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Educating India’s poorest: A radical plan to attract private sector investment

Sreedharan, Ranjan (2009): Educating India’s poorest: A radical plan to attract private sector investment.

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Abstract

Despite its recent economic successes, India still has a vast underclass where children either do not go to school or, if they did, they are forced to drop out early. This paper outlines a new model to attract ‘for profit’ private sector investment into the education of India’s poorest and most vulnerable children who, given current realities, are unlikely to make their way out of the poverty trap anytime soon.

The idea is radical but at its core the plan is simple: “Recognizing that the private sector can work wonders when there is a profit motive at work, this paper proposes that the Indian government should invite them to set up schools and colleges for the very poor, or arrange to take them into existing quality schools and colleges, with the incentive that as when these children grow up and start earning their livelihood, the income tax paid by them to the federal government over their life-time would go to the entity that nurtured and educated them.”

The financial viability of the model under Indian conditions is considered in Appendix A. This section has been contributed by Sankar Krishnan, formerly a global partner with McKinsey and Company.

Appendix B considers how a workable model—with returns to investors captured from future income tax payments—can be devised to attract corporate investment in college education for poor but talented American students.

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