The technical higher education market dissected

The AICTE should place the safeguarding of students’ interests before the commercialisation of education

May 17, 2022 12:08 am | Updated 12:08 am IST

‘Supply far exceeds the demand for technical higher education’

‘Supply far exceeds the demand for technical higher education’ | Photo Credit: Getty Images/iStockphoto

In India, the technical higher education sector — dominated by private players — can be best understood only in market terms: be it the exponential growth in institutions or in enrolment as well the dynamics of the decisions made by the regulatory bodies. It is no accident that much of the growth in the technical higher education has been after 1991, when the All India Council for Technical Education (AICTE) became functional in its present avatar.

Supply exceeds demand

During the three decades immediately preceding the present (1961 to 1991), the number of technical higher education institutions had increased five times to go up from 53 to 277. During the same period, enrolment in technical higher education had increased six times — 0.37 lakh to 2.16 lakh. Importantly, most of the growth has been in the government sector. During the past three decades (1991-2020) the institutions have gone up by 40 times (at 10,990), with the intake capacity rising 15 times to touch 32.85 lakh. Much of this expansion has been in the private sector.

Going by the number of students who appear for the joint entrance examination and other entrance tests conducted by various agencies and different higher educational institutions, the total demand for technical higher education appears to be no more than 20 lakh. Clearly, supply far exceeds the demand for technical higher education, probably in the hope that the supply would create its own demand.

It is no wonder that a large number of technical institutions have been saddled with sunk costs due to their inability to fill their sanctioned seats. Their capacity utilisation has been falling for a long time now to become 53.53% in 2020-21, as compared to 62.32% in 2012-13. Declining demand notwithstanding, these institutions have been adding more capacity, though some market corrections seem to have happened during the past few years. The number of institutions and intake capacity in 2021-22 have come down to 8,997 and 30.87 lakh, respectively.

Student-teacher ratio

The AICTE prescribes a minimum specific student-teacher ratio (STR), ranging from 7.5 to 20, depending on the type and level of programmes and disciplines under its domain. As an overwhelming majority of the institutions are unable to admit students to capacity, their STR, at least on paper, has gone down from 5.5 in 2012-13 to 3.0 in 2020-21.

A lower STR could mean better quality but in their case, this only means higher cost adversely impinging on their economic sustainability. Their revenue models adversely impacted, they are unable to create quality infrastructure and human resources and become trapped in a vicious cycle of mediocrity. In market terms, they are the price takers and should be willing to offer their products and services at the lowest possible prices.

In a typical market framework, such businesses would either improve their quality or slash their prices to survive. Apparently, it does not happen in the higher education market, except during the past two years when market corrections led to a drop of 18.3% and 6.01% in the number of institutions and intake capacity, respectively.

Appealing to the regulator

Instead, they prefer regulators coming to their rescue. In the past they urged doing away with the requirements of a certain percentage of marks in the school board. Recently, they could convince the regulator to abolish the condition of studying science and mathematics at the senior secondary/intermediate level in schools, though the AICTE retracted from the decision quickly. Such suasions have obviously been intended to widen the catchment for admission. Institutions have also been helped by raising the STR — from 15 to 20 in the undergraduate programme in engineering, for example.

The Veblen Effect

These apart, technical higher educational institutions are differentiated and highly hierarchical. The Indian Institutes of Technology, the National Institutes of Technology, the Indian Institutes of Information Technology, the Schools of Planning and Architecture, the National Institutes of Design, the National Institute of Pharmaceutical Education and Research and a few select universities are the most sought after. Taken together, they can admit a maximum of 40,000 students. An equal number of seats may be available in high quality private institutions.

Being highly selective, they are the price makers. Left to market forces, they may resort to an exploitative pricing policy. They generally resist capacity expansion ostensibly out of fear of dilution in quality. Artificial scarcity suits them fine and at times enables them to use higher fees as a strategy for brand building. After all, the Veblen Effect (what is expensive is perceived to be excellent), is as applicable to higher education as it is to luxuries.

Such institutions hate pricing regulations that limit their ability to charge as much as they wish. They are naturally disappointed with the news that the AICTE is contemplating prescribing a ceiling limit on fees that these institutions can charge from their students. A bulk of poor quality institutions are happy about the prospect of a certain minimum level of fees being made mandatory.

Steps for the AICTE

Technically, the AICTE is empowered to take ‘all such steps as it may think fit for the coordinated and integrated development and maintenance of standards’. Specifically, it can “fix norms and guidelines for charging tuition and other fees” as well. But would it be justified to prescribe a specific amount that must compulsorily be charged from students? Will this move not be construed as helping the institutes bettering their balance sheets, rather than safeguarding the interest of students. After all, the AICTE Act mandates it “to take necessary steps to prevent commercialisation of (in) technical education”.

Finally, would it be advisable for the AICTE to prescribe fees for all technical higher educational institutions spread across the length and breadth of the country? Cannot it just provide a broad framework and guidelines for determining the permissible level of fees? The rest could be left to the State-level fee fixation committees. This would be in the true spirit of federalism which expects States to be a responsible partner in the process.

Furqan Qamar is a former Adviser (Education) in the Planning Commission of India. The views expressed are personal

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