Should we do away with subsidies for higher education?

Inclusiveness and equity are very important characteristics of a good public institution.

Updated - November 22, 2019 10:43 am IST

Published - November 22, 2019 12:05 am IST

College and university students, researchers and professors studying together, school supplies and digital tablet: education and research concept

College and university students, researchers and professors studying together, school supplies and digital tablet: education and research concept

In the wake of a very public protest by students of the Jawaharlal Nehru University (JNU) over a proposed fee hike, a considerable amount of controversy has been generated on whether higher education should be subsidised. In a conversation moderated by G. Ananthakrishnan , Professors Yoginder K. Alagh (former JNU Vice-Chancellor) and Shyam Menon (Central Institute of Education, University of Delhi) underscore the importance of greater inclusiveness, diversity, and quality. Edited excerpts:

Subsidy in education produces positive externalities such as health improvement, and reduction in population growth, poverty and crime, and strengthening of democracy. Yet, there is a demand for removal of subsidies.

Yoginder K. Alagh (YKA): I think it is a little more than that. You are also building the economy for the future. If it had not been for the fact that we had built a whole system of the CSIR, the IITs and Central universities, we would really not have been having the major source of growth, which is software. Please remember that this is not about machines. This is [about] men and women who have the capability to be able to design systems. This is a matter of education, higher education. You have to have a very broad base.

Now, this notion that higher education is not funded or subsidised is a very antediluvian one, it is historically not true. Fees account for less than 10% of the expenditure on higher education in most European countries. In the U.S., it is true that fees account for a substantial part, more than 30% to 40%. But please remember that they have huge scholarship schemes. A girl or boy who can make it to college is taken care of. [But] they have to repay through their lifetime.

You are talking of privatisation. Okay, private universities and colleges do want fees immediately, but if you think about Central Universities, you are [also] talking about JNU, not just the IITs or the IIMs; it covers a very wide spectrum — philosophy, history, social science and they get children from all over the country. Tens of thousands of kids apply, they take 900 because another 100 come from abroad. Thousand was at least the entrance when I was there, maybe now it is a little more. So, you get the best children. They then become Collectors, SPs, Chief Secretaries, DGs and so on. Countries must put money into higher education. We must give our young kids an opportunity to develop and these things don’t take place if you don’t subsidise it.

Shyam Menon (SM): Let me put this in a slightly larger perspective. Higher education used to be the exclusive preserve of elites, and several generations of the rich and privileged in India enjoyed the benefits of subsidised education. Under those circumstances, there used to be a muted argument against subsidising higher education. But higher education has since changed and it has expanded both through public and private institutions, and a whole new generation has graduated out of a newly expanded school system, many of whom are first-generation aspirants and they are seeking access to higher education, particularly in public institutions. It is an irony, in my opinion, therefore, that just when large numbers of the poor and the marginalised are beginning to express their aspirations for social mobility through access to public higher education, while the more affluent are migrating to private institutions and institutions overseas, there is a heightened pitch in the hue and cry demanding removal of subsidies. I think this is grossly unfair.

How does subsidy increase equality of opportunity?

YKA: If you have money, then you can get admission in private universities. But if you are a bright kid, and please remember that the laws of nature and biology don’t go by income group, so bright children are there in poor families too. My daughter would always have good opportunities, but the daughter of a landless labourer, where does she get opportunities from? I think the children of rich parents will always find education in India and abroad that they can pay for. But you cannot have a society where 50% of the people are poor; we will lose a lot of talent if they don’t get in. A major source of growth will be gone for the country. Education is one of those genuinely long-term businesses. You have to, for the girl child who is going to be born, you have to plan a secondary school ten years from now, you have to plan ahead. This is again something which needs a public effort, you need a different management style, you need autonomy and accountability. [The] state has to fund this need of the future as a priority. If it does not do it, it is neglecting the country’s future. And if people misuse it, then sack them. Public institutions have to be run in a responsible manner.


SM: Inclusiveness and equity are very important characteristics of a good public institution. And, over the years, this has actually increased in public institutions and that is entirely because of subsidy. I would tend to think that public higher education cannot have any equity or inclusiveness without public funding, and subsidising it.

We have tried it with students at Ambedkar University. One of the things which we did was working with differential fee structures. Below a certain income level, we made it possible for students to participate in higher education without payment of any fee. There was some kind of rationalisation of fee structure, the fee structures were different for different kinds of programmes based on marketability, affordability and input costs. Yet, we used to have enough surplus from this to use as a corpus, to subsidise student welfare, where there was a special request for assistance to travel, and to get paying guest accommodation for those who did not get it in hostels and so on.

YKA: When I was V-C at JNU, we also introduced a system of deprivation points. Sometimes, you know income certificates can be bought; so, if you were born or if you did your school diploma, in, say the most backward 100 districts, if your parent was below the poverty line, if you were a girl, then you got nine deprivation points; if you were in an urban area and below the poverty line and were a boy, you got one. We also used to use that as a criteria for subsidising, for charging fee and for admission purposes. So, I think there are a variety of ways but I would bend over backwards to see to it that a talented person doesn’t go without education.

SM: In fact, there was a credo which Ambedkar University used to print on its prospectus: No student who had been admitted would be deprived of an opportunity to pursue studies just because he/she had financial difficulties. It was the university’s responsibility to see that he/she got the opportunity.

Is it correct to say we did not harness the potential of public education in the post-liberalisation period, when incomes grew, and if yes, why did that happen?

YKA: It happened in 1992, when Dr. Manmohan Singh signed the agreement with the Bretton Woods countries and that meant our budgets had to be curtailed, and that meant a ceiling on the money available for universities. In a democratic country, salaries keep rising, other costs keep rising. There was some respite because modern methods of education actually save money — use of Internet and so on. There again, we needed capital expenditure and in those days even access was a question. I gave ISRO the right to put up an antenna on the JNU library, which had 12 floors, so that they could download space messages and, in return, they gave us access to Internet, which was very important in those days. At the same time, somebody had to be there to hold your hand. In those days if you went on appeal, if the UGC did not give you money, you went to [Prime Minister] Narasimha Rao... they saw you through your difficult period. They would make you collect money, but they saw you through. This was true of JNU, but I am not sure about State Universities. The real problem started emerging when good State Universities began getting into trouble, I know the Presidency universities, which were great places — Kolkata, Madras, Bombay — they got into serious financial difficulties. Then we designed the UGC Advanced Centres. But those were all... band-aid. If you did not fund the universities, you funded some advanced centres, when that was not working, some national institute. Basically you have to fund the universities and also enforce discipline.

SM: My sense is that... in continuation of what Prof. Alagh said, in the post-liberalisation era, public expenditure in higher education went through a period of stagnation in real terms, and the per student public expenditure actually declined dramatically. All this happened while private higher education saw a phase of impressive expansion. So, while the overall intake of students in higher education increased considerably in the post-liberalisation era, a large proportion of this expansion was accounted for by expanding private sector.

Growth in national income did not result in an increase of public expenditure for education as a whole. It kind of stagnated. Within the education sector as a whole, there was a shift in the focus of funding in the 1990s from higher education to primary education. As Prof. Alagh recalled, in 1992, there was this social safety net that came along that with the structural adjustments and all the agreements that the Finance Minister signed with the IMF and so on. This readjustment happened in terms of public spending, this stagnation in public expenditure for higher education has really killed... there is a major reduction in the effort to uphold the minimum acceptable levels of quality of education particularly in State institutions. The post-liberalisation [period] has affected much more severely the State institutions... everybody has been affected.

YKA: The demand for public education has been growing. People want to get admission into the Presidency Universities. They want to get admission into the best State universities, whether it is MSU in Baroda, or in Tamil Nadu in Coimbatore and so on. Even rich children want to get admitted. It is not as if you are getting second-rate education there and everybody wants to buy private education. Rich people send their children to private universities, but public universities are still flag bearers of good education and this true all over the world [even] in the liberalisation era.

Is there any evidence that subsidies go disproportionately to the rich?

YKA: There was a study done in the Gokhale Institute. It showed that unless you are very careful, the benefits can be skewed. The point is that giving opportunity to a poor child is one thing, giving equal access is another. That is a far more complex business. Some universities try, they have special sections in which, you know JNU for example has set up... the JNU students’ union was given money when I was V-C, to help kids from poor families to get application forms and then you can help them. So, if you do that, they have a better chance of not being rejected for admission. If you look at the entire reforms, of bringing in coloured children in the U.S., when I went to the University of Pennsylvania, there was only one non-white student in the entire campus; now, when you go, it is one of ten and, in many major Ivy League universities, one out of every five kids is non-white.

So, I think conscious efforts also make a big difference in opening up opportunity and that should be a part of our system. Some of the schemes that we have — like giving access to the girl child and [providing] access to people from disadvantaged regions, PM’s schemes and so on, are a step in the right direction and we need to supplement them.

SM: My sense is that there is considerable unevenness in the distribution of public finances. Student subsidies for premier institutions like the IITs and engineering colleges are incomparably higher than those for universities and colleges, particularly for liberal arts institutions. Similarly, there are major disparities in allocation of funds per student in Central universities and State universities, and between colleges in the metropolises and those in the mofussil towns, between mainstream and distance education. In some of the well-known universities, it is the correspondence courses and the revenues that are generated out of them that are cross-subsidising the other programmes. It is like the poor kids are subsiding the rich kids. Institutions where the poor and the marginalised access higher education, are likely to get a considerably smaller share of funding.

How much of expenditure should be recovered from students and others? The Punnayya Committee and others favoured 20% as a ceiling.

YKA: I think it is a good idea. University administrations should be encouraged to look for funds. To look for endowments, donations. We have a rich tradition of people funding higher education and they tend to do it along religious and caste lines, but newer generation opportunities are emerging. There are a number of funds... At JNU, even in the 1990s I was able to collect funds from a number of institutions, financial institutions, the Reserve Bank endows professorships, the State Bank, and old Trusts with an old tradition. Many of them do it in a secular manner. More of that is welcome. As Prof. Menon was saying, in most civilised countries of the world, a third of the cohort goes in for higher education, and it is much less in India today. Particularly so for women, those from backward areas. We need to put in funds, there’s no question about that. If you provide housing to a teacher, give him a fan and refrigerator, he is willing to go to an adivasi district.

SM: There is considerable divergence across public institutions in higher education in the proportion of revenue from students as a total of the operational expenditure. There are States with a controlled fees, at the same time, many State universities are in a predicament where their salaries and pension liabilities constitute something like three-fourths or four-fifths of their expenditure. What do you do? What they do, in peninsular India in particular, is start self-financing courses to make both ends meet. There are subsidised courses and self-financing courses and there are unequal resources deployed. But there is a lot of divergence in terms of proportion of student fees to total operational expenditure. The proportion tends to be somewhat greater in affiliating universities with large undergraduate programmes with economies of scale, in comparison with small unitary universities, with predominantly post-graduate programmes. Some very large public universities could, by now be approaching the 20% mark as recommended by the Punnayya Committee and National Knowledge Commission. In some cases, there is a realisation that rationalising student fees need not mean increase in fees across the board, for all programmes and students.

Then there was this argument being made in many fora that the student fees should be fixed at the level of last fees paid at school. Thereby you differentiate between those who go to expensive private schools and those who go to government schools. I am not aware of this having been implemented anywhere.

In the milieu of higher education being significantly privatised, what should we do, going forward, to increase access, equity and quality?

YKA: It is a political question. We have to keep writing and communicate. There are parent-teacher associations, groups which have encouraged thinking about education. As you can see in the JNU debate, it is very annoying. All kinds of funny arguments are being used, and there is very little creative debate. Our effort should be to push it in that direction, to keep up the education process. Through time, things will improve. So, 40 years from now, I am very hopeful of my country — its progress towards equality and its progress towards a secular democratic entity.

SM: There are private universities and private universities.To the extent that you will be able to fix them to ideals like ensuring access, equity and quality... it is complicated, there is no straightforward answer. Private institutions are generally not likely to be amenable to measures promoting access and equity unless the accreditation institutions and regulatory mechanisms develop ways of assuring adoption of such measures. Accreditation bodies have not succeeded in persuading private institutions to implement statutory reservation policies, and it is a little vague whether it applies to them or not. But, many a times, I have heard at UGC that it applies to them, but then it has not been implemented properly. In such a situation of enormous inequality, where 93% of India’s workforce is in the informal and unorganised sectors, there is a legitimate perception among the poor that accessing quality public higher education is their only chance — the last ferry to cross over, from the margins to the core of the economy and, hopefully, claim their legitimate share of India’s economic growth. But access without assured quality is no access. If you agree that there cannot be any compromise on equity, inclusiveness or on quality in public higher education, then per student public funding has to increase drastically.

Yoginder K. Alagh is an economist and former Vice-Chancellor of Jawaharlal Nehru University; Shyam Menon is a Professor at the Central Institute of Education, University of Delhi and former Vice-Chancellor, Ambedkar University

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