Am I correct to assume that you have included all the risk associated with investing in a person (ex. they could die on graduation day)


My 2 paisa on this.. there is no risk involved in investing in a person. Even if there is, it is insignificant and imperceptible. When you consider a single individual, yes, a person might die, but, if we invest in 100 people, what is the probability? I’m sure it would be less than 10 power -20.

When talking about risks in investing, we should cover the entire gamut of investments to put things in proper perspective. Lets say the Govt wants to spend money on a bridge. What is the risk involved in that? It might collapse due to natural calamities. It might collapse due to extremely poor construction standards. What is the probability of the death of a single individual vs the collapse of a bridge – with the same investment?

Lets say, a bridge costs 100 crores, if that 100 crore is spent on education, how many people can be educated? A few thousand? What would be the economic output of these people vs the economic output of the bridge. And it is single bridge – the probability of a collapse (equiv to death) is incomparably higher than the probability of death of a few thousand people.

I’m not saying that bridges are totally unnecessary, but the most important resource for a country is education. Bridge is just an example. This *theory* can be extended to everything that we invest on. Putting things in proper perspective, will set our focus. What we should concentrate on.

Investment = evaluation of risks and returns

Please do note that I know nothing about economics, hence if my arguments sound absurd, please do forgive. Everything about economics, I learnt on this blog, from the inimitable analysis of Atanu. Just trying to use Atanu’s methods. The master would be a better judge whether I am learning correctly or not.

Warmest Regards,
JP.

The Govt perpetuates poverty and all other problems with its pernicious policies.

Regarding your question on primary education, Suhit is right, Education has to be non-profit. However, Kerala uses a different model, which allows private participation, hence the highest literacy. Details at: http://ccsindia.org/people_pjs_lae.asp

Regards,
JP.

You people are commenting on all Indian blogs, you say you are compiling a list. What you are doing is just to make money out of the good bloggers work, go and do some productive things.

http://www.hindustantimes.com/news/181_1667876,00120001.htm

He defends the CPI(M)’s work in Bengal.

Really nice analysis.

But one thing I want to address here is the fact that, what if a person work for other country like (USA, UK, Australia etc) after pursuing his/her study in India. Does our society get benefit from this?

-RPatel

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‘Education and Economics’ might be another good title/tag.

Subhas.

I see the maestro of analysis at his best! So analytical, and so lucid, it may be called, “The Case for Loans in Education”

Some people know in general that education benefits society. But, how exactly and in what way, they are not sure. Not fully the case for those in development circles. Your article elucidates how education benefits, with beautiful examples. I always like examples with numbers!

I wish you write incisive analysis on everything that matters for India – the more on matters that matter the most, leaving away superficial posts. Even if you post a gripping analytical article once a week on a fixed day, you would be doing a lot.

I would suggest a topic: “Productivity of a person is what makes him and his country well off. Why does then, a teacher, a lawyer, a doctor, and any person in service sector of the economy in India, earns many many times lesser than their US counterparts, despite performing the same work?”

Warmly,
Subhas.

I hope you do incorporate temporal and population scales into the analysis. You are quite aware of the overall costing weaknesses as put in the second paragraph. The extra characteristics I would seek in the solution are below.

(a) Most of us are not perceptive enough to appreciate the intangibles that actually suggest the strongly positive returns of Education. To turn this around introduces the time factor to gauge the effectiveness of any proposed solution.

(b) Those who perceive are usually already educated. This fraction must increase. A multiplier effect must be introduced into the solution to make it effective.

Provisions can be introduced into the overall solution to provide private and public incentive to address these independent of any appeals to ideals. For instance, one way would be to convey the knowledge in local languages rather than teaching the populace into English and making knowledge accessible. That this could be a way to increase the gain by reducing the cost needs to be thought over as a possibly another “what if’s”.

- Abhijat

If so then you would have to create something similar to say a car insurance company that determines who gets loans and of what size. Trusting the government with such a complex task is probably not the best course of action. Subsidies can work, just not in India.

I look forward to reading about where these resources should come from and who should be responsible for distributing them.

I have a weird idea of my own. Create something similar to a bond. Say a person, who doesn’t have to be indian, invests a 100 dollars in this certificate. This 100 will be distributed amongst the educational costs of say 10,000 students. As these 10,000 individuals move into the labour force they begin paying taxes. A percentage of this tax revenue can be given to repay the 100 dollar investment. Or perhaps this certificate can be thought of more as a stock that pays dividends for as long as the person who holds it (many ways to tinker with this).

This will give people in other countries an incentive and a means to educate indians!

My understanding is that according to the laws in India you cannot start a for-profit school in India.

Suhit

If so then you would have to create something similar to say a car insurance company that determines who gets loans and what size they would be. Trusting the government with such a complex task is probably not the best course of action. Subsidies can work, just not in India.

I look forward to reading about where these resources should come from and who should be responsible for distributing them.

I know India has the largest for-profit education giants in grad, postgrad, professional & exam-tutorial fields eg. NIIT, Aptech, Brilliants, Agarwal etc. NIIT I am told is the largest for-profit IT education chain in the whole world. So what prevents them from opening a for-profit primary school ?

Lovely analysis!

I too have been thinking of subsidies in education these past few days, what with the IIMs going in for fees hikes of Rs. 20K a year.

Why did the IIMs settle on such a paltry hike when it is public knowledge that most students go in for bank loans to pay the fees and that what they earn in one year (post-degree) is more than enough to write off the loan twice or thrice over?

Will there be a credit shortage if the IIMs decide to hike the fees to the level where there is no subsidy (and gasp, even a margin)?

Regards.