India still has the largest number of illiterate adults in the world, but has made “rapid advances” in cutting down the numbers of school drop outs, a new UN report on education has said.

The Education For All-Global Monitoring Report, released here on Wednesday finds that out of the total 759 million illiterate adults in the world, India still has the highest number.

“Over half of the illiterate adults live in just four countries: Bangladesh, China, India and Pakistan,” the report said, adding the progress has been “painfully slow” and threatens to obstruct the Millennium Development Goals.

It said about 72 million primary school age children and another 71 million adolescents are not at school, and on current trends, 56 million primary school age children will still be out of school in 2015, it said.

UNESCO’s top official Irina Bokova said the world body was apprehensive that the financial crisis would cause governments to scale back funding on education.

“With the world’s largest illiterate population, India has been making progress,” the report said.

While in 1985 -1994 just about half of the adults in the country were literate, now the number has gone up to two-thirds. “Since the adult population increased by 45 per cent, this marks a real advance,” it said.

Gender disparities remain deeply engrained, with 28 nations across the developing world having nine or fewer girls in school for every 10 boys.

The report said two-thirds of the total illiterate people are women.

On a positive note, it says that out-of-school numbers have fallen “driven by rapid advances in India”. In the three years to 2007, out-of-school population fell by 8 million.

“Much of the decline took place in India, which reported a fall of almost 15 million in out-of-school numbers in the two years after the 2001 launch of the Sarva Shiksha Abhiyan (universal primary education) programme,” the report said.

It finds that with the exception of China, progress towards halving illiteracy has been “painfully slow,” which will make meeting MDG targets difficult.

“On current trends, the world will be less than halfway towards this goal by 2015. India alone will have a shortfall of some 81 million literate people,” it said.

Ms. Bokova, Executive Director of the UN body for education, warned that the present financial crisis would cause parents and governments to scale back on educating their children.

The Education For All Monitoring Global Report comes out in the backdrop of a financial crisis that is driving millions into extreme poverty. “In short it would create a lost generation... a tremendous cost to society,” she added.

“It could force governments to cut their spending on education and parents to pull their children out of school or simply not to send them,” Ms. Bokova said, at the launch of the report here at the UN headquarters.

The report also finds that low-income countries provide poor quality education and caste system obstructs education in South Asia.