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Affirmative action and private education expenditure by disadvantaged groups: evidence from India

Under the Right to Education Act (2009), the Indian government mandated private schools to reserve 25% of primary school places for socioeconomically disadvantaged children. This study examines the policy’s spillover effect on private schooling costs. Using household survey data and a difference-in-differences approach, it compares private school fees for disadvantaged children across two age cohorts and survey rounds. Findings show fees decreased by ₹223–₹844 (0.05–0.25 SD) post-policy. A 5% enrolment increase led to a fee reduction of ₹240–₹470 (0.05–0.14 SD). The effects are driven by an increased supply of low-fee private schools facilitating cheaper private education for disadvantaged children.

 

The NCAER-NSE Business Expectations Survey for India Second Quarter 2024–25

The National Council of Applied Economic Research (NCAER), one of India’s premier economic policy research think tanks, carried out the 130th Round of its Business Expectations Survey (BES) in September 2024, with support from the National Stock Exchange of India Limited (NSE). NCAER has been carrying out the BES every quarter since 1992, covering 500 firms across four regions.

Where are the rich people in India’s household surveys? Track their e-commerce to fill gap

These households or persons are generally difficult to approach, or they refuse to entertain  survey investigators. Even when they do let them in, much of the data, especially related to income or expenditure, tends to be under-reported.

This is a serious problem for a rapidly growing country like India, where incomes are rising at a fast rate. Discounting such a large proportion of the population not only leads to estimates that are biased toward low-income households, but also jeopardises evidence-based policymaking.

The Indian government has recognised this issue. In a brainstorming session last month, the Ministry of Statistics and Programme Implementation (MoSPI) invited suggestions from several stakeholders on developing strategies to improve responses from high-income groups and gated societies in government surveys. This was the first initiative of its kind by the ministry, signalling that the government intends to take feasible and practical actions to mitigate this problem.

It may now be time to look at data points beyond the ordinary.

The reticence of the rich

 Realistically, there are a number of reasons why the wealthy are hesitant in sharing information with survey investigators. These range from being simply unaware about the purpose of surveys and their utility, to being sceptical about how data will be used. Besides, for obvious reasons, there is rampant distrust in society when it comes to hosting strangers and responding to their long list of questions.

Having said that, collecting information through household surveys is an important activity which collapses if respondents are unwilling to share or if they withhold or under-report socio-economic data.

The Collection of Statistics Act 2008 facilitates the collection of data on economic, demographic, social, scientific, and environmental aspects, providing adequate protections and restrictions on the use of such information. It also includes various penalties for refusing to supply particulars or making false statements.

However, with non-responses increasing rapidly, there is a need to shift to alternate data collection methods. With the increasing usage of technology in our daily lives, a number of data points can prove to be useful in capturing critical social and economic data.

UPI usage in India is growing at a fast pace. Being one of the most revolutionary outcomes of “Digital India”, it has brought a seismic shift in payment preferences from cash to digital transactions. From street vendors to large shopping malls to online platforms, all now provide options for making digital payments and transfers. The number of digital payment transactions has grown manifold, from 220 crore in 2013-14 to a staggering 18,592 crore in 2023-24. In value terms, it is a surge from Rs 952 lakh crore to Rs 3,658 lakh crore—an astonishing growth of over 280 per cent.

When combined with data from e-commerce platforms, digital payments can provide rich data. Companies are already utilising these digital systems to grow their business, so the government could also tap into them for collating useful data insights on expenditure patterns.

Indeed, the government has recognised the utility of such unconventional data sources and is contemplating collecting e-commerce data from 12 towns, mapping popular items on different platforms for the new Consumer Price Index (CPI) series.

The digitisation of Banking, Financial Services, and Insurance (BFSI) services is another useful source of financial data. Analysing such data can provide useful insights into consumer preferences and purchases of products and services. Such data provides a more comprehensive view than respondent-based data collection. Further, banking data like KYC information as well as electoral data could form the basis for sampling design.

People are also increasingly using travel-related apps and online platforms to purchase tickets and book accommodations. Further, streamlining of the processes can help in the collection of travel and tourism-related data.

These are just a few examples of where multiple data points can be tapped and collated.

Balancing caution & creativity

Unlocking the rich and diverse information from digital and online sources could be a game changer for the generation, collation, and production of official data. This possibility is now more feasible than ever. However, there is a need for caution.

Data security and privacy have always been key concerns when it comes to accessing online and digital information. The well-heeled and high-income groups are averse to sharing and revealing information for many reasons, but data security and privacy are at the top of the list.

While traditional, non-technology-based methods remain important, experimenting with new approaches could be beneficial. These may include identifying high-income households, or those living in gated societies, where at least one member is a government employee. It may be easier to garner their trust due to their awareness about the importance of such surveys. Even better, such government employees could be deployed as  survey interviewers in their localities. Widespread awareness campaigns are also extremely important.

In some wealthy countries, another method being used is to leave diaries with households during the first visit for them to record daily expenses. These diaries are then collected during the second visit.

In the initial phase, the government could commission a study to assess the feasibility, practicality, and utility of accessing data through these unconventional methods.

DL Wankhar is a retired officer of the Government of India; Poonam Munjal and Palash Baruah are respectively a Professor and a Fellow at the National Council of Applied Economic Research (NCAER), New Delhi. Views are personal. 

The EV challenge that India must overcome

India’s push toward electrical vehicles (EVs) by 2030 is a bold and necessary step, aimed at achieving 10 million EV sales annually and creating 50 million jobs across the ecosystem.

India’s push toward electrical vehicles (EVs) by 2030 is a bold and necessary step, aimed at achieving 10 million EV sales annually and creating 50 million jobs across the ecosystem. As the country races towards this ambitious target, it finds itself at the crossroads of opportunities and challenges. Can India lead the electric revolution, or will infrastructure and cost barriers slow its progress?

EVs offer significant environmental and economic benefits. The transportation sector accounts for over 10 per cent of India’s greenhouse gas emissions, and electric vehicles are the key to reducing this. India already has over 3 million EVs registered, and sales rose 45 per cent in 2023-24. Besides reducing emissions, EVs can address public health concerns. Cities like Delhi and Mumbai, known for high air pollution, stand to benefit from cleaner air. EVs are cheaper to maintain than petrol or diesel vehicles, offering long-term cost savings for consumers.

But even with these advantages, has the transition been fast enough? Are incentives strong enough to encourage mass adoption? Government policies, like the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, have been crucial in accelerating EV adoption. The Production Linked Incentive (PLI) scheme aims to boost domestic battery and EV manufacturing, reducing dependence on imports. By 2030, the Indian EV market is expected to grow to 20 trillion, with 4 trillion in financing. With the right incentives, India could also become a leading exporter of lithium-ion batteries. But will policy alone be enough to drive investment and consumer adoption, especially in a country with vast income disparities? One of the largest obstacles to widespread EV adoption is the lack of a reliable charging infrastructure.

India currently has just over 12,000 public charging stations, far fewer than required to support growing EV numbers. Consumers, especially in rural areas, continue to face “range anxiety,” worrying about running out of charge without access to a nearby station. Addressing this will require largescale investment in charging infrastructure, especially in underserved regions. Without a robust network of charging stations, India’s EV goals will remain distant. Despite declining battery prices, EVs remain expensive. Batteries make up 30-40 per cent of an EV’s total cost. While the government has reduced customs duties for EV components, the high initial cost remains a barrier for many consumers. Additionally, battery safety concerns, including incidents of fires, have raised doubts about the technology. Stronger safety regulations and better battery management systems are necessary to build consumer trust.

Can India scale battery production fast enough to drive down costs? And will advancements in battery technology be able to keep pace with the rising demand? EVs will only achieve their full potential if powered by clean energy. With India still reliant on coal for a significant portion of its electricity, the environmental benefits of EVs could be undermined. The government’s efforts to integrate renewable energy, especially solar and wind, into the grid are encouraging, but more needs to be done to ensure the grid can handle the increased demand that EVs will bring. India is poised to become a major player in lithium-ion battery production by 2030, which will reduce dependence on imports and support renewable energy storage solutions.

However, the challenge remains to align the growth of the EV sector with sustainable energy practices. The EV sector presents an enormous opportunity for job creation. The government estimates that by 2030, the sector could create 50 million jobs, including direct employment in manufacturing, charging infrastructure, and related services. This is particularly significant for India, with millions of young people entering the workforce each year. India, already the world’s thirdlargest automotive market, stands to further cement its place as a global leader in automotive manufacturing by embracing electric mobility.

But will the workforce be ready to meet the demands of a rapidly changing industry? India’s goal of achieving 10 million EV sales annually by 2030 is both ambitious and necessary. While challenges such as infrastructure gaps and affordability persist, the opportunities for economic growth, job creation, and environmental benefits are immense. With strong government backing, continued investments in infrastructure, and a focus on renewable energy, India can lead the global transition to electric mobility. The road to 2030 will be tough, but with the right policies and investments, India can become a model for other nations. Will India rise to the challenge and deliver on its electric promise? Only time will tell.

The writers are with NCAER New Delhi and IIT Bhubaneswar, respectively. The views expressed are personal.

Green hydrogen: don’t repeat mistakes of biofuel

Seawater must be used for producing this clean fuel, else there will be further pressure on groundwater.

Green hydrogen seems to be the centre of action as the clean fuel for enabling net zero emission. As hydrogen has a much higher energy density than alternative fuel choices like propane or gasoline, it can serve as a valuable energy source in industry and the transport sector. Also, as it has a zero-carbon footprint post combustion, it is an ideal choice for adopting low carbon pathways.

Similar hype existed for biofuel in India a decade-and-a-half back. We are still struggling to meet the 20 per cent blending target and the goal posts are being shifted time and again. It is worthwhile to recapitulate the mistakes India made in its biofuel transition.

Most countries which have been successful in promoting biofuel have banked on some crops as feedstock. Most also have undertaken genetic engineering on the crops so that the yield is maximised. Take the case of Brazil. Most of its ethanol is produced from sugarcane directly for efficient extraction. By contrast, India uses byproducts (molasses) from sugar production or damaged food crops to produce ethanol. This is not an efficient process. Of course, the sugar producers get better price for their by-products.

It is best India identifies feedstock, and undertakes genetic engineering on the plants concerned if it plans to use biofuel in a big way in the transportation sector. The use of used oil and crop residue can at best supplement biofuel production, but can never fulfil the scale target India needs if it wants to replicate Brazilian experiment with biofuel. Also, India lacks R&D investment in fourth generation biofuel (algae based). A laissez faire approach without R&D interventions has not yield much in respect of maturing of the sector.

Hydrogen transition

The development of green hydrogen currently rests crucially on availability of green power and access to clean water. Like other countries, India is banking on green power like solar or wind for production of hydrogen by electrolysis of water. However, only a few western and northern States are making significant progress in the development of renewable energy. The biggest problem is that the States which are production centres of green electricity are the very States which are water stressed.

India’s groundwater use is estimated at roughly one-quarter of the global usage, surpassing that of China and the US combined. With farmers provided with electricity subsidies for groundwater pumping, the water table has seen a drop of up to four meters in some parts of the country.

This unfettered draining of groundwater sources has accelerated over the past two decades. The Ministry of Jal Shakti (MoJS) has identified 255 out of total 788 districts as water stressed districts. Supporting 16 per cent of the world’s inhabitants is daunting enough, but it is even more so when one recognises that India only possesses 4 per cent of the world’s fresh water. Clearly, India has to adopt water efficient agricultural practices to free the scarce resource and augment capacity of green hydrogen. Saving of water from agriculture won’t happen without strong policy intervention and incentives. Should government have a policy to decide whether a hydrogen plant will be built in water stressed blocks?

Seawater is an abundant resource, therefore producing green hydrogen from it via electrolysis can help meet India’s energy challenge. Some of the States are building o -shore wind/solar farms. So, use of seawater for producing hydrogen is a natural choice. Moreover, solar power capacity is fast getting developed in States like Rajasthan and Gujarat where getting cheap freshwater is a dream. Hence, seawater can be the key ingredient for producing hydrogen.

Controlling corrosion

However, corrosion of electrodes from saltwater hampers the mass production of green hydrogen. Therefore, there is a critical need for strong and effective electrocatalyst technology that can avoid or withstand chloride corrosion and precipitate formation on the electrodes. Worldwide, considerable R&D activities are going on to develop coatings for electrodes, to employ semi-permeable membranes, to create novel platinum catalysts to address corrosion or to develop alkaline base electrode to withstand corrosion and enhance efficiency in salt water electrolysis. Similar zeal is missing in the Indian context. As a result, we may have to depend on imported technologies for fulfilling the hydrogen mission.

The writer is a professor at NCAER. Views are personal

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