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Universalization of Elementary Education (UEE) in India by the year 1960 was a constitutional objective. This has not been realized even after 34 years. The programme of Action of the National Policy on Education (NPE), 1986 envisaged that it will be achieved by the year 1995. This remains to be an elusive target particularly in Andhra Pradesh. An analysis of the secondary data indicates that there is a decline in the inequalities of enrolments in the state over a period of time. However, the decline in the inequalities among communities and regions are more pronounced in the case of developed coastal Andhra region than in Telangana area. About 95 per cent of the expenditure on primary education is devoted to the salaries of teachers. The expenditure on equipment and appliances and other such items that determine the quality of education have not been paid adequate attention. The government has emerged as the dominant and almost the sole contributor of the finances for primary education in the state because the resources from endowments and other private sources have dried up. The budget allocations for primary education as a proportion to total education have been declining as compared to higher levels of education. This unique study which identifies various explanatory factors for the low levels of development in primary education will be a useful work for scholars and practitioners in education and economics. Printed Pages:226.