In the information technology sector, the two well-known categories of goods are hardware, the stuff you can hold in your hands, and software, the bits that have no weight. The third category is termed vaporware: hardware that exist only in the fevered imagination of their promoters and which will never hit the stores.

The government of India recently unveiled a tablet computer which they claim will revolutionize education. Perhaps vapor does not translate well into Hindi and therefore they settled on the word for sky, or Aakash, for the tablet.

Vaporware does not condense into hardware because it fails the pitiless test of the marketplace that the product’s benefits exceed its costs. That constraint does not apply to the government sponsored Aakash because they can choose to ignore inconvenient costs through the simple expedient of spending other people’s money.

The Aakash can be priced at any arbitrarily low number but that does not change the cost. The difference will be paid for not by Mr Kapil Sibal but by the average citizen of India. And for what? To eliminate digital illiteracy, an entirely artificial malady conjured out of thin, blue air.

The failure of the Indian education system must count as the Indian government’s greatest failure. Over 90 percent of students drop out of school by the 12th grade and only six percent go on to tertiary education, to cite just one dismal statistic. We have to understand that the failure is primarily due to flawed policies that the government has consistently imposed on the education sector. Aakash, like its predecessor the “$10 laptop”, is just another distraction, but a very costly distraction.

It is costly in many ways. First, the government should not be subsidizing consumer electronics. Electronics is the most competitive industry in the world and extremely competent huge corporations are constantly innovating with the result that costs move downwards monotonically. Governments are incapable of choosing winners in technology, and the Indian government has demonstrated particular ineptitude in that regard.

Second, the lack of real commitment to fix primary education is especially hard on the poorest sections of the society. Promoting digital gizmos at immense public costs only widens the gap between the haves and the have nots. Something like half the 7th standard students cannot read, write or do simple arithmetic. Where a hundred million suffer illiteracy, attempting to promote digital literacy cannot but be a cynical exercise in self-promotion and aggrandizement.

A press conference saying that India has invested in providing blackboards and teachers in 100,000 schools that lack them would not be as headline grabbing as one which parades a me-too device hyped as an “iPad killer.” A policy of funding toilets in schools (needed to alleviate the suffering of girl children especially) does not have the sex appeal of a policy of handing out digital gizmos. But the production and distribution of hi-tech gadgets offer immense opportunities to profit for the producers and the government – never mind at what cost to the public.

Press releases that repeat the claim by the government that the Aakash tablet will be sold in tens of millions of units fail to do basic arithmetic. The subsidy costs could run into billions of dollars. Like so many other government schemes, the Aakash tablet, in the unlikely event that it is actually produced, will ultimately be funded by the poor through increased inflation. Unlike Mr Sibal, the poor suffer when the government runs the printing presses at the mint overtime.

Our focus has to be on the urgent and important matter of education. The government has a critical role to play, which is to provide the regulatory environment for needed massive investment by the private sector. That role is as a facilitator and not as a competitor to the Apples and the HPs of the world.

Public support for education, particularly education for the poor, is absolutely necessary and beyond doubt. Basic economics argues for subsidies because there are enormous social benefits to an educated population. However that public spending has to be targeted and the interventions have to be sequenced properly.

Perhaps digital illiteracy should be a cause for concern, but I doubt it. Like tens of billions of others, I too was a digital illiterate but that did not interfere with my education in the least. However, basic illiteracy is a critical concern. That is the weakest link in the entire chain of education. Strengthening any link other than the weakest link will not make the chain stronger. A government that has failed to achieve universal literacy cannot be trusted to eliminate digital illiteracy.

When entrepreneurs and start-ups peddle vaporware to get funding, the losers are private investors that are taken in by hype. The rough and tumble of the marketplace eliminates the incompetent or the simply greedy, and rewards true innovators. But when the government gets into the game of funding vaporware at massive public costs, and away from the discipline of the marketplace, it adds one more chain around the citizens, already imprisoned by the shackles of inflation and government control.

The penalty for wrong-headed policies is paid not by the government officials but by people like us. No matter what promises they make about eliminating digital illiterary, we cannot afford to pay the price.

{This appeared as an op-ed in the Indian Express on Oct 8th, 2011.}