The cabinet has reportedly passed a version of the Foreign Educational Institutions (Regulation of Entry and Operations) Bill, and this modified version of a draft bill is to be soon tabled in Parliament. The debate has, however, already begun, with protagonists and opponents expressing a range of views on the subject. While debate is normally a process of bringing clarity to an issue, there is a real danger that this would not be true of the ongoing debate on the subject of expanding higher education, improving it and rendering it inclusive.

It is indeed true that if foreign institutions are to be allowed at all, to provide education of one kind or the other in the country, it is better that they operate within an appropriate framework of regulation. If not, unscrupulous operators can use the “foreign” tag to exploit poorly informed students who do not have the scores to enter a good national educational institution or the finances to travel abroad to acquire a good education. In an environment where good higher educational facilities are in short supply, such operators could get away with charging high fees for courses backed by inadequately qualified faculty, inferior infrastructure and substandard equipment.

This has in recent years been a reality in India because of a mismatch between the law on foreign investment in educational provision and the law with regard to the functioning of “recognised” educational institutions. The foreign investment law in this country does allow foreign educational providers to enter India under the automatic route in the educational services area. It therefore allows for commercial provision of educational services by foreigners and the repatriation of surpluses or “profits” earned through such activity.

However, if an educational service provider chooses to establish an institution that is termed a university and is recognised as such by the University Grants Commission (UGC) or if it awards a degree or diploma that is recognised by a range of institutions such as the All India Council on Technical Education (AICTE) or the Medical Council of India, then it would be subject to regulation just as any other Indian institution engaging in similar practices. It also cannot operate on a “for-profit” basis. Surpluses can be generated based on fees charged, but those surpluses have to be ploughed back into the institution.

This distinction in the regulatory framework applying to institutions seeking recognition of their degrees and those that do not, did result in the proliferation of courses that are not recognised by government, in institutions that were, therefore, not subject to regulation under laws governing the higher education system. Most of these institutions were in the private sector, with a majority being domestic private institutions and a few foreign. Some were good, many extremely bad. These institutions were not all avowedly “for-profit” entities, but there were many that made large surpluses legally and otherwise and distributed them in various ways to their promoters.

In some ways, what the Foreign Educational Institutions Bill does is that it seeks to bring certain of those foreign institutions within a separate, clearly defined regulatory framework, requiring institutions providing diplomas and degrees to register under a designated authority, making them subject to regulation and seeking under such regulation to ensure that the promoting institution has a proper pedigree, brings in adequate resources, employs quality faculty, offers adequate facilities, and reinvests all surpluses in the institution, which cannot function for profit. However, even though these are not considered for-profit institutions, the government is not seeking to regulate the fees they charge the students they take in.

There are two questions which arise in this context. One is whether the implementation of the Bill amounts to skewing further the inequality in access to higher education and tilting the playing field against public institutions. Clearly, the Bill does not allow for the application of laws with regard to affirmative action in the form of reservation of admissions to private institutions, domestic or foreign. But if the infrastructure for higher education is inadequate, this is true not just for those who fall in what is termed the “general category”, but for those in the reserved categories as well, who need adequate numbers of seats to be reserved for them. So if private, including foreign institutions, are seen as entities that would help close the demand-supply gap in higher education, they would need to service students in the categories eligible for affirmative action as well.

Since the aim of promoting private education, including that offered by foreign providers, is to make up for the shortfall in public education, the demand that reserved category students be admitted to these institutions with support from the state is bound to rise. That is, while the state is not going to regulate fees, it may be forced to cover the fees charged by these institutions for needy students, especially for those for whom it wants to assure the access they are deprived of because of the social discrimination they face. The obvious question that would then arise is whether it may not be better to use these funds to expand quality public education at lower cost per student. Hence, clarity on the government’s use of these institutions for closing the demand-supply gap would be useful.

A second question that arises is whether the better among foreign educational providers are likely to choose not come into the country if stringent regulations are imposed on them. Since such regulation would include the “not-for-profit” condition, which prevents them from extracting surpluses and transferring them abroad, they may see no reason to be in India. Perhaps for this reason, the Act has clauses which subvert its very intent. For example, it provides for the constitution of an Advisory Board that can exempt any foreign provider of all requirements imposed by the Act except the requirement of being a not-for-profit body. It also exempts institutions conducting any “certificate course” and awarding any qualification other than a degree or diploma to be exempt from most of the provisions of the Act, making them subject only to certain reporting requirements. This amounts to saying that if a foreign provider enters the country, reports its presence, and advertises and runs only such “certificate courses” (as opposed to courses offering degrees and recognised diplomas), it would have all the rights that many of the so-called “fly-by-night” operators exploit today. Once that possibility is recognised the only conclusion that can be drawn, based on the experience hitherto, is that this Act in itself is unlikely to either bring high quality education into the country, or keep poor quality education out. What motivates it is, therefore, unclear.

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