Today India creates the world's largest school voucher program. The Right of Children to Free and Compulsory Education Act 2009 comes into force, meaning that from the start of the next school year, 25% of all recognized private schools must admit poor and marginalized students between the ages of six and 14—and government will pay for their tuition.

Though not consciously designed as a school voucher program, this is nothing short of a revolution in school choice—and a recognition of reality. India's parents are already flocking to both registered and unregistered private schools, which provide a far better education than their public-school counterparts. In urban areas, some 50% of all parents opt for the private schools; in rural areas, where schools are scarcer, the numbers are lower, but still significant.

It's clear why: On average, private schools provide a better education at a lower cost. The 2009 Annual Status of Education Report, conducted by a New Delhi-based nonprofit, shows that more than half of fifth-grade public-school students can't read at a basic second-grade level. Private-school students have a 41% reading advantage in English over their public-school peers. These differences in learning outcomes are not surprising since 25% of public-school teachers are absent on any given day and half of those present don't do any teaching.

There will be serious problems with the implementation of the school-voucher program. It mandates that private schools will have to admit 25% of their students from economically poor backgrounds and socially disadvantaged groups, such as scheduled castes and scheduled tribes and other groups as determined by state governments. This will put more power in the hands of bureaucrats to determine which students are eligible to attend private schools, should they chose to do so.

The mandate also raises a constitutional issue—can government force private schools to take students chosen by it? How would schools resist further government controls when taxpayers pay for one-fourth of their students? Would this put the whole private-school system under a new inspector raj?

Then there is the question of onerous regulation, a ubiquitous problem in India, which still has a largely statist mindset. According to the new law, all private schools must obtain official government recognition within three years or be closed down. Schools must have a certain size of land plot, playground, library, teacher qualifications and salaries.

Private schools for the rich would have little difficulty in meeting these norms. However budget private schools where the poor go—those that charge a monthly fee of 70-150 rupees ($1.55-$3.33) in rural areas, and up to 350 rupees in metro areas—would find it impossible to meet these criteria. It's utopian to demand that a slum school be earthquake resistant when all the houses and buildings in the slum can barely stand up to heavy rains and winds.

The salaries of teachers in private unaided schools are four to seven times lower than those of government schools. Requiring these budget schools to pay government-scale salaries would be a death knell. They would have to raise tuition fees substantially or close down; either way, the poor would lose the one option they have to escape failing government schools.

Thus the Act opens the door to private schools for some of the poor but closes the door for the rest of the poor by shutting down budget private schools. It's hard to pin down just how many of these schools would be affected; estimates range from 300,000 to 700,000. The policy says the poor can attend private schools with state support but not on their own.

There is a way out of this contradiction: a graded recognition system which evaluates and rates schools through independent agencies. Such a rating system could involve various tiers based on facilities, teacher performance and student learning outcomes. Broader standards focused on outcomes as much as on inputs would help keep many efficient budget schools within the net of recognition. It would also enhance competition around quality by incentivizing schools to acquire higher ratings and assist parents in choosing more suitable schools.

The new Act has put India's school system on a higher trajectory, but the future of millions rests on whether pragmatism prevails in its implementation.