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Reimbursements under RTE Section 12(2): Too Little, Too Late

Centre for Civil Society |
November 9, 2021

In 2009, the Parliament of India passed the Right to Free and Compulsory Education (RTE) Act. Section 12(2) of the RTE Act requires the Government to reimburse all private unaided schools for reserving 25 per cent of their entry-level seats for children from Economically Weaker Section and Disadvantaged Groups (EWS/DG). Private unaided schools receive reimbursement to the extent of per-child-expenditure incurred by the State or the actual amount charged from the child, whichever is less.

But significant implementation challenges mar this attempt to expand inclusion. In 2019-20, reimbursements for over 3.11 lakh students in 12 states were not approved (Central Square Foundation 2020). Difficulties and delays in the admission process due to administrative errors and absent records of children also hamper the proper execution of the provision (Bhattacharjee 2019; Sarin, Dongre, and Shrikant Wad 2017). This leaves private schools, especially budget private schools that charge monthly fees of ~INR 1000, in a precarious position.

This year for our annual Researching Reality internship, we onboarded 16 interns and explored the issue of reimbursements under Section 12(2). We approached the topic in six parts:

  1. The story so far: we conducted an extensive review of the existing research on reimbursements under Section 12(2) and their implementation and impact on children
  2. Law and economics behind reimbursements: we studied if incentives for each stakeholder in the reimbursement process were aligned and how they played out; we also examined the legal safeguards in place to protect the implementation of Section 12(2)
  3. Arithmetic for per-child expenditure: we discussed the formula used by the Government of NCT of Delhi to arrive at its per-child expenditure, other standard components of educational spending that various state governments reimburse, and the implications of this existing formula on concerned stakeholders
  4. Ease of claiming reimbursements: we compared the de jure process of reimbursements in Delhi with that of Madhya Pradesh, Odisha, and Karnataka. Based on interviews of school principals and state officials, we drew the process on the ground and identified bottlenecks in the process.
  5. Stakeholder perceptions on claiming reimbursements: we captured how each stakeholder perceived the reimbursement process, key decisions they took therein, and their interactions with one another
  6. Legal issues regarding reimbursements: we analysed all judgements about the implementation of Section 12(2) from 11 High Courts in India

Based on our research, we were able to paint the following picture.

  1. Reservations under RTE Act 2009 is akin to Government acquiring private land (Eminent Domain)
       a.   Prompt compensation is a must for such takings; at the very least, schools should be paid interest on dues in case of delays.
  2. Untimely and inadequate reimbursements ring loudly in the system.
        a.   Schools in Delhi often receive reimbursements 2-3 years after filing claims
        b.   Amount for books, uniforms, and other mandated supplies is arbitrarily fixed, grossly insufficient, and at times, not reimbursed
        c.   At present, schools are not even paid any interest on dues in cases of delay
  3. The current formula for calculating per-child costs for reimbursement is not reliable.
        a.   The formula uses total enrolment as a factor—a number often over-reported, reducing the total per-child expenditure calculated.
  4. Private schools face procedural bottlenecks in claiming reimbursements.
       a.   Timelines for filing reimbursement claims are not fixed in Delhi; schools rely on informal networks for updates
       b.   Rectifying errors takes a long time and requires schools to visit the Directorate and resubmit all data
       c.   Procedure for filing reimbursements varies across districts in Delhi
       d.   Schools pay one percent of their reimbursement amount to the government officials as facilitation fees for timely reimbursements
  5. Reimbursement delays and inadequacy have a ripple effect.
        a.   Delays affect the schools’ cash flows, salaries of teaching and non-teaching staff, quality of education, and motivations to run a school
        b.   Cost of educating EWSDG students is often passed on through a fee hike to fee-paying parents. Not surprisingly, all fee regulatory Acts in India for private unaided schools were passed after introduction of RTE
  6. Different High Courts adopt different approaches.
       a.   The High Court of Madras observed that since private schools are reimbursed for 25% children, they should not charge “excess fees” from other students
       b.   The High Court of Madhya Pradesh directed the government to process reimbursement claims within 3 months of receiving applications; no other High Court in the country has taken this necessary stand so far

The implementation of Section 12(2) of the RTE Act leaves a lot to be desired. In the long run, reforms aimed at making the Government accountable, increasing choice for parents and students, and reducing administrative burden for schools will allow for a prosperous system that can provide higher quality education. In the short run, efforts should focus on making reimbursements less cumbersome and more transparent for all involved.





Rights, Restrictions, and the Rule of Law: COVID-19 and Women Street Vendors

Sharan Bhavnani, Prashant Narang, and Jayana Bedi |
October 19, 2021

Street vendors constitute nearly two percent of India’s urban population (Bhowmik 2005). Together vendors play a pivotal role in the urban economy by providing access to essential goods. Until 2014, no national legislation existed to help regularise their informal economy. This often led to rent-seeking actions by local authorities or police officials (Ministry of Housing and Urban Affairs 2011).

The Street Vendors Act (hereafter, referred to as The Act), passed in 2014, marked a watershed moment in the fight for the right to dignified livelihoods in India. The Act sought to formalise street vending through a rights-based approach. However, up until 2019, state governments had not implemented the law, effectively rendering it toothless (Centre for Civil Society 2019).

Most street vendors have since continued to face the same hardships and harassment at the hands of the local authorities as they did before. Among them, particularly hard hit are the women street vendors, roughly one million in number. These women do not just bear the burden of economic hardships, but also of gender-based violence and other oppressive social norms (Chakraborty and Ahuja 2021).

With the onset of COVID-19, and in response to the World Health Organization’s (WHO) global call to take “urgent and aggressive action” (WHO 2020), India prepared to curtail a broad gamut of rights in the name of public health safety. However, WHO noted that “countries must strike a fine balance between protecting health, minimizing economic and social disruption, and respecting human rights” (WHO 2020).

To strike this “fine balance”, the powers of the executive must be closely guided and limited. However, empowered by the Parliament, the executive ordered closure of markets, imposition of curfews, and prohibition of movement. These COVID-19 restrictions beset vendors with additional adversities. Already living precarious lives, women vendors, especially, moved closer to poverty and severe economic and social vulnerabilities (Majithia 2020).

This policy brief evaluates the bearing of COVID-19 restrictions on women street vendors. In particular, it outlines: i) the approach adopted by the government to regulate street vending amidst the pandemic; (ii) areas of excesses and its impact on vendors; and iii) international best practices that could guide the government's future approaches in crises.

Unfree to Sell: How Trade Restrictions Hurt Farmers

Anirudh Goel and Arjun Krishnan |
July 27, 2021

The Indian growth story of rising incomes, increased wealth, more freedoms, and higher aspirations has not been the reality for many citizens of Bharat. Sharad Joshi, an economist and former Rajya Sabha Member from Maharashtra, noted this dichotomy in the way the urban residents of India and the rural residents of Bharat were treated. At its core, while the government treats its urban, nonagricultural population as rational economic actors capable of making decisions about their economic lives, it treats its agricultural population as incapable of doing so. This approach has left farmers desperately poor and debt-ridden


This protective attitude is amplified when dealing with the international trade of agricultural produce. Because of India’s past as a food-insecure country, various laws that restricted trade and storage were adopted. These policies hurt India’s image as a reliable trade partner and limited investment in postharvest facilities. In addition, market interventions like Minimum Support Prices(MSP) that incentivise production of wheat and paddy mean that most of India’s produce is low-value. As a result, India’s agricultural supply chains are not well linked to international markets and the goods exported are not remunerative. 


This policy brief studies the historical motivations for India’s trade policy, the current state of agricultural trade, and the legal hurdles to a more open trade environment. It then suggests a series of reforms that would have significant long term benefits to India’s farmers

National Education Policy 2020: A One-time Comprehensive Evaluation

Anirudh Agarwal and Prashant Narang |
July 21, 2021

The National Education Policy 2020 (NEP 2020) was launched in July, 34 years after the last National Education Policy in 1986. It aims to address the country's development imperatives and proposes to revamp the education structure, including education governance. This monograph examines the key reforms pertaining to school education under the NEP 2020. These include extension of the right to education, changes in the medium of instruction, learning assessments and outcomes, early childhood care and education, and strengthening foundational literacy and numeracy. The monograph also sheds light on the proposed regulatory framework for schools and the fee regulation norms. Some of our key insights are listed below.

Expanding the right to education: Though the NEP 2020 takes a progressive step by expanding the ambit of compulsory education, it does so without fully considering the reasons for current pitfalls in compulsory schooling. The policy offers solutions for dropouts without examining the reasons for high dropout rate. It offers to bring in social workers, without outlining a sustainable strategy for their recruitment. Finally, it remains silent on the implementation challenges of Section 12 of the Right to Education Act.

Three-language formula: NEP recommends a three-language formula and provides flexibility to the states. But, it fails to reconcile the need for regional medium instruction with the demand for English medium education. Further, it fails to outline how the needs of micro regions with considerable linguistic diversity within the state would be accomodated.

Education technology: Although the NEP sends a positive signal by acknowledging the need for strengthening education technology, it falls short in providing a concrete ed-tech policy to bridge the digital divide.

Foundational skills and Assessments: The NEP takes a holistic approach to testing and incorporates elements consistent with its vision. It proposes a formative, holistic report card and emphasises that the purpose of standardised tests is the improvement of the school and education system. However, it fails to address the pitfalls that earlier policies faced while implementing holistic report cards in the form of Continuous Comprehensive Evaluation. Further, though the NEP does well by aiming to achieve universal foundational skills at the earliest its reliance on informal ways, such as community volunteers and “each one, teach one”-approach, leave much to be desired.

Early childhood care: The policy hits the mark by including Early Childhood Care and Education (ECCE) under the ambit of free and compulsory education and emphasising on providing opportunities for early learning. However it ignores the Nurturing-care framework, fails to treat early childhood care as a set of goals that necessitate a separate program, and does not sufficiently engage with other dimensions of strong ECCE support (such as responsive caregiving, and safety and security).

Regulatory framework for schools: The policy has taken big steps towards a progressive regulatory regime. The decision to separate the regulatory and provisionary functions of the government is a welcome move. It will aid in creating a level playing field for the private sector and hold the system accountable to improve.

Fee regulation: The policy does not go far enough and abolish fee regulation mechanisms. Fee controls keep the prices artificially low and incentivise schools to seek regulation instead of competition, thereby discouraging innovation.

Overall, the NEP 2020 has made considerable strides with what it wants to achieve as well as governance reforms. However, the policy does not sufficiently outline specific challenges it would have to overcome to meet its target or how it would sustainably finance the interventions.


Quality of Laws Toolkit

Centre for Civil Society |
April 13, 2021

Laws and regulations impact the social and economic wellbeing, and freedom of members of a society. They alter how individuals interact and trade with each other. While all laws and regulations alter behaviour and impact stakeholders, a good regulation maximises social welfare while minimising the cost and extent  of intervention (CUTS Centre for Competition, Investment & Economic Regulation). 

A cost-benefit analysis alone is insufficient to assess the quality of a law or regulation. Partly, this is because it is not possible to know all the costs and benefits associated with a specific law or regulation. While known costs and benefits can be calculated, there will be costs and benefits that are impossible to predict ex-ante (Frédéric Bastiat 1850). Added to this, is the knowledge problem. All the relevant information will never be available to any one individual since this knowledge and data is distributed among individual actors (Friedrich Hayek 1945). 

The Quality of Laws toolkit attempts to address this gap. It draws from international literature on administrative law and various global indices of regulatory quality like the World Bank Global Indicators of Regulatory Governance (GIRG), OECD Indicators of Regulatory Policy and Governance, and the European Union’s Better Regulation Toolbox. Last year, Centre for Civil Society released a binary-style ‘Quality of Regulation’ checklist (Anand 2019). It outlined the minimum set of benchmarks that a law must meet irrespective of the sector it governs.

This year, based on the checklist, we developed a scorecard to measure the quality of laws and rules (Forthcoming 2021). It constitutes three parts: Representation safeguards (i.e accessibility of laws and public consultation), Rights safeguards (i.e. checks on executive discretion) and Resource safeguards (i.e. administrative burden imposed and change in incentive structure using Epstein’s framework).


Improving Ease of Doing Business for MSMEs in Punjab: A Process Audit

Centre for Civil Society |
March 15, 2021

India has jumped from 142 in 2014 to 63 in 2019 on the World Bank’s ease of doing business index. Even though this index is based only on Delhi and Mumbai, Government of India has encouraged all the states to implement reforms to improve the investment confidence. Department for Promotion of Industry and Internal Trade (DPIIT), under Ministry of Commerce and Industry of Government of India, ranks states based on reforms implemented as mentioned in Business Reform Action Plan (BRAP). This ranking incentivises states to compete for becoming favoured destinations for industries. 

Unfortunately, micro, small, and medium enterprises (MSMEs) continue to bear the burden of complex regulatory compliance. Though MSMEs play a crucial role in the Indian economy, the impact of the current regulatory environment on their capacity to develop and scale-up remains unknown. In particular, there is limited information on what happens after an MSME applies for a licence or an approval. 

In 2020, we at Centre for Civil Society conceptualised a project to ease the regulatory environment for MSMEs at the state-level.  We wished to develop evidence-based policy reforms, and implement them in tandem with state governments in India to improve the overall working conditions for MSMEs. We partnered with Government of Punjab and Global Alliance for Mass Entrepreneurship and  conducted a process audit of 26 services across five departments: Labour, Local Government, Industries and Commerce, Housing and Urban Development and Punjab Pollution Control Board. As a part of this audit, CCS analysed administrative logs and conducted interviews with departmental officers and applicants to determine the reasons for delays and prescribed recommendations. 

Some of our major findings from the study include

  • Officers do not raise the objections related to the documents at one go. They raise objections in piecemeal fashion and not within the time limit. For instance, in one file of Change of Land Use under the Department of Housing and Urban Development, the official forwarded 12 objections to the applicant. But after the applicant rectified these problems, officials raised 3 new objections that were not mentioned in the original objection.  This led to unnecessary slow down in the approval process.

  • Often, the objections are not directly communicated with the applicant. Take for instance, applications for Building Plan Approval under the Department of Local Government. In all the files we studied, each time an officer raises an objection, the objection is returned down the process ladder until it reaches the Building Inspector who communicates the issue to the applicant. In one application, an objection raised by the Assistant Town Planner reached the Building Inspector after 15 days after passing through two officers.

  • For some services in Department of Local Government, Department of Housing and Urban Development and Department of Industries and Commerce, officials ask for additional documents which are not part of the list of required documents mentioned on the website. For instance, in an application for Change of Land Use under Department of Housing and Urban Development, the applicant indicated that the concerned land did not fall under forest area and hence a No Objection Certificate(NOC) from the Department of Forests and Wildlife was not required. But the officer still insisted on submitting this document.

Through this study, we offer targeted suggestions and policy recommendations to improve the efficiency of bureaucratic processes in the service delivery by Government of Punjab and improve the business environment in the state. 


RegData India: A quantitative analysis of national laws in India

Jayana Bedi and Prashant Narang |
March 9, 2021

RegData, an initiative of the RegData, an initiative of the Mercatus Center, is an effort to quantify various aspects of regulation. The Mercatus Center created RegData in 2012 with an aim to “introduce an objective, replicable, and transparent methodology for measuring regulation.” It uses custom-made text analysis and a machine-learning algorithm to measure the different features of law. These features include volume, restrictiveness and linguistic complexity. Together, these metrics indicate the regulatory burden a particular law, department or ministry imposes. Some variables, like the restrictive terms or ‘binding words’, demonstrate associations with economic growth and productivity (Mercatus Center 2019).

In collaboration with the Mercatus Center, we obtained quantitative metrics for all  876 national laws of India. For this purpose, we used the list of laws made available on the official portal of the Government of India. This empirical analysis, along with our categorisation of laws by the Ministry and Department, will help open way for further research on the burden imposed by laws. 

We study laws on the following three metrics:

  • Volume: This metric quantifies the number of words in a law. We also use this metric to study the average number of words per law in a particular year, and the average number of words per law in each Ministry.
  • Binding words: RegData uses a text analysis program to count the number of  binding words or “restrictions”in a law—that create an obligation to comply or limit choice sets. Restrictive terms are likely to be higher in laws that are lengthy. To get an estimate of the density of restrictiveness, we also calculate the ‘normalised binding words’ for each law. This metric refers to the average number of words after which a ‘binding’ word appears. For instance, if the normalised binding words for a law is 300, it means that on average a restrictive term appears after every 300 words in the law. Lower normalised binding words would imply that a law is more restrictive. 

Linguistic complexity: This metric measures the complexity of a given law. Complexity is understood by how a law fares on  the following four sub-categories: Shannon entropy, sentence length, conditional count and Flesch Reading Ease score. These four metrics provide an understanding of how easy or difficult it is to comprehend a law. A law that is tough to comprehend may also increase the compliance costs for regulated entities (in terms of effort, time and money) (Mercatus Center 2020).

Our interactive dashboards provide details of all three quantitative metrics across all national laws.


Governance challenges in K-12 education in India

Bhuvana Anand and Tarini Sudhakar |
October 17, 2020

Significant work has been done on de facto operations of state functionaries (World Bank 2004; Posani and Aiyar 2009; Aiyar, Chaudhuri and Wallack 2010; Pritchett 2018; Centre for Civil Society 2019). But there is limited research on the de jure framework for K-12 education in India, especially for private schools. Information on roles of state education functionaries for public and private schools is scattered. Clarity on these roles is necessary to establish sharp lines of accountability. This is crucial, especially since private schools have to compete with the government that sets the rules for all schools and operates its own schools.

We dive in and examine the rule-sets for Maharashtra, Delhi, Haryana, Jharkhand, and Uttar Pradesh. In particular, we analyse the language of the legislation and identify responsibilities of functionaries. Alongside the Right of Children to Free and Compulsory Education (RTE) Act 2009, we study 26 state Acts, corresponding rules, and School Codes wherever applicable. School Codes contain subordinate legislation (executive orders, notifications, circulars, and court judgements) that pertain to school education. We also study the implementation framework for the Samagra Shiksha Abhiyan as it allocates responsibilities to state education functionaries.

What do we find in common across states? The government regulates private schools at multiple touch-points. Schools need to obtain recognition in order to operate. They can only hire employees with minimum qualifications as prescribed by the government or after obtaining permission from the state Department. Private schools need to operate “in public interest” to avoid losing control over their management. They are also subject to caps on fees that often do not account for investment in new facilities or expansion of schools. The regulatory framework also lacks a systematic dispute resolution system with clear distinction between the disputants (parents, schools, and government).

States also fare poorly on frameworks that examine the regulatory environment for private schools, including the Systems Approach for Better Education Results - Engaging the Private Sector (SABER-EPS) of the World Bank (2014) and that of Vidhi Centre for Legal Policy (2017).

After comparing the language of the legislation for private schools with that for government schools, we find a striking absence of accountability mechanisms for the latter. While private schools are subject to clauses such as “shall cease to function” or “may take over”, government schools do not face any such enforcement actions. We also find that state functionaries are vested with multiple and overlapping functions, including regulatory, service delivery, financing, and assessment.

When the rule-writer is also the service provider, day-to-day pressures of management compromise its attention to on-ground outcomes. The administration tends to become insular and conceal mistakes (World Bank 2004). We need to implement thoughtful separation of powers in K-12 education administration. Uncoupling roles of functionaries and determining who should be accountable to whom and for what, makes for efficient outcomes and clear lines of accountability (World Bank 2004; Posani and Aiyar 2009).