Making studies profitable

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CII wants greater FDI in higher education, hike in fees and better deal for faculty

It took four decades for the Karnataka Government to strengthen the numerical base of its medical colleges. Students and parents welcomed it, although it eventually turned out to be too little, too late. In the period when the Government virtually slept, private professional colleges mushroomed, grew and have now started grabbing the coveted private university status. Sensing the difference, private industry, it appears, wants to move in and have a greater role in higher education.

Pushing for greater private sector participation in the sector, the Confederation of Indian Industry (CII) and the Indian Council for Research in International Economic Relations (ICRIER) have now proposed a slew of measures to revitalise the higher education sector. The thrust, undoubtedly, is on capitalising on the opportunities offered by a more liberal and encouraging investment climate.

So, here are the key recommendations of a joint study conducted by CII and ICRIER: facilitate private sector entry; set up a uniform ratings and accreditation system; extend autonomy to institutions in administration and curriculum design; liberalise Foreign Direct Investment in higher education; ensure that the country becomes a global education service provider; rationalise fee structure on the basis of user charges; develop a vibrant credit market to finance higher education; establish world class institutes through greater public investment; make admissions through national-level entrance examinations; and upgrade faculty conditions.

The study is clear about the linkage between quality and rating. “A country-wide uniform rating system for accreditation of private and public institutes must be put in place with established and agreed criteria,” recommends the study. But it wants to make it mandatory for new private investment to meet minimum standards in infrastructure, technology usage, and faculty. “There should be flexibility in course structure and autonomy in administrative matters. Fee range structures should be indicative, and based on ratings.”

Elaborating on the fee issue, the study says “keeping fees low and highly regulated actually prevents expansion of higher education, constrains continued investment in infrastructure and modernisation and reduces access.” The message is clear: rational charges and profits act as incentives for private investments. “It would also be possible to raise salaries to attract quality faculty.”

Faculty is one area of special attention for the CII-ICRIER study. “Apart from salary, working conditions, academic freedom, research and study also should be modified or ‘incentivised’. Flexibility for movement of faculty should be available, including mobility to private institutions and vice versa.”


When the study talks about a liberalised higher education sector, the focus is also on foreign players. “Foreign education providers must be allowed to set up joint ventures in India as is being done in China,” says the study. But it finds the current draft Bill under consideration for such providers far too “restrictive” with potential to discourage any cooperation. “Entry of foreign education providers would reduce the number of students going abroad at exorbitant fees.”

But it is not a one-way trip. Attracting overseas students to Indian institutions is an equally significant proposal. “Studies on India and Indian languages and culture could potentially become popular among foreign students. Students from developing countries would find it cheaper to study in India. Indian higher education institutes must be branded and expanded to attract foreign students,” finds the study. However, to encourage this trend, a high degree of research capability and guidance from faculty should be put in place.

Building up a strong case for greater private sector involvement, the study cites declining expenditures, poor facilities, and a lack of capacity which characterise the public sector. “The public sector higher education system displays a lack of flexibility in supply response for meeting the rapidly-changing needs of a fast-growing Indian economy. Private support can help governments overcome financial, administrative and technical constraints.”

Poor skills

Although private institutions and enrolments currently account for 80 per cent, the demand-supply gap is huge. “Skills shortage is accompanied by graduate unemployment of 17 per cent, comprising 5.3 million of the total unemployed population of 44.5 million. Many are considered unemployable due to poor skill levels.”

Curriculum with no relevance to market conditions makes the scenario bleaker. The solution: huge investments to revitalise the sector and help supply adequate manpower for the industry and research institutions.

The Oversight Committee on providing reservation for Other Backward Classes, had in its interim report, estimated an overlay of more than Rs. 16,000 crore to expand seats by 54 per cent to provide for 27 per cent reservation to OBCs. But this kind of money, the study makes it clear, cannot come from the Government. The private sector had to pitch in.

The CII-ICRIER study is confident that the private sector can raise such huge funds. It is here that the study makes its incisive comment on “profit” as an incentive for growth.

“It should not be an anathema to let profit act as an incentive to attract private investment, both domestic and foreign, for funding the necessary response in a well-regulated framework with minimal entry barriers and accompanied by recourse to credit for students.”

This telling statement is apparently proof enough for all stakeholders to take this study with all seriousness.



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