The Political Economy of Privatization of Education: Role of Local Politicians in India

Journal: Journal of Economic Behavior & Organization

The rapid growth of private schooling has been one of the most striking changes in India’s education landscape over the past two decades. While much of the existing discussion focuses on whether private schools perform better than government schools, far less is known about what drives their expansion across regions. This study examines the role of local political leaders – Members of the Legislative Assembly (MLAs) – in shaping the growth of private educational institutions.

Using detailed constituency-level data across multiple Indian states, the study compares areas where politicians from the state ruling party narrowly won elections with those where opposition candidates narrowly won. This approach makes it possible to isolate the causal impact of political alignment on education outcomes.

The findings show that constituencies represented by ruling party-aligned MLAs experience significantly faster growth in private schools – about 3 to 5 percentage points higher annually – than constituencies represented by opposition leaders. Similar patterns are observed for private colleges and universities. In contrast, there is no comparable effect on the expansion of government schools.

Why does this happen? The evidence points to the role of political influence in navigating bureaucratic processes. Setting up a private school in India involves multiple approvals and regulatory clearances. Politicians aligned with the ruling party are better positioned to expedite these processes through their influence over local administration. In some cases, politicians or their associates may also directly invest in educational institutions. Importantly, the study finds that this expansion is not driven by broader economic growth. Instead, it appears to be closely linked to political access and administrative discretion. The effect is strongest in areas where government schools are of relatively low quality and in states with weaker institutions or limited political competition.

However, a key takeaway is that this increase in the number of private schools does not translate into better learning outcomes or improvements in school quality. Despite the growth in private provision, there is no evidence of corresponding gains in student achievement.

Overall, the study highlights an important but underexplored dimension of India’s education system: the role of political incentives in shaping private sector expansion. It suggests that while political connections can accelerate the growth of private education, they do not necessarily improve educational outcomes. Strengthening regulatory oversight and focusing on quality, rather than just expansion, may therefore be critical to improving education in India.