India's ruling Congress Party led coalition genuinely wanted this year's government budget to help lift the poor and narrow the rich-poor divide, but it failed of course. Hidden in the budget, which the Finance Minister, P.C. Chidambaram announced on February 28 were two items that almost escaped notice. One was the provision to hire 200,000 teachers and the other was to give away 100,000 scholarships to schoolchildren. In the profoundly differing stories of these two numbers lies the answer to the question why every Indian government fails to help the poor. India's economic rise bewilders Indians. No one quite understands how their chaotic democracy of a billion people has become one of the world's fastest growing economies. It grew 9.2% this year following upon three years of 8% growth. This in turn followed 22 years of respectable 6% annual growth. With 25 years of high growth, per capita income has tripled from $1,178 in 1980 to $3,378 in 2006 (in purchasing power parity), and 1% of the poor have been crossing the poverty line each year since 1980. This adds up around 200 million people, but it still leaves 220 million who live on less than a dollar a day.

Although India's booming economy is doing its bit in raising the poor, the poor also need good schools and health clinics to enjoy the benefits of high growth. It is not the lack of money that prevents them from having the most basic public goods. India spends a respectable 4 percent of GDP on education and even in this 2007 budget, spending on education (and health and rural employment schemes) has increased 35%.

Surveys show that one out of four school teachers is absent in state primary schools, and one out of two present is not teaching when they should be. Similarly, two out of five doctors and one in three nurses is absent from government primary health centers. There are over a million primary school teachers in India's state system, and going by surveys it means that 670,000 teachers may not be doing their job. So, when Mr Chidambaram sanctions an additional 200,000 teachers, Indians do not feel cheerful.

What do parents do when teachers don't show up? As with so much about India's success story, they find their own solutions. They pull their kids out of state schools and enroll them in cheap private schools, which charge $2-$4 a month in fees and are spreading rapidly in slums and villages across India. Even though private schools pay one third the salary of the unionized government teachers, they deliver better results. Hence, 53% of urban Indian children (and 18% of rural children) are now in private schools. This is very high by world standards. Even Chile, which privatized education in 1981, has achieved only 46.5% share of private enrollment after 25 years.

For this reason the news about 100,000 scholarships in this year's budget brought a lot of cheer. For the parents the key was that they could choose their school in this merit-cum-means scheme. For those seeking school reforms, scholarships would empower parents, incentivize teachers and motivate students to perform. Merit testing might also serve as indirect way to assess the effectiveness of spending on state schools.

It is ironic that India's success in the global economy is the result of its human capital, and its famed Indian Institutes of Technology have become a global brand name. But the quality of education for the average Indian child is extremely poor. The heart of the problem is teacher accountability. And the failure is even more heartbreaking to Indians given the exalted status of the teacher in their civilization. Instead of addressing the accountability issue, the education establishment's single point agenda is to want to raise spending from 4% to 6% of GDP.

How does one explain the discrepancy between the government's desire to spend more on elementary education and health and the reality that more and more Indians are embracing private solutions? The answer is that the Indian establishment is caught in a time warp, clinging to the belief that the civil service is the only way to meet peoples' needs. No one could anticipate that Indian politicians would “capture” the bureaucracy and use the system to create jobs and revenue for friends and supporters. Politicians in many states sell teaching jobs for a handsome price. Teachers, who are thus appointed for life, believe they don't need to teach. As a result, Indian states have become so riddled with perverse incentives that accountability is impossible.

None of the solutions being debated in India will bring accountability unless the Indian establishment jettisons its faith in what the political scientist James Scott called “bureaucratic high modernism” and recognizes that the government's job is to govern rather than to run everything. Government may have to finance primary services such as health and education, but the providers could be independent, who are accountable to citizens and not to a bureaucratic hierarchy. This tale of two numbers teaches that the hope for providing decent services to the poor rest in this mindset change.