Investment in Education in India

In this paper, education is treated as a form of investment. No attempt is made to measure the contribution of education to economic growth. Internal rates of return to investment in education in India for the year 1960-61 are estimated and compared with Professor A. C. Harberger's estimate of the rates of return to physical capital. "Net" education capital formation during the period 1950-51 to 1960-61 is also estimated at 1960-61 prices and compared with physical capital formation during the same period. The study indicates that education is not an attractive form of investment when compared with physical capital. Within the educational system, primary education is the most attractive and collegiate nonprofessional education the least attractive form of investment. The study suggests diversion of resources in favor of physical capital.