On Feb. 28, India's ruling congress party-led coalition introduced its latest budget, aiming, according to Finance Minister P. Chidambaram, "to lift the poor" and close the income gap. The new plan, however, is no more likely to succeed than past efforts. The problem is best understood by focusing on two numbers hidden in the document. One represents a promise to hire 200,000 new schoolteachers; the other, to grant 100,000 scholarships. These two figures underscore both what is right and wrong with India today, and why its leaders fail to help their neediest constituents.
India as a country is getting richer at a bewildering rate. Somehow this chaotic, billion-person democracy has become one of the world's fastest-growing economies, expanding 8 percent in the past three years and 9.2 percent this year. Since 1980, per capita income has tripled. Some of this progress has trickled down: 1 percent of the poor have crossed the poverty line each year since 1980. That adds up to a total of about 200 million people. But it still leaves 220 million Indians living on less than a dollar a day.
To enjoy the benefits of high growth, India's poor also need good schools and health clinics. The problem is not a lack of spending; India devotes a respectable 4 percent of GDP to education, and the new budget increases money for education, health care and rural-employment schemes by 35 percent.
The trouble is how that cash is spent. India's public schools are in woeful shape. Surveys show that on any given day one out of four primary-school teachers is absent; of those present, one out of two is not teaching. The picture at health-care centers is similarly grim: two out of five doctors and one in three nurses is generally missing. India already has more than a million primary-school teachers. Adding more may help, but the real trick is getting the approximately 670,000 of them who don't do their jobs to start performing.
That will require greater accountability. At the moment, teachers and health workers are employed for life, answerable (if at all) not to parents or patients but distant bureaucrats. And they're hard to discipline: many health and education workers get their jobs through political patronage or by buying them outright. Once hired, they are protected by powerful unions.
In the face of such problems, India's parents have found their own solutions, enrolling their kids in cheap private schools. These charge $2 to $4 a month and are spreading rapidly through villages and slums across the country. Even though these schools pay a third of the salary that unionized government teachers get, they deliver better results. Hence parents are voting with their feet, and 53 percent of urban children (and 18 percent of rural children) now attend private schools. And according to the World Bank, private health-care spending in India is double that of the United States (which has one of the most privatized health-care systems in the world).
The promised 100,000 scholarships is good news in this regard. It will help empower parents to choose schools based on merit and give the public system an incentive to improve. Yet even as more and more individuals turn to private solutions, the government remains caught in a time warp, relying mainly on the civil service to meet people's needs. The left-leaning education establishment, for example, has a single-point agenda for improving standards: raising spending from 4 percent to 6 percent of GDP.
There are many sensible steps India could take to improve education and health care. Focusing on outcomes rather than internal procedures would help, as would making schools accountable to local communities. More generally, the Indian establishment must jettison its faith in what the political scientist James Scott called "bureaucratic high modernism" and recognize that the government's job is to govern rather than to run everything. Government may have to finance primary services such as health and education, but the providers of those services should be made accountable to citizens as though they were customers. The new scholarship program suggests that at least some sections of the government are finally beginning to realize that the delivery of public services is in a terrible state, and that something needs to be done. But the hiring of still more teachers shows how big the bureaucratic hurdles remain.