Noting that is often assumed that there is a surplus of education in India, where the literacy rate is three in ten, this paper questions the assumption that the economic returns to investment in Indian education are negative. The case of India is reviewed: a circumstance in which the existance of unemployment has led to the unjustified assumption that external productivity due to education is low. The paper illustrates new ways to use equity in educational planning: in the distribution of per pupil expenditures, examination pass-rates, literacy, trade training, and the availability of books. It also adds two new mechanisms for estimating the economic potential of educational investments: the amount of knowledge acquired in schools and the degree of impact of school resources on academic achievement. From each of these sources the paper concludes that there is reason to question the widely held belief that additional investment in Indian education would be uneconomic. The following are suggested as good investments: basic education (both expanding enrollments and improved quality); mathematics, writing, and other basic skills for adults; and specialized agricultural and technical skills at the postsecondary level. It is pointed out that if undertaken they would also meet other priorities were they directed specifically at those mileius where the need appears to be the greatest and the degree of inequality the most pronounced. (Half of the document consists of tables, e.g., enrollment of scheduled castes by state, distribution of literacy by state.) (JT)