost of schooling and to encourage participation in a developing country. Thus
it can be used as the basis of a specific voucher program.
“The main objective of the FSSAP project is to stimulate a significant increase in secondary
school enrolment of girls, thereby enlarging the stock of educated women capable of
participating Centre for Civil Society Education fully in the economic and social development of
the country. This approach will make Bangladesh a South Asia pioneer in supporting female
• The project represents a so-called integrated package approach incorporating multiple
interventions. As a primary component of the project, it has provided stipends ranging
from US$12 in Grade 6 to US$36 in Grade 10, to girls who have been enrolled at
secondary schools in 118 targeted districts and who meet eligibility criteria.
Source: World Bank Bangladesh’s Female Secondary School Assistance Project
• The stipend addresses the direct costs of education by providing a monetary incentive to
assist with personal expenses (school fees, tuition, transport, books, stationery and
uniforms) and tuition costs in all grades and books and examination fee allowances in
upper grades. Other components: salaries of additional teachers, occupational skills
training; activities to promote public awareness; building facilities and capacity building
at national and local levels.
• The stipend covers 30-54 per cent of direct school expenses. It is paid directly to the
account of each girl, in a nearby commercial bank. The recipient girls are expected to
pay out of their stipend the other school fees. Additionally, the FSSAP also provides
tuition assistance, but this part of the financial assistance is paid to the school where the
girl is enrolled. The FESP has had positive effects on enrolment, attendance, drop-out
rates and (partly) on student’s performance. This indicates that providing monetary
incentives directly to girls can be an effective way of increasing their participation in
secondary education. By July 1997, the gap between girls' and boys' enrolment was
• The percentage of girls receiving Secondary School Certificates increased from 42
percent in 1996 to 52 percent in 1997.
The project can surely be called successful, though there are still problems to be resolved.
This will not be easy: Two-thirds of Bangladesh’s girls still do not attend secondary school and
the reasons are rooted in poverty. The poorest have to be offered higher stipends, but given the
poverty of the entire country, the government may have difficulty continuing the stipends.
Achieving sustainability remains a major task. With economic development, increased job
opportunities and a substantial change in attitudes a broader impact on the lives of women in
developing counties can be expected.
The first publicly funded American voucher program was the Cleveland Scholarship program,
including both, secular and parochial schools. The voucher provided up to 90 percent of a
student's tuition to a maximum of US$2,250, which is the equivalent of just over a third of the
cost of sending a child to a Cleveland government school.
The planning and administration of the lottery providing low-income students with vouchers,
was impeded by a court case launched by the American Federation of Teachers and others. Like
the study on Milwaukee's voucher program the research on the Cleveland scheme is based on
academic testing of students and interviews with parents. The two "very important" reasons for
parents to apply for a voucher: first, parents looked for "improved academic quality" in their
children's education (85 percent); second, they wanted "greater safety" in their school
environment (79 percent). All scholarship recipients were "far more satisfied" with independent
schools than the families attending government schools, and more satisfied than those who were
offered and refused a voucher. Even more interesting is that wealthier families were more likely
to be satisfied with government schools than were poor families. Such a difference could not be
found among voucher recipients attending independent schools.
In 1981 a voucher scheme was established with the objective of providing opportunities for able
but poor students. By 1995 about 29,800 students were using these selective vouchers at 294
specified independent schools in England (there is a separate system for Scotland). Every year,
about 5,000 new pupils enter the program at the ages of eleven or thirteen. The voucher principle
has been extended to higher education colleges which have also been re-established as
autonomous institutions independent of the local governments. A new system of “learning
agreements”— individual contracts between a college and a student, specifying the precise
qualifications aimed for— enables government funding to follow the student to the college of his
or her choice. The Department of Education declared in 1995 that it intended to extend free
entitlement for all four-year-olds to good quality private, as well as public and nursery education.
Under the scheme today, low-income parents can get assistance with tuition fees for any eligible
Current status of Voucher proposal in India
A) Delhi Voucher Project
This is a privately-funded pilot (The project is managed by Centre for Civil Society (CCS) as
part of their School Choice Campaign: ‘Fund Students, Not Schools!’ In 2009, CCS also
launched another voucher pilot with 400 Muslim girls) or proof-of-concept programme in Delhi.
In 2007, school vouchers worth up to 3,600 per year were awarded to 408 students in 68 wards
of Delhi .In these 68 wards, more than 50 School Choice activists reached out to more than 1.2
million parents. All students in government primary schools qualified for the programme. Over
125,000 parents applied for a voucher for their child. As a fair and transparent method of
selecting students from the large number of applicants, a public lottery was held in each ward
where the local Ward Councilor picked 12 students — six winners and six for a waiting list, in
case some of the students in the fi rst list had eligibility or acceptance problems. Those who did
not win the lottery submitted a petition to their Ward Councillor asking for school vouchers from
the government. In the all-India campaign, more than 250,000 parents submitted voucher
demands to their elected representatives. The vouchers were awarded to winners in the presence
of the Chief Minister of Delhi Sheila Dikshit and the Education Minister Arvinder Singh Lovely.
In the assessment of the project, the voucher children performed better in reading and
mathematics. These students and their parents were more confident. In the first week of school,
many principals complained of voucher students not coming on time, showing up without taking
a bath, combing their hair or wearing proper uniforms, and many did not bring lunch and often
resorted to ‘forced sharing’ of lunch from others. After a couple of meetings with parents, the
situation slowly improved, which meant that both the students and parents became more
punctual, improved their hygiene and took extra effort to prepare for the school with proper
lunch and a full school bag. More importantly, after two years of the programme, the aspirations
of parents changed This ‘crowding in’ of investment is very powerful — when the parents find
more responsive schools because of others’ investment (through vouchers), they also begin to
invest more because now they become more hopeful for the future of their children.
b) first government-sponsored school voucher programme in India (Pahel in
It is billed as a PPP initiative that provides school vouchers worth `3,000 per student per year to
children (6–14 yrs) who are rag-pickers, scavengers, snake-charmers, or orphans. The eligibility
criterion is that the child should have been a drop-out for at least a year or never enrolled and
that there is no government school/Education Guarantee Scheme (EGS) centre within a kilometre
of their habitation. The scheme was started in 2007 in the city of Dehradun and based on its
success, a year later, was expanded to Nainital and Udham Singh Nagar with a total
of 651 children.
Suggestion for the proper implementation of voucher system in Indian Education System
• The experience in Colombia as well as Vermont, USA suggests a voucher scheme which
would be very reasonable to implement in India. Small and geographically distant
communities could provide their students with vouchers to attend either private schools
or public schools in another town. Vermont also found its way for transportation. Out of
14 towns examined, 11 provide or pay for school buses to transport students to nearby
public schools. Of the three remaining districts, one holds parents responsible for
transportation; the second reimburses parents for driving their children to the nearest bus
stop and, if there is no nearby bus, the town reimburses parents for the full trip; and in the
third the town pays the entire cost of transportation. In addition, some private schools run
buses that pick up students.
• Unlike Chile, in India it is not only the rich families who are prepared to invest in their
children’s education. In India it is (proportional to the income) even more in the interest
of the poor to spend money for a better future for their children. The Chilean example
tells us that public schools will be able to compete with private schools only if the
government puts additional effort in improving the curriculum, the quality of teaching
and the management of education. Due to these lessons it is more important than ever
those private schools in India get recognized more easily and that the license-permit raj is
• In India, children are not out of school because of lack of demand. Poor quality of
government education delivery is a crucial reason for their absence from school. Parents
who are laborers, auto-rickshaw drivers or market stall-owners send their children to
budget private schools, spending between 6 per cent and 11 per cent of income on
education. These schools are not philanthropic but work on commercial principles and
they receive no government subsidies. Their charges range between 10 to 20 US dollars a
year per student, about 5 per cent of what middle class private schools would charge. In
addition, they offer free places for very poor students, up to one-third. Budget private
schools spend resources on curriculum development and support teachers with training,
though their infrastructure like libraries, computers, and science equipment often needs
• Although the private school teachers are often better qualified than teachers in
government schools they are paid 25 to 40 per cent less. On the other hand, they are less
likely to obtain appointments in government schools, duo to existing corruption and
cronyism thereGovernments put private schools off through bribery and corruption. E.g.
school recognition requires relatively big physical infrastructure, which is often not
possible to have. If this is the case, private schools have to pay bribes of around Rs
50,000 to obtain recognition and Rs 25,000 per year to retain the recognition or opt out of
the system. But public-private partnerships are also possible.
To put it clearly: a public system can narrow children’s options by forcing them to attend an
inferior school when a superior one could be within reach. It is maybe the most striking
argument for vouchers that they enable families to overcome these obstacles to get a genuine
chance of equal opportunities.
Establish Education Quality Zones
The Indian government has already established EPZs—Economic Priority Zones—to foster
entrepreneurship and innovation through a variety of sectors in the economy. According to James
Tooley’s (professor of education policy at the University of Newcastle upon Tyne, did his
research on private education for the poor in India, China and Africa,) suggestion, the EPZs
could be a pattern to create “Education Quality Zones (EQZs)”. They could be fruitful testing
grounds for educational innovation. The crucial function would be to create geographical areas
where new models would be applied. One could start with more relaxed rules and regulations
concerning education till the introduction of a real avant-garde thinking concerning the role of
the private sector. E.g. programs in which private education companies take over the
management of failing government schools - through outright sale, long-term leasing, or
management on contractual basis.
Which Sort of Voucher Model would best serve India?
At present, the Indian Government provides grants to schools as well as state run schools also
exist. However, to realize the aim voucher schemes, namely providing families with a maximum
degree of choice within a decentralized and competitive system of schools, it is imperative that
the support is given directly to the pupils or to their parents, instead of to the institutions. The
experience all over the world clearly suggests that it is not so much the size of the government
education budget but how the budget is spent that determines the efficacy of the education
system. Our own state of Kerala stands witness to the significance of choice and competition in
education. In the case of budget private schools in Andhra Pradesh, fifteen private schools that
were researched had fees of between Rs 35 – Rs 350 per month (about 70c to $7.00 per month),
with most in the lower range.Contrary to common assumptions, government spending in
education is not a substitute for private spending. E.g. in Kerala, the government has been
spending more on education than in other states but the people there follow the governmental
example. The poor in this state spend roughly about one third of their annual per capita income
on elementary education. Thus governmental and private spending is complementary.
There are numerous parallel systems being established. Prominent among others is the District
Primary Education Programme (DPEP) launched in 1992 with assistance from World Bank and
European Union. The programme promotes primary education through decentralized planning
and integrated programming at district level. It has been extended to 149 districts in 14 States in
1997. The Lok Jumbish (LJP) and Shiksha Karmi Projects (SKP) are two other internationally
assisted projects. Lok Jumbish is establishing a boundary between the local community, the
teaching profession, the educational administration and the learners. The Shiksha Karmi Project
has been trying to respond to the problem of teacher absenteeism in the distant and inaccessible
areas of Rajasthan.
Many of these programs are confronted with the problem of stagnation and inadequate
sustainability. Despite important achievements, the duty of UEE is far from complete. Schools
and enrolments have surely increased but so has the number of out of school children. Today
India has one of the largest illiterate populations in the world. Caste, gender, class and regional
disparities in UEE are still evident and persistent. The demand for quality education is far too
obvious through improved awareness and social mobilization, though supply is generally
inadequate. The educational administration in most states and municipals is far from able to
effectively deal with widespread problems concerning shortage of teachers, inadequately
designed school buildings, lack of teaching/ learning equipment, need-based teacher training and
a syllabus related to real life requirements.
• (2006): ‘Privatization of Higher Education: Opportunities and Anomalies’,
Paper presented in the national seminar on Privatisation and Commercialisation of Higher
Education, organized by NIEPA, New Delhi on May 2, 2006, mimeo.
• Bhargava, P (2006): ‘Knowledge and National Development’, paper presented in the
National Seminar on the Education Commission organised by NUEPA, New Delhi from
December 26-28, 2006, mimeo.
• CABE (2005): ‘Financing of Higher and Technical Education’, report of the CABE
Committee, NUEPA, New Delhi.
• (2005a): ‘CABE Committee Report on Autonomy of Higher Education
“Trends in Growth and Financing of Higher Education in India “paper of EPW by ved
• Bangladesh: Female Secondary School Assistance” Human Development
Department, World Bank, http://www.worldbank.org
• Claudia Rebanks Hepburn, “The Case For School Choice: Models from the United
States, New Zealand, Denmark, and Sweden”
• Sujatha Muthayya, ”Privatising Education”, in: The New Sunday Express, November 17,
2002 For further information look e.g. at the World Bank homepage:
http://rru.worldbank.org, EG West Centre homepage: http://www.ncl.ac.uk/egwest, or
• Sanjiv Kaura, in: “Elementary Failure”, in India Today, September 8, 2003, page 56
• Brian P. Gill, P. Michael Timpane, Karen E. Ross, Dominic J. Brewer, “Rhetoric Versus
Reality: What We Know and What We Need to Know About Vouchers and Charter
• Press Information Bureau, Government of India
• Parth J. Shah, “On the Role of Government and Civil Society in Education:
Liberalisation, Accountability, and Empowerment”