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Privatisation Of Higher Education Essay

Higher education in India today is ridden with many and varied problems including broadening of access, ensuring equity, and the financial crunch. India has quite a large system of higher education with universities, over 10, colleges and nearly 55 lakhs of students being taught by over 3 lakhs of teachers. And yet the proportion of the university and college going student population in the relevant age group of is dismal 6 per cent. This is quite low even when compared with developing countries, the figure being 20 per cent for both Egypt and Thailand, and 16 per cent for Mexico.

In the developed countries, however, access to higher education is to the tune of 40 per cent and more. Thus, in spite of a general expansion of higher education in India, inadequate access continues to cause concern. Further, while enrolment of women and those belonging to SC/ST groups and other backward communities has improved, they are still very much under represented.

Providing increased access to education, meeting the challenge of equity and improving the quality of education entails large investment. To solve the problem of resource crunch, a suggested way is exploring additional avenues of generating systems own resources instead of being fully dependent on the state exchequer. It is imperative here that the higher education system has to seek participation both of the Government as well as private and voluntary bodies. Some amount of private funding thus appears inevitable for making up the deficit caused by inadequate state funding.

The overall investment in education as a proportion of the gross domestic product (GDP) is still below the norm of 6 per cent as stated in the National Policy on Education. Since provision of free and compulsory education at the elementary stage is a Constitutional commitment, budgetary allocation for this sector of education is continuously on increase. This has affected the resource allocation to

universities and most higher education institutions all over the country, which are facing acute financial crisis. While the universities are at pain in persuading the Government for increased budgetary allocations, some of them have simultaneously taken measures for generating funds of their own.

It is high time the university system resorted to long-term resource planning instead of taking the state support for granted. Each university will have to identify avenues of resource generation, internal as well as external, depending upon the nature of its programme offerings and the locale. The internal measures, amongst other things, may include proper utilization of funds, general economy in expenditures, pooling and sharing of departmental and institutional resources and most importantly, rationalization of fee structure. As for the external resources, the important avenues include donations from alumni, philanthropists and others, consultancy, university-industry interaction, etc.

In most institutions of higher education, at present, the tuition fees contribute very little towards earnings while the recurring expenditure on each student is much higher. The Swami Nathan panel set up by the UGC has suggested building up a reservoir of funds by collecting educational from industries and other user organizations. Setting up of an Educational Development Bank of India initially with shares of ? crore each by the State Governments, Central Government and international financial agencies has also been suggested. Raising money through consultancy work or job assignment by institutions to industries or other professional organizations is yet another avenue being profusely recommended.

The private initiative in education, especially higher education is not altogether new to India. Some of the leading universities namely, the Banaras Hindu University and the Aligarh Muslim University came up with the efforts of certain dedicated individuals and financial support of the community at large. Again, a large number of educational institutions in the country especially those concerned with general and professional higher education have been established on private and voluntary initiative with or without financial subsidy from the Government.

A few private institutions of higher education have been given virtual university status by being recognized as 'Deemed Universities'. A few universities like Guru Gobind Singh Indraprastha University in Delhi have been created consisting of only affiliated private self-financing colleges. A few private institutions like International Business Schools and Indian Institute of Information Technology are allowed to operate virtually as universities. There has also been a general trend towards liberalization and opening of education sector to private initiative especially in the southern states of Karnataka, Andhra Pradesh and Tamil Nadu.

Thus, the private higher education system constitutes more than 50 per cent of the higher education sector. Hence, what is required is not restriction but more growth so that with competition, quality will automatically improve. Perhaps a rating agency, which could provide a standard procedure for ranking of institutions of higher learning based on predetermined criteria, could instill students with greater confidence in their choices.

The road ahead for India is directly linked to creation of quality higher education institutions in a big way to meet the challenge of the knowledge hub, which India is fast becoming. Since the Government resources for higher education are simply not enough, recourse to quality private higher education, both university and non-university is essential. India needs to have a proactive demand based policy towards private higher education including foreign institutions/universities desirous of setting up campus in India or entering into joint-ventures. The central and state Governments could offer tax concessions/fiscal incentives for setting up campuses.

Since private institutions are already using a higher fee structure, there has arisen a need for financing of higher education for students, especially those from low income households. Like in the United States, it has become necessary to evolve a guarantee system, where students from low income households are eligible for a student loan without parental security or guarantee so that there is no discrimination due to the financial background of the student. Subsidization of the interest rate for students may be based on the student's and student's family income. An innovative financial mechanism needs to be evolved incorporating some of the salient features of the systems existing in the UK and USA.

In the context of the current changing social and economic fabric of the country, it appears almost certain to go in for private funding of education. The recent paradigm shift in Indian economic and political philosophy has led to the demand of private universities so as to meet the challenge of contemplated open economy and the demand for qualitative human resources and high level of R & D.

However, the Partial privatization calls for caution against, amongst others things, the resultant commercialization of education, obstacles in merit based admissions, deterioration in academic standards, encroachment in institutions and autonomy, service conditions of teachers, and education becoming subservient to market logic advanced by the private sector in the country.


The impending inauguration of a new government finds interested parties bringing into the public arena matters of importance to them. One of the issues that has been raised recently is whether higher education in India should be privatised. This question merits serious attention. And though interest is usually confined to the so-called professions, namely, engineering and medicine, it is important to consider the entire higher education sector. After all, the purpose of higher education is the creation of knowledge, and we don’t want to place this knowledge in silos.

Proponents of private education

Proponents of private education start with the observation that the supply of publicly provided professional education has not expanded commensurately with the growth in demand, thus signalling a failure. This is entirely well taken, and prima facie makes a strong case for allowing private entry. However, the associated argument often found, that the government should cease regulating institutions that it does not fund, is surely wrong. The case for regulation in education is motivated by considerations no different from the concern for a patient’s well-being, which leads us to prescribe standards of medical practice. Similarly, we insist on a driver’s licence to ensure the safety of pedestrians on our roads. Note that public intervention here is guided by the motivation to defend private interests, as the actions by doctors and drivers, undertaken in their private interest, have an impact on the well-being of others. So, what is so special about educators? Their performance actually determines the life chances of a very large number of individuals in society.

Another argument for privatisation of professional education that has been made is that doctors and engineers, trained using the tax payer’s money, have now begun to enter politics. As a democracy, we should actually be rejoicing that public life is now attracting individuals from a more diverse educational gene pool. Of course, there could be a problem if all our young doctors and engineers deserted their original professions, but this does not appear to be the case yet. On the other hand, it is only a false consciousness that makes us proud when many of them who have been trained using the tax payer’s money leave the county to practise overseas. But the answer to this malaise is surely not the privatisation of professional education, but to expect that these youth in question serve in India, if not in the public sector itself, for a brief period after graduation, in lieu of which they repay the cost of their education. Versions of this principle are invoked in many parts of the world while we have not given much thought to the issue.


When calling for the regulation of even privately funded professional colleges, it must be flagged and not merely acknowledged that India’s regulatory agencies can be ham-handed in their interventions and are perceived to be corrupt. No public interest is served by an overbearing government, and we need continuing social audit of regulation in higher education. Also, it is believed that politicians influence the regulator to further the interests of private institutions owned by them or their clients. But this deficit only provides an argument for drastically reforming how our regulatory bodies are populated and run rather than a case for dismantling them.

We have all read reports of professionals with dubious qualifications performing surgery or flying passenger aircraft. The counterpart to this is the regulation of education. While the government has at times intervened intrusively, especially when it comes to admission, it has by and large left ungoverned the functioning of even aided public colleges. The most egregious instance of this is the practice of publicly aided colleges auctioning their faculty positions. State governments have chosen to look the other way for fear of hurting vested commercial interests and electoral vote banks. Prime Minister Manmohan Singh’s incisive observation about India’s economy, that it is over-regulated but under-governed, especially rings true in the educational sector. This must make us reflect upon how the higher education system is to be governed to serve public interest.

But the most important reason for the state to remain in higher education is that the private sector is yet to demonstrate its capacity to create knowledge on a sufficient scale. Where is the research that creates knowledge? Even in these ‘professional’ courses there is more research in public institutions than in the private ones. There are exceptions such as the Christian Medical College in Vellore whose alumni now reside in some of the major research universities of the world. But it is germane to the context that the college is not a profit maximiser. Similarly, one of the reasons for greater knowledge creation in public medical schools is that they often have large hospitals attached to them. This enables the apprentice to learn by doing, arguably the best way to learn. The practice of combining teaching with the provision of medical care, which requires huge investments, is directly related to the feature that the underlying objective is not the pursuit of profit. But leaving out research, and outside of medical education, even when it comes to the mere training of professionals, it would be difficult to hold that a significant number of private institutions have yet surpassed the IITs and the IIMs.

The arts and sciences

It is when we go outside the professions altogether that we find the case for retaining the public sector in higher education the strongest. The private sector is not a presence much felt among the arts and sciences as these subjects do not always command high exchange value. But we take our cue from the market only at our peril. The function of the arts and sciences is to hold a mirror to society so that it can form an image of itself, which helps us understand where we come from and see where we are going. A profit-oriented private sector is unlikely to be interested in such a task.

There is much that must leave us unhappy about the functioning of India’s public higher education sector. It has held the country back in many ways, principally by not responding with solutions for our pressing needs. It cannot be left the way it is. So it is time that its record be subjected to open social audit, prior to it being thoroughly reformed. All expansion should be put on hold till the latter task is completed. But there is no case for it to be privatised wholesale, not even its professional colleges. Equivalently, once an effective regulatory framework is in place, it makes little sense to stymie the growth of the private sector in higher education.

(Pulapre Balakrishnan is Professor, Centre for Development Studies, Thiruvananthapuram.)

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