A responsible budget can only come about through expenditure realignment. And before we get into pyrotechnics about whether the rich should pay more, etc, let it be fully understood that the top 10 per cent of the population pays for almost all the income tax collected in India. Add to it that they pay the lion’s share of corporate taxes, one gets the simple result that more than 60 per cent of all taxes are paid by just 10 per cent of the population.
It is imperative that the fiscal deficit be reduced, and be reduced substantially. This will involve a major “sacrifice” from the populists. But isn’t there some way that the rich could share in this burden of adjustment? It turns out there is — start asking the rich to pay more for tuition at government-run “institutions of higher learning” hereafter. These institutions, like their counterparts in the private sector, come in different sizes and shapes of quality. Many are first-rate institutions, though it is particularly sad, and surprising, that none of our finest institutes figures even in the top 200 of the world.
How to improve quality is a larger subject best left for another occasion. Though it is possible that tuition increases at government colleges will motivate them to perform better as they seek to attract more students. At present, it is very unclear whether students are attending government colleges for their quality, or their cheapness.
All forms of education have “externalities”. That is why education — whether primary, secondary, or higher — is never priced at “market”. Equally, no one should make the case that education should be free for everybody. To be sure, there are many students who could not attend college without both a scholarship and a stipend. They need to be subsidised — but that does not mean that everybody should be subsidised.
The pattern of income distribution is such that only about a fifth of the entire working population has incomes above the present cut-off point for paying taxes — Rs 1.8 lakh a year. So a large majority of those who go to college — private or public — belong to the top 20 per cent of the income distribution. Recall that one needs to graduate from high school in order to attend college. And despite all the freebies, only about 10-12 per cent of the college-going-age cohort goes to college