July- September, 1999 , Volume 1  No. 1

Privatisation of Higher education in India : Rationale and Perspectives

C.L. Anand


Higher education in India today is ridden with problems which are many and various. Some of the most crucial ones that confront us are somewhat controversial and, at any rate, in need of a thorough scrutiny in the overall interest of the country. The issues are, however, inter-dependent and include: (i) broadening of access in higher education; (ii) ensuring equity in higher education; ((iii) the financial crunch, and (iv) the move to privatise higher education as a remedial measure.

The Crucial Questions

There are indications to partially privatise higher education in India as a remedy to most of the problems and issues raised above. The following crucial questions, therefore, need to be consciously raised:

  1. What is the rationale for privatising higher education?
  2. What exactly are the issues related to access and equity in higher education and how would privatisation tackle them?
  3. Will private effort be able to generate the requisite finance for higher education?
  4. How has privatisation delivered goods in the educational systems abroad?
  5. Will private funding of the university system eventually be a substitute to the statutory and constitutional requirement of the State to maintain institutions of higher learning?
  6. Will private funding be really available for courses other than those concerned with professional and technical higher education?
  7. Will privatisation not lead to commercialisation?
  8. Is commercialisation of higher education in national interest?
  9. Will privatisation not adversely affect interests of the poor and other backward sections of the society?

Access and Equity in Higher Education

India has quite a large system of higher education in as much as we have today 250 universities, over 10,500 colleges and nearly 55 lakhs of students being taught by over 3 lakhs of teachers. And yet the proportion of the University and College going student population in the relevant age group of 16-23 is dismal 6%. This is quite low even when compared with developing countries, the figure being 20% for both Egypt and Thailand, 10% for Turkey, 11% for Brazil and 16% for Mexico. In the developed countries, however, access to higher education is to the tune of 40% and more. Thus, though higher education in India has expanded generally, inadequate access continues to cause concern. This issue, therefore, needs critical examination.

On the one hand we are worried about the so called ‘mushroom growth’ of the universities and colleges, and on the other, are unable to provide access to education even at par with most other developing countries in the world. Further, while enrolment of women and those belonging to SC/ST groups and other backward communities has improved, they are still very much under represented. Thus, the twin issue of access and equity needs to be tackled by adopting alternative strategies.

As we all know, providing increased access to education, meeting the challenge of equity and improving the quality of education all entail large investment. It is all the more necessary to ensure continuous inflow of funds needed for implementing and carrying out relevant programmes and activities. But then there does exist the problem of resource crunch. A suggested way out is exploring additional avenues of generating systems own resources instead of being fully dependent on the State exchequer. It is imperative here that the higher education system has to seek participation both of the Government as well as private and voluntary bodies. Some amount of private funding thus appears inevitable for making up the deficit caused by inadequate state funding.

Financial Crunch

Lack of adequate funds in education is the most crucial issue. While overall investment in education as a proportion of the gross domestic product (GDP) has gone up from 1.2 per cent in 1950s to 3.7 per cent in the 1990s, it is still below the norm of 6 per cent as stated in the National Policy on Education. University education has particularly been hit hard. Most higher education institutions all over the country are facing acute financial crisis. Two important questions immediately intervene themselves: One, what is the justification for so radically changing the 40-year old policy of state support to higher education, and two, how could the state extend financial support to higher education at a time when the country is facing severe resource crunch?

Since provision of free and compulsory education at the elementary stage is a Constitutional commitment, budgetary allocation for this sector of education is continuously on increase while the University and higher education has got a raw deal for the sixth year in succession. This is in keeping with the declared objective of the Union Government that the lion’s share of funding for higher education must come from sources other than the Government. The consequence of inadequate investment in higher education is serious. While the Universities are at pain in persuading the Government for increased budgetary allocations, some of them have simultaneously taken measures for generating funds of their own.

It is high time the university system resorted to long-term resource planning instead of taking the state support for granted. Each University will now have to identify avenues of resource generation, both internal as well as external, depending upon the nature of its programme offerings and the locale. The Punnayya Committee set up by the UGC and the Swaminathan Panel of the AICTE have made some broad recommendations in this regard. The internal measures, amongst other things, may include proper utilisation of funds, general economy in expenditures, pooling and sharing of departmental and institutional resources and most importantly, rationalisation of fee structure. As far the external resources, the important avenues include donations from alumni, philonthropists and others, consultancy, university-industry interaction, etc.

In most institutions of higher education, at present, the tution fees contribute very little towards earnings while the recurring expenditure on each student is much higher. In fact, an upward revision of fees is over due. The need to raise the tution fees to at least 20% of the recurring expenditure per student generally and at a still higher level in higher professional and technical courses is being advocated. Increase in fees from the foreign students at further higher levels is being talked about by reserving seats for them in select institutions like the IIT and the IIMS. While measures such as these appear realistic, their repercussions need to be thoroughly assessed before taking some definite decision in the matter. Particularly, interests of poor students generally and those Indian students who are pitted against the foreign students admitted on the basis of higher fees need to be protected.

By far the least controversial avenue of generating additional resource is that of tapping the philonthropists, alumni and others such as business houses and industrial concerns for voluntary contributions. In order to encourage this the Government of India’s financial act provides for 100% tax exemption in respect of donations by a tax payer to a university or institution of national eminence. Again, University-Industry interaction is becoming a plank in this direction. The Swaminathan panel has suggested building up a reservoir of funds by collecting educational cess from industries and other user organisations. Setting up of an Educational Development Bank of India initially with shares of Rs.1000 crore each by the State Governments, Central Government and international financial agencies has also been suggested. Raising money through consultancy work or job assignment by institutions to industries or other professional organisations is yet another avenue being profusely recommended. As an incentive, part of this money goes to individual scholars while the rest is added to the funds of the University. It is pertinent to mention here the official view that avenues generated through enhanced fee structure, consultancy and other activities would not be offset against Government grants with the industries considering "adoption" of one or more institutions of higher education.

A major problem in relationship between industry and academia is that perhaps both do not know what the other wants. While the universities are unable to identify the precise needs of the industry, the latter are unaware about the type of interaction universities look forward from them. Could a beginning not be made by sharing the infrastructure each is known to possess?

Private Initiative in Education in the USA and UK

In the United States of America the concept of private universities is an integrated part of the political and economic philosophy of consumer soverignity. The state intervention in education is exerted indirectly by regulating consumer response. In keeping with this view of philosophy, the state regulates its concerns about access and equity by providing funds to institutions of higher learning or establishing institutions under its control. The state also largely finances students directly by paying for their education as consumers. If one has inadequate means to pay for education, the state would provide resources for the same. The so called ‘voucher system’ and various schemes of scholarships and loans come in this category. Thus, the state indirectly subsidises education either through educational institutions or through the receiver of education.

Along side state funding, American education is the responsibility of the local Governments, parents, students, alumni and, most importantly, private and voluntary bodies. There are universities which are purely private with no governmental subsidy whatsoever. The universities of Yale, Princeton, Perdue amongst others are the world famous universities known for high quality education available to those who could afford to pay.

Thus, there is a dual system of public and private education with traditional distinctions based primarily on the means of their financing and the nature of control. The United States is committed to preserving this dual system of higher education by maintaining both public as well as private institutions.

The higher education system in the U.K. shares some of its features with those in the USA. Self governing nature of the universities and their administrative and financial autonomy are most important. The Universities of Oxford and Cambridge which are nearly 800 years old and the Universities of London and Durham founded in the early part of the 19th century, though not strictly private in the American style and manner, are independent and self governing academic bodies. Their funds, except those required for the capital projects come from their own resources such as income from endowments, consultancy income of the faculty, donations, support from industry, voluntary subscriptions from alumni and tuttion fees.

Privatisation of Higher Education in India – Case for and Against

The private initiative in education, especially higher education is not altogether new to India. Some of the leading universities namely, the Banaras Hindu University and the Aligarh Muslim University came up with the efforts of certain dedicated individuals and financial support of the community at large. Again, a large number of educational institutions in the country especially those concerned with general and professional higher education have been established on private and voluntary initiative with or without financial subsidy from the Government.

In the context of the current changing social and economic fabric of the country, it appears almost certain to go in for private funding of education. The recent paradigm shift in Indian economic and political philosophy has led to the demand of private universities so as to meet the challenge of contemplated open economy and the demand for qualitative human resources and high level of R & D.

There are views for and against privatisation of higher education in India. While some have started criticizing the concept even before it has come to be defined and taken off the ground, others consider it very useful and indeed inevitable. So much so that proposals for setting up private universities affiliating the privately funded institutions are being discussed. For one thing, there is no denying the fact that higher education is comparatively less expensive in India even though under-developed countries like Bangladesh and developed ones like the US, Japan, Australia and many others have successfully switched over to privatisation of education without making it a crass. Can India also think on these lines especially if the money earned can be "ploughed back" into the educational sector for its own improvement?

Summing up, a clear cut policy of the Government of India regarding privatisation of higher education is unfortunately not available at the present moment. We wonder if there is one at all. At any rate, the move is lacking in transparency. One thing is, however, clear from the occasional official pronouncements that there is a need for supplementing Government measures by the efforts of the non-Government organisations and the institutions themselves to generate resources. This, in a way, does amount to partial privatisation calling for caution against, amongst others things the following:

  1. resultant commercialisation of education,
  2. obstacles in merit based admissions,
  3. deterioration in academic standards,
  4. encroachment in institutions & autonomy,
  5. service conditions of teachers, and
  6. education becoming subservient to market logic advanced by the private sector in the country.
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