Abstract
EDUCATION is one of the dominant sectors of the Indian economy in terms of enrolment of children, employment of adults and investment of financial resources. While school education has a broad base, higher education suffers from a narrow base covering only about 7% of the relevant age group population. With the expansion of school education, the pressure on the higher education system to expand is expected to continue in India. In this context, two criteria of efficiency and mobilization of resources are put forward in justification of privatisation of higher education. When higher education is left to the market forces, it results in ‘elitisation’ of a basic need; it puts higher education firmly out of reach of the millions of under-privileged of our country who dream of going to the university one day. It firmly makes higher education a “commercial commodity’’ that is available only to those who can afford the price which, going by today’s rate of a seat in a professional college, could be anywhere between Rs 2 lakh and Rs 30 lakh. India spends 2.8 per cent of its GDP on higher education which is much less than most of the Third World countries. Even this meager amount is now sought to be reduced in the name of reducing the “burden” on the government. Since, educational institutions form the very soul of a society and typically create the space for both creativity and social introspection, downplaying these important features of education can have a deadening effect upon society.
Introduction
In India, activities of the education system have been mostly funded and directed by the state. Liberalisation of educational services under General Agreement on Trade and Services has posed major challenges to the state supported educational institutions. Privatisation of education is oriented to profit and commodification of educational services. Foreign educational institutions operating within purely commercial parameters are expanding their tentacles all over the country. Cash controlled and privatised education by corporate driven globalisation has posed massive challenge to the managements, teachers and students of higher educational institutions. “Government Subsidies in India: Discussion Paper’ put forward in 1997 by the Ministry of Finance stated that secondary and higher education is ‘non-merit good’ for which government subsidies needed to be drastically reduced. In 2004, it declared all types of education except elementary education as ‘Merit II good’. The corporate sector has lobbied for marketisation and liberalization of education as an important part of global trade (Ambani, M and Birla. K, 2000). During last one and half decade, the international market for education in general and higher education in particular has experienced exponential growth. (Sahni & Kale, 2004).
Most of the reform measures recommended in higher education centre around two major propositions:
1. Improving efficiency in the functioning of public institutions without allocating additional resources by increasing student staff ratio and teaching/administrative workload.
2. Measures to diversify the sources of funding or develop alternative arrangements to provide higher education by shifting the burden of cost from the public to private and household domains.
Education Financing-A Major Challenge
Public expenditure on higher education as a share of GNP increased from 0.19% in 1950-51 to around 0.56% in 1990-91. It needs to be noted that the expenditure on higher education as a share of GNP increased consistently until the 1980s. In fact, in the late ’70s, India was spending almost one per cent of GNP (Table 1) on higher education. This trend changed and its share reduced to 0.56% in 1990-91. From the mid-1980s onwards, especially after the National Policy on Education, the focus of discussions and priority in allocation shifted towards elementary education. The growing hunger for education has been accompanied by a decline in per capita public spending and, consequently, rapid privatisation, making it impossible to create a progressive and democratic education system. Hardly 7 % of population in the age-group of 17-23 years is admitted in the higher educational institutions in India.
The share of the central government in total education expenditure increased during the post-policy period, i.e., from the late 1980s.To attain the target of universalisation of elementary education, the share of education in GNP needs to be increased to 6 % (Varghese, 2000). Expenditure on higher education as a share of total recurring expenditure on education shows a declining trend (Varghese and Tilak, 1991). Higher education accounted for 20% of the recurring expenditure on education in the ’50s which increased to 27% in 1971 and 29% in 1981.It declined to 18% in 1991. As of now, the share of recurring expenditure on higher education is lower than what was in the 1950s. This reduced spending on higher education becomes more marked when one looks into allocation to higher education under successive plans.
Plan Allocation for Higher Education
The first plan accorded a high priority to elementary education and nearly 56% of the allocations were earmarked for this sector. Consequently the share of resources for higher education was only 9%. However, its share in the second plan doubled to 18% reaching a high of 25% in the fourth plan. From the 1970s onwards one finds a consistent decline in the share of allocations to higher education reaching the lowest share of 7% in the eighth plan. The trends clearly indicate that allocation to higher education increased consistently from the first to fourth plans and declined consistently thereafter. However, the argument is not that too many resources were allocated to elementary education; universalisation of elementary education requires more resources than what is currently allocated. With the expansion of school education, the pressure on higher education to expand will continue. Since both sectors require more resources, a reprioritisation in allocation between primary and higher education keeping the same level of public funding will leave both sectors starved.
In 1950-51, the expenditure on higher education was shared equally by the government and private sources. More importantly, fees accounted for nearly 37% of the total recurring expenditure on higher education. However, in 1985-86 (the latest year for which information is available) more than 80% of the expenditure came from government sources. Correspondingly, there was a decline in other sources of funding for higher education. For example, student fees accounted for 36.8% of the total expenditure in the 1950s. (I & II Five Year Plan, G.of I., Delhi)
Over a period of time the income from fees as a share of total resources for higher education declined and in 1985-86 it accounted for only 14.4% of the total recurring expenditure. This implies that the share of fees in total expenditure declined from over one-third in the 1950s to nearly one-seventh in the 1980s. A similar trend is visible in case of endowments and other sources of income to the universities. Nearly 14% of the total expenditure on higher education came from these sources in 1950-51; it declined to 4.5% in 1985-86.
It is interesting to note that even when there was a decline in public funding for higher education, the nonprofessional courses were more adversely affected than the professional ones. (Varghese, 1987).
Mobilising resources from non-government sources became important even to sustain the system of higher education at its present level of operation. Most of the committees appointed during this period have made various suggestions in this regard. With the expansion of school education, the pressure on the higher education system to expand is expected to continue in India. In this context, two criteria of efficiency and mobilization of resources are put forward in justification of privalisation of higher education.
The Reform measures suggested (World Bank, 1994) for developing countries
These reforms include:
(i) Encouraging greater differentiation of institutions of higher education, including development of private institutions;
(ii) cost-recovery mechanisms including cost-sharing with students;
(iii) Redefining the role of the government by evolving a policy framework to make the sector more market friendly and public institutions more autonomous; and
(iv) Prioritising investments towards quality improvement.
During periods of structural adjustments, public expenditure declines in general and that on social sectors, including education, declines in particular. In India too, allocation of resources to higher education declined during the period of adjustment (Tilak, 1993). For example, during the period between 1989-90 and 1994-95, the share of higher education in plan expenditure decreased from 12.6% to 6% whereas the same in non-plan expenditure declined only from 14.2% to 11% (Tilak, 1996). The effort of reforms in India was to further reduce the financial burden of the government to provide education, especially higher education.
National Priority
The UNESCO-organised first world conference on higher education in 1998 in which 182 countries participated, resolved that development of higher education should be one of the highest national priorities. The Task Force on Higher Education 2000 set up by the Ministry of HRD, GOI sent out the message that higher education was no longer a luxury. In total opposition to these sentiments, the Ambani report says that higher education is not necessary for every one.
Why this opposition to the government’s role in higher education? Why the campaign to privatise education? One of the World Bank commandments says that the government should reduce its expenditure and so the axe falls on items which will affect the underprivileged the most, and there will not be much opposition to it. The articulate middle-class, hitherto the biggest beneficiary of state-subsidised higher education, has outgrown state universities as their children are leaving for studies abroad even for under-graduate studies. The middle class has climbed the ladder and now does not hesitate to kick it down.
India spends 2.8 per cent of its GDP on higher education which is much less than most of the Third World countries. Even this meager amount is now sought to be reduced in the name of reducing the “burden” on the government.
Mindset of the Intellectual Elite
The Government of India’s 1997 discussion paper on Government Subsidies in India provided a revealing insight into government thinking. For the first time, higher education (as well as secondary education) was classified in the discussion paper as a “non-merit good” (and elementary education as a “merit good”), government subsidies for which would need to be reduced drastically.
In a sense, the public policies and action that preceded and followed this statement seemed consistent with such a view, though the Ministry of Finance has partly modified its earlier classification of goods. It reclassified higher education into a category called “merit 2 goods,” which need not be subsidized by the state at the same level as merit goods.
The casualty of the reckless growth in private institutions is not just equity, a well-known fact, but also the quality of higher education. “The private colleges have also featured regularly in the news because of public concern about low academic standards and mismanagement….” (Fuller & Narsimhan, 2006). Few private colleges offer quality higher education and many have been started with the sole goal of making quick profits. Philanthropy, charity, and education, which were considerations of the private sector in education in the past, no longer seem to figure as motives. Government’s inability to regulate private institutions is becoming increasingly obvious. (Tilak, 1993).
Neoliberal economists and human capital formation strategists argue that charging of user fees for higher education takes care of the problem of ‘excess demand’. ‘Egalitarian distribution of subsidies’ also creates high number of educated unemployables due to craze for acquiring degrees, not skills. This phenomenon implies wastage of human resources and state subsidies as well as mismatch between demand and supply of human skills.
Gender Implications of Privatisation of Education
At present, all private educational institutions are thriving on super-exploitation of workers, employees and teachers working on a contract basis where, total control over hire and fire policy rests with the management; majority of contract workers happen to be women. There has been massive retrenchment of women teachers from schools and colleges due to Zero Budget policy adopted by the state (Patel, 2002).
In the drive for privatization, women as students are the main losers as parents channelise financial resources for son’s education, daughter’s education is considered to be less important. (Patel, 2006) There is ghettoisation of women in general higher education (Arts and Commerce) and mostly men throng professional colleges (Engineering, Architect, Medicine, Science & Technology).
The Punnayya Committee (UGC 1993) looked into the funding of central universities. Its recommendations include:
(i) maintenance grants, dearness allowance to be provided by the government;
(ii) subsidies on many of the other items of maintenance grant to be reduced and maintenance grants to be stabilised at a certain acceptable level;
(iii) maintenance grant to be based on unit costs;
(iv) universities to mobilise funds – at least 15% of the total recurring expenditure at the end of the first five years and 25% at the end of 10 years;
(v) creation of corpus funds to meet infrastructure development;
(vi) increase in student fees keeping in view the rate of inflation;
(vii) scholarships to at least 20% of students; and
(viii) Soft loan scholarships from nationalised banks.
The reform measures suggested in the reports of both committees have two distinct aspects, namely, improving efficiency in the functioning of institutions of higher education to reduce waste and saving resources and mobilising them from sources other than the government. The report on technical education strongly advocates the possibility of rationalising teaching workload so as to reduce the salary bill. It also advocates reducing the share of regular faculty to 60% and appointing the remaining 40% of the staff on a part-time and contract basis. It further suggests reducing the staff-student ratio from 1:10 to 1:15 in degree courses and from 1:11 to 1:20 in diploma courses. Similarly, it advocates promotion of distance mode of education and to base the grant transfer on a per unit basis. These steps, no doubt, will be helpful in saving resources and make more funds available to the sector without additional public investment.
Reforms relating to mobilisation of resources to reduce the public cost include promotion of distance learning, encouragement of private sector and cost-recovery methods. Access to higher education through non-institutionalised structures like the open learning system has expanded in India. Open universities have been established both at the national and state levels. The Open University system reduces recurring expenditure on account of salaries and non-recurring expenditure on account of institutional arrangements for imparting education. Therefore, one of the strategies adopted in India to meet the increasing demand for higher education is through the Open University system and correspondence courses. Enrolment in higher education in the non-institutionalised sector (open universities and correspondence courses) has increased in India during the 1990s. It needs to be noted that this sector does not necessarily cater to the age group which normally attends courses in universities and colleges.
The Swaminathan Committee (AICTE, 1994) looked into possibilities of resource mobilisation in technical education, essentially through cost-recovery from students. The committee’s recommendations include:
(a) The creation of corpus funds in institutions;
(b) Establishment of an Educational Development Bank of India (EDBI) with an initial capital of Rs 3000 crore;
(c) Reducing the share of salaries in recurring expenditure from the present level of 80% to 60%; and
(d) Enhancing fees to recover at least 20 per cent of the recurring expenditure.
Emergence and Proliferation of Capitation Fee Colleges
The efforts to privatise higher education in India by encouraging private agencies to set up institutions of higher learning have enjoyed limited success in general education. In the ’80s a large number of institutions offering professional courses were set up in the private sector. Such ‘capitation fee colleges’ (Tilak, 1992) represent a case of totally leaving the responsibility to the private sector.
The growth of private sector has led to two types of distortions:
(i) it encourages only certain courses, especially professional courses;
(ii) It adversely affects equity considerations in education, since admissions are based more on the ability to pay principle than on merit.
The criticisms about capitation fee colleges both in terms of admission criteria and their functioning have led to litigation. Consequently, the government is now trying to regulate the operation of these colleges. In other words, the experience with capitation fee colleges shows that unconstrained privatisation of higher education sector is perhaps not a desirable solution to finance higher education in India. The private sector may respond more to the market processes than to national and social concerns. It can be argued, and that too rightly, that privatisation may lead to promotion of certain courses at the expense of other courses and promotion of better-off sections of society at the cost of meritorious but economically poor students.
Cost-recovery implies a reduction in subsidies in higher education. The best way to reduce subsidies is to diversify the sources of funding for higher education. This could be done by shifting the incidence of the financial burden either to the beneficiaries (students) or to their users (employers). Student loans, graduate tax and enhancing fees (Woodhall, 1989; Tilak and Varghese, 1991) are some of the suggestions made in this regard.
Student loans are mechanisms envisaged to shift the burden to the beneficiaries of education. Under this scheme individual students are expected to meet the cost of higher education. One advantage of the student loan scheme is that it is provided to those students who take advantage of higher education and is recovered from the same group of students. In other words the incidence of liability is confined to those persons who take advantage of the public provision. Another advantage with the student loan scheme is that the loan is recovered only after the loanee completes studies and starts earning. Both the committees (Swaminathan and Punnayya Committees) recommended student loan scholarships, either through the proposed Educational Development Bank of India or by commercial banks at concessional rates.
A student loan scheme can create two types of distortions. First, only those courses which enjoy a premium in the employment market will be preferred, both by the providers of loans and borrowers. The professional courses may get priority at the expense of others which are important from the point of social and national concerns but do not enjoy a premium in the labour market. Second, the educational credit market in India is not well developed. When banks try to provide educational credits to students they look for surety and security deposits which poor students are not in a position to provide. Ultimately, loan scholarships may lead to a situation whereby these opportunities are taken advantage of primarily by children from well-to-do families. This may have adverse equity implications.
Another commonly suggested measure to recover the cost of higher education is through a graduate tax. The graduate tax is an education specific tax levied on those who use educated manpower. The paradoxical situation in India is that while the expenditure on education is borne by the government, the products of the educational system are used by the public and private sectors. The educational sector in India provides manpower to the production sectors and they generate profits which are beneficial to the employers. However, employers seldom contribute to the education sector on a regular basis. There is, therefore, a strong case for levying a tax on every graduate who is employed in an organisation. An employer can be asked to pay an annual tax to the government for each graduate recruited.
A commonly suggested cost recovery method in higher education is to increase fee rates. The share of fees in total-expenditure on higher education has declined over time. This happened because the amount of fee levied remained almost unchanged over a long time, while the cost of education increased. This has resulted in an increasing cost-fee disparity in education. Therefore, there is a justifiable case for increasing the fee to be levied from students of higher education.
Most of the students who go in for higher education are from economically and socially better-off families whose ability to pay is higher than what they are actually charged. A continuation of the present levels of subsidy benefits a segment of the population that does not deserve it. Therefore, there is scope for increasing fees to mobilise resources. Such possibilities are higher at the post-compulsory and tertiary levels of education.
There are many ways in which fees may be increased. One can argue for a uniform increase in fees for graduate and postgraduate courses which implies that fee rates will remain the same in a university. A second alternative is to increase fees based on the cost of provision of different courses. In this case the fee for a particular course will remain the same in a university but the rates for different courses will vary. A third alternative is to give autonomy to colleges to charge fees based on the cost of courses that they offer. In this case charges for the same course may vary between different colleges within a university. In all these cases, students opting for similar courses are levied the same fee, either at the college or university level. The downside is that it does not discriminate between those whose ability to pay is higher or lower. A discriminatory fee structure, on the other hand, takes into account the ability to pay principle.
Student fees have recently been enhanced in all types of universities in India. The management and technical institutions provided a lead in this direction. Fees remain the main source of income for private institutions, where parents are willing to pay. Though enhancing fees in public institutions is often resisted in India, recent experience shows that it is possible even in public institutions. However, a uniform increase at times goes against equity considerations. A discriminatory structure based on the ability to pay principle increases income without adversely affecting equity concerns.
All reform measures attempt either to save resources by improving efficiency in the operation of educational institutions or mobilise resources from non-government channels. There is scope for doing both in India. Improving the efficiency of educational institutions cannot be effected through policy reforms at the national level; it needs changes at the institutional level (Sanyal, 1995). The internal management of institutions needs to be strengthened.
Globalisation and Higher Education
Global integration has led to changes in the pattern of international investment and production, with emphasis on relocative investment and outsourcing both within and across borders. While this was already marked in the manufacturing sector, recently there has been a growth of such outsourcing activity in the services sector as well, reflecting technological changes which allow more services to be traded across borders. So, the newer job opportunities in the developing world tend to be those that meet the requirements of internationally mobile capital in most sectors, even while domestic agriculture and manufacturing face difficulties and employment deceleration.
These changes are accentuated by the major demographic shift that is occurring in the world, with the aging of most of the industrial world as against the still dominantly young societies in the developing world. This has implications not only for current and future outsourcing but also for short-term economic migration to fill labour supply gaps in more developed countries. Such migration has become the most important source of foreign exchange for many developing countries, as well as an important cause of material betterment for millions of individuals and their families from the global South. In India, for example, remittances from migrant workers have been the single largest source of foreign exchange for more than two decades, more than all forms of capital inflow put together.
All these features have important effects upon labour markets and upon the education process in developing societies, including India. One important social effect is a significant increase in what may be called “the spirit of competition”, in particular of notions of individual success and mobility based on performing better or achieving more than others. This also involves a broad public recognition that education is possibly the most effective route to individual mobility, leading to a tremendous - and unfulfilled - hunger for education in all classes of society, including among the poor.
There are several emerging issues and new dilemmas that confront those who want to create a progressive and democratic education system in India. The first is the basic question of provision, which itself also raises the prior question of resource mobilisation for such activities. How can public policy address the issues of the evident hunger for education across all sections of society in a democratic, creative, and socially useful way, without allowing private profiteering to exploit the poor, and without compromising on quality in public institutions?
Conclusion
While dealing with privatization of higher education, we need to address some crucial mind-boggling issues regarding role of higher education per se. Is it to create a concerned and informed citizenry? Or to meet the expected future needs of economic and social development in the country? Or simply to meet the labour requirements of international capitalism? Can a balance be achieved between these aims? (Ghosh, 2005)
This is important because the current emphasis on producing particular technical skills also ignores one of the most important functions of education, which is its critical role in encouraging creativity and construction of knowledge leading to intellectual self sufficiency to face the challenges of contemporary complex knowledge-driven economy. A focus on purely technical or absorptive skills can lead to a downgrading of the process of encouraging analytical capacities, or creating questioning attitudes and socially necessary dissidence. Since educational institutions form the very soul of a society and typically create the space for both creativity and social introspection, downplaying these important features of education can have a deadening effect upon society.
Then there is the issue of class, caste and gender bias in education, in addition to the communal biases which have received much attention in recent times. These biases reflect themselves not only in access to education, but also in terms of subject matter, syllabi and orientation. They are obviously not new, but it could be argued that the class bias in particular has been accentuated in recent times because of the inequalising nature of growth processes and the functioning of job markets.
As Dr. Amartya Kumar Sen says, “We need a vision of mankind not as patients whose interests have to be looked after, but as agents who can do effective things- both individually and jointly. We also have to go beyond the role of human beings specifically as ‘consumers’ or as ‘people with need’, and consider, more broadly, their general role as agents of change who can- given opportunity- think, assess, evaluate, resolve, inspire, agitate, and through these means, reshape the world.” (Sen, 2000).
Thus, from the point of view of Human Development too, the state must regulate privatisation of education as
– Knowledge driven society needs major contribution from the higher educational institutions.
– Prerequisite of the Information Revolution, and the Information Age is highly educated pool of professionals and think tank that can ensure intellectual self sufficiency.
– Education helps a person to add to the value of production in the economy as also to the income of the person who has been educated.
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