Using a national household survey data on rural India, the article estimates coefficients of elasticity to examine two important questions on the nature of household expenditure on education: how do households behave in spending on education, given a change in their levels of economic development; and whether households complement or substitute public efforts in spending on education? The results indicate that there is a complementary relationship between household and government expenditures on education; and that household expenditures respond favourably but less than proportionately to changes in household incomes.
Conventionally, higher education is regarded as a public good, benefiting not only the individuals but also the whole society by producing a wide variety of externalities or social benefits. Of late, however, the chronic shortage of public funds for higher education, the widespread introduction of neo-liberal economic policies and globalization in every country and in every sector, and the heralding of the international law on trade in services by the World Trade Organization and the General Agreement on Trade and Services-all tend to challenge the long-cherished, well-established view of many that higher education is a public good, and to propose and legitimize the sale and purchase of higher education, as if it is a normal commodity meant for trade. The very shift in perception on the nature of higher education from a public good to a private good-a commodity that can be traded-will have serious implications. The paper describes the nature of the shift from viewing higher education as a public good to a private, tradable commodity and its dangerous implications.
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