Despite its dominant role in providing school places, the public sector accounts for only slightly more than 50 percent of total expenditure on education. Expenditures by the private sector (that is, by households) have emerged as an important complement to budget outlays at all levels of education. Estimates based on the 1992-93 and 1997-98 VLSS suggest that total private spending on education has increased dramatically from about 1.7 percent of GDP in 1993 to 3.4 percent in 1998. Of this aggregate total increase, 14 % is due to the increase in total number of children enrolled in schools, and 84 % is due to increase in private spending per student. Almost all of this -- nearly 97 percent -- was spent by students enrolled in public schools.

Putting these public and private expenditures together (Table 9) suggests that the state budget finances only 52 percent of overall education expenses in 1993 and 50 percent in 1998. More importantly, as a result of the major reallocation of public spending within the education sector (as can be seen from previous paragraph), public spending plays an increasing role in financing public primary education, its share in total education expenditure for this level increased from 45 percent in 1993 to 61 percent in 1998. And private spending in public primary schools fall from 55 % in 1993 to 39 % in 1998, though the absolute level of private spending almost doubled in real terms. Similarly, the share of public spending in total spending on lower secondary education increased from 34 % in 1993 to 41 % in 1998. In contrast, the private sector played an increasingly important role in financing upper and post secondary education. Share of private spending in public upper and post secondary schools in total education expenditure for these levels increased from 60 % and 29 % in 1993 to 67 % and 54 % in 1998, respectively. This trend means that more money from public fund for education will be available for basic education levels.

**Table 9: Public and private shares of financing by level of education, 1993 and 1998 (%** of total expenditure **at** each education level)

||_Publicfinancing_|
|---|---|
|_USES:_|1993<br>1998|
|**Primary**|45<br>61|
|Lower secondary|34<br>41|
|Uppersecondary|40<br>33|
|Post-secondary|71<br>46|

_Source:_ Estimates based on government budget data (MOF) and 1992-93 and 1997-98 VLSS.

# _Privatefinancing of education_

Table 9 highlights the diminished role that the public sector now plays in the financing upper and post secondary education, as distinct from the provision of education. On the one hand, this means that the education sector has been successful in mobilizing a considerable volume of private sources to finance schooling. On the other hand it means that private costs already play an important role in rationing enrolment in public schooling -- the costs of official fees, private fees, unofficial contributions, books, uniforms, transport, etc. This factor is especially likely to influence access by students fromn poor families and may limit the scope for further cost recovery to finance expanded access and better quality of education.

Although fees were no longer compulsory at the primary level, households have to pay many other school-related costs, such as parent contribution (PTA), books, uniform, private fees, transportation, and lunch at school. Though non of these are compulsory by any regulation, they 11