# **I. Introduction**

1. The role of the private sector has become increasingly prominent in the educational landscape of South Asia in recent years, taking the spotlight in academic research as well as the popular media. The private sector is defined here in its broadest sense, including communities, non-governmental organizations (NGOs), faith-based organizations, trade unions, private companies, small-scale informal and individuals (Lewis and Patrinos, 2011). In other words, the private sector here refers to non-state entities. Private schools have accounted for a considerably increasing share of student enrollment at all grade levels. Various types of public-private partnership have emerged. Much attention has also been drawn to the widespread phenomenon of outside-classroom tutoring. A central question in today’s discussion is with regards to the absolute and relative quality of education associated with engagement by the private sector.

2. This paper contributes to the literature and discussion by putting together, for the first time, a regional picture of the role of the private sector in educational service delivery at the primary and secondary levels across the countries in South Asia, and examining the learning quality associated with this engagement, as measured by student test scores. The paper involves an extensive literature review, basic data analyses (using household surveys, learning assessment surveys, and school censuses), and policy implications proposed by the authors. It does not entail any original impact evaluation. Due to varying degrees of availability of data and information as well as varying histories and government policies across the countries, Bangladesh, India, Nepal and Pakistan get extensive analysis, while analysis for the other countries is limited. Similarly, some types of private sector engagement can be discussed in more detail than some other types. Moreover, the paper focuses on country-level analysis, and abstracts from analysis of variation across within-country administrative units, such as states, provinces and districts, which could be substantial (see, for example, Nguyen and Raju, 2013).

3. Private sector engagement in the provision of educational services at the primary and secondary levels in South Asia takes various types. Schools fully financed and managed by the private sector (unaided schools) account for virtually all of private sector engagement in primary and secondary education in Nepal and Pakistan. Government financed and privately managed schools (aided schools) are highly prevalent in Bangladesh and have considerable presence in India. According to the latest household survey data available for seven of the eight regional countries, almost one-third of school children are enrolled in schools identified as private schools (aided or unaided schools), with a high concentration in Bangladesh, India, Nepal and Pakistan. Available school census data for these four countries indicate that the expansion of privately managed schools is fairly recent, starting around the mid-1970s to early 1980s. Predominant among the urban and high-income, it has increasingly reached rural areas and poorer households. Importantly, in India, the parliament has recently passed the Right to Education Act that includes a provision mandating private schools to reserve up to 25% of their seats for students from disadvantaged backgrounds, with a reimbursement of fees by the government. With this provision, India may soon lead the world in the number of children attending private schools with government funding, and also in the inclusiveness of private schooling. Besides engagement in aided and unaided schools, the private sector may also provide school-level services without assuming management responsibilities, or set up schools of a specific model, finance and run them while gradually transferring financing and management responsibilities to the government. Outside-classroom paid tutoring is reported to be common in most countries, whether private schooling is minimal or significant (except in Bhutan where tutoring is banned by law).

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