One of the main factors contributing to this relatively low literacy rate is usefulness of education and availability of schools in vicinity in rural areas. There is a shortage of classrooms to accommodate all the students in 2006-2007. In addition, there is no proper sanitation in most schools. The study of 188 government-run primary schools in central and northern India revealed that 59% of the schools had no drinking water facility and 89% no toilets. In 600,000 villages and multiplying urban slum habitats, 'free and compulsory education' is the basic literacy instruction dispensed by barely qualified 'para teachers'. The average Pupil Teacher Ratio for All India is 42:1, implying teacher shortage. Such inadequacies resulted in a non-standardized school system where literacy rates may differ. Furthermore, the expenditure allocated to education was never above 4.3% of the GDP from 1951 to 2002 despite the target of 6% by the Kothari Commission. This further complicates the literacy problem in India.
Severe caste disparities also exist. Discrimination of lower castes has resulted in high dropout rates and low enrollment rates. The National Sample Survey Organisation and the National Family Health Survey collected data in India on the percentage of children completing primary school which are reported to be only 36.8% and 37.7% respectively. On 21 February 2005, the Prime Minister of India said that he was pained to note that "only 47 out of 100 children enrolled in class I reach class VIII, putting the dropout rate at 52.78 per cent." It is estimated that at least 35 million, and possibly as many as 60 million, children aged 6-14 years are not in school.
Absolute poverty in India has also deterred the pursuit of formal education as education is not deemed of as the highest priority among the poor as compared to other basic necessities. The MRP-based (mixed recall period) poverty estimates of about 22% of poverty in 2004-05 which translated to 22 out of per 100 people are not meeting their basic needs, much less than meeting the need for education.
The large proportion of illiterate females is another reason for the low literacy rate in India. Inequality based on gender differences resulted in female literacy rates being lower at 65.46% than that of their male counterparts at 82.14%. Due to strong stereotyping of female and male roles, Sons are thought of to be more useful and hence are educated. Females are pulled to help out on agricultural farms at home as they are increasingly replacing the males on such activities which require no formal education. Fewer than 2% of girls who engaged in agriculture work attended school.