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In
the latest move in the game to transform higher education
in India, the Commerce Ministry has put out a consultation
paper aimed at building support for an Indian offer
on education in the negotiations under the General Agreement
on Trade in Services (GATS). The paper, while inviting
opinions on a host of issues, is clearly inclined to
offering foreign educational providers significant concessions
that would facilitate their participation in Indian
education. In its view: ''Given that India's public spending,
GER (gross enrolment ratio) levels and private sector
participation are low, even when compared to developing
countries, there appears to be a case for improving
the effectiveness of public spending and increasing
the participation of private players, both domestic
and foreign.''
Public spending—central and state—on higher education
has indeed been low, amounting to less than half a percent
of GDP over the last two decades, even though the government
itself targets a spending rate of 1.5 per cent of GDP.
If, besides private sector participation, public spending
and enrolment are low, the emphasis must clearly be
on increasing these with more allocations to education.
This is likely to be extremely effective since India
has the requisite institutional framework. With around
350 universities and more than 17,000 colleges, institutionally
speaking India has one of the largest higher education
systems in the world. The problem is that the average
enrolment in Indian higher education institutions is
anywhere between one-fifth and one-twentieth that in
many other countries. This would mean that if public
spending could be raised to improve the infrastructure,
quantity and quality of personnel, and student intake,
quick progress can be made. However, by taking the availability
of public resources as given, the emphasis is being
shifted to increasing the effectiveness of public spending
rather than its quantum, and supporting it with higher
user charges and a larger private presence.
The arguments advanced are tiresomely familiar. The
availability of higher education is seen as woefully
short of demand and need. This is attributed to the
fact that public expenditure is (and would remain) inadequate
and ineffective, and private provision is constrained.
The affiliating college system, which is an ingenious
way of combining decentralised management and competition
in a mammoth educational apparatus with central control
over the substance and quality of education, is presented
as chaotic. The substance of education is seen as irrelevant
in the sense that it does not train students for the
job market, whose needs are seen as being easily characterised.
And all of these inadequacies, it is presumed, can be
substantially addressed with greater private presence,
especially foreign presence.
As always the case with the behaviour of the votaries
of accelerated liberalisation, the fuss over this issue
is unclear. Foreign educational providers are permitted
to enter and have entered India, even if not in large
measure. India permits 100 per cent equity holding for
foreign direct investors under the automatic route in
the educational services area. It therefore allows for
commercial provision of educational services by foreigners
and the repatriation of surpluses or ''profits'' earned
through such activity.
What then is not permitted currently? To start with,
no educational service provider if recognised as a university
by the University Grants Commission (UGC) or is offered
recognition by organisations like the All India Council
on Technical Education (AICTE) can operate on a ''for-profit''
basis. Surpluses can be generated based on fees charged,
but those surpluses will have to be ploughed back into
the institution.
Moreover, obtaining and adopting the nomenclature ''university''
in India has its regulatory implications. Section 2(f)
of the UGC Act 1956 defines a University to mean an
institution established or incorporated by or under
a Central Act, a Provincial Act or a State Act. Going
by this section, for an institution to identify itself
as a university in India, it would have to be set up
by a central or provincial legislative Act.
There is one other route to university status. Based
on the recommendations of the Radhakrishnan Commission,
a provision was included under section 3 in the University
Grants Commission Act of 1956 that institutions which
have unique and distinct character of their own could
be deemed to be a university and enjoy the concomitant
privileges without losing their distinctive character.
Originally, this option was to be exercised only in
the case of "institutions which for historical
reasons or for any other circumstances are not universities,
yet are doing work of high standard in specialised academic
fields comparable to a university and the granting of
the status of university would enable them to further
contribute to the cause of higher education which would
mutually enrich the institution and the university system."
In the 35 years between 1956 and 1990, only 29 institutions
were granted the deemed university status.
However, the provision has been put to use more often
in recent times, with even private institutions being
deemed as universities. Further, since 2000, deemed
university status has been granted even to de novo institutions.
In the 15 years after 1990, 63 institutions were declared
deemed universities. More recently, over the period
2000 to 2005, 26 institutions have been notified as
deemed universities. Many of these are institutions
which provide undergraduate education or training of
a vocational kind.
What is more, certain state governments have been liberal
in encouraging the establishment of private ''universities''.
In Chattisgarh, the Chhattisgarh Niji Kshetra Vishwavidyalaya
(Sthapana Aur Viniyam) Adhiniyam, 2002 allowed the state
government to establish a university through a mere
notification in the state official gazette. As a result,
more than 100 private universities were established
in Chhattisgarh alone through a single umbrella act,
which has since been challenged with adverse implications
for the student body in some of these ''universities''.
While foreign providers can use these routes to obtain
university status, there are two implications they would
have to take into account. First, since a University
has either to be established by an Act or be deemed
to be a University by the University Grants Commission,
they would be subject to the regulatory system for formal
''universities'' as it evolves through interventions by
the executive and the judiciary. There cannot be a framework
which applies to foreign universities, which is any
less regulatory or more open than what applies to domestic
private universities.
Moreover, the fundamental objective driving foreign
entry may be undermined by this environment. Foreign
universities and higher education establishments are
unlikely to enter the country and establish a long-term,
sustainable presence for purely altruistic reasons.
In their search for profit and its repatriation, they
are bound to make a case under the ongoing GATS negotiations
to permit the easier entry of commercial educational
providers with repatriation rights. This could result
in a conflict between the decision to permit entry by
foreign educational service providers and the terms
of such entry, on the one hand, and the current understanding
of the role institutions of higher education should
play.
India has always maintained that higher education is
an obligation and duty of the state that must be substantially
financed by the exchequer and that commercialisation
and profiteering are not legitimate goals of Universities.
B.N. Kirpal, C.J.I. in delivering the judgment in the
TMA Pai case on behalf of the majority, states, inter
alia, that: ''…Article 19(1)(g) employs four expressions,
viz., profession, occupation, trade and business. Their
fields may overlap, but each of them does have a content
of its own. Education is per se regarded as an activity
that is charitable in nature [See The State of Bombay
v. R.M.D. Chamarbaugwala (1957) SCR 874: AIR (1957)
SC 699]. Education has so far not been regarded as a
trade or business where profit is the motive.'' There
are instances of substantial fees being charged from
students but these are justified in terms of covering
costs and building infrastructure with no element of
profit making.
Since universities in India, including private universities
cannot function as commercial establishments, it should
be obvious that foreign educational service providers
cannot be allowed to function as profit-making enterprises
with the right to repatriate surpluses to their parent
institution. If foreign providers are willing to adopt
charitable status and be subject to the domestic regulatory
frame there case can be considered on the same principles
that apply to domestic private providers. But given
its commercial implications, India cannot make any commitment
with regard to education under GATS, without rethinking
the principles it has held and continues to hold on
the educational front.
Does this mean that foreign players would be unwilling
to enter the higher educational area? It does not. What
they may do (and are doing) is establish a presence
in the form of private commercial providers of educational
services who are not officially recognised by the government.
There are a number of institutions in the country, both
domestic and foreign, currently operating in this form.
Those which are successful are the ones that are seen
as providing a training that is recognised by employers,
as reflected in the proportion of outgoing students
who get placed and the salaries at which such placement
occurs. Since those arguing for privatisation of education
are most often also those who argue for greater ''commercial
relevance'' of education, this should be a completely
acceptable form of ensuring both competition and quality
in the market for private educational services. What
needs to be noted is that India does not have to make
any additional commitments to provide foreign players
the opportunity to offer these kinds of services.
The case for special concessions under GATS arises,
therefore, only if the government wants a foreign presence
that goes beyond what is detailed above. There are two
grounds on which such an extension of the area of freedom
for foreign players has been defended. The first is
foreign investment in education is seen as necessary,
in order to supplement the inadequate amounts currently
being spent by ostensibly resource-starved governments
on higher education in the country. This is seen as
crucial to meeting the excess demand for good higher
education in the country. The second is the argument
that the best foreign players would not come in adequate
measure if they are not accorded the status provided
to all public and many private educational providers
in India. This is seen as unfair to those who are willing
to pay for such an education. It is also seen as foreclosing
a much needed contribution by foreign providers, even
if at high cost.
The point regarding inadequacy of resources, is if anything
weak. It ignores the possibility of substantially increasing
resources in the hands of the state, by raising India's
relatively low tax-GDP ratio, for example. And it overlooks
the possibility of reallocating resources from what
many consider less essential areas to a priority area
like education.
The second argument, which is more material, is the
view that there is a demand from resident Indians for
education of the kind offered in universities abroad,
but is currently accessible only to those who obtain
the necessary funding or have the requisite own resources
to travel abroad to access such education at relatively
high cost. Increasing access to such education through
means other than consumption abroad is seen as a democratic
project. Needless to say, this presumes that the kind
of education being offered on Indian soil by foreign
educational providers is equivalent in quality and certification
to that which can be accessed abroad—even though this
is not necessarily the case. In fact, there could be
misuse of a foreign brand to purvey relatively poor
quality education at high cost.
Moreover, the reason why such educational access is
being demanded needs to be addressed. It is indeed true
that the National Science Foundation of the US reported
(in its publication Science and Engineering Indicators
2006) that more than 63,000 of the 279,000 foreign graduate
students enrolled in US universities in 2004 were Indians.
But it also pointed to the fact that of the 3,238 Indian
recipients of science and engineering doctorates in
the US in 2003, nearly 90 per cent planned to stay on
in that country, with two-thirds having definite plans
to stay.
If the demand for a foreign education is because such
a degree is necessary to access jobs outside the country,
then provision of such degrees need not be a priority
for the government. If, on the other hand, such access
is demanded because the quality of domestically provided
higher education is not adequate in terms of availability
or quality, then the case is for redressing that inadequacy,
rather than adopting a policy that may in fact further
weaken domestic education. No one can deny that there
are enough instances of institutions of higher education
that are considered comparable to the best internationally
in the country.
Moreover, some degree of access to top-quality international
educational resources is possible through collaboration
agreements between domestic and foreign universities,
which allow Indian students to benefit from the faculty,
the courses and even the ''brand'' of the better foreign
universities, just as students from those universities
can access the best Indian expertise. In sum, while
considering demands from more well-to-do sections in
the country for domestic access to the services of foreign
educational providers, the government needs to assess
the private and social benefits of acceding to this
demand after taking into account the social costs that
such a policy may entail.
When confronted with these arguments, it is often held
that India should permit foreign educational providers
to enter into the country in order to obtain reciprocal
and equal rights in those countries for Indian universities.
There is a growing recognition of the teaching strengths
of sections of the Indian higher education system. This
could mean that in the evolving ''knowledge economy''
India may have advantages as an international educational
service provider, that can help absorb some of the educated
unemployed into this activity as well as serve to earn
the country valuable foreign exchange. For this reason,
it is argued, India should not shut itself to the international
provision of educational services through cross-border
supply or through the establishment of a commercial
presence, supported with the movement of natural persons.
It hardly bears stating that India's priority today
is not that of becoming an exporter of educational services,
but of ensuring good quality higher education for its
young citizens. Making a commitment under GATS could
tie the hands of the government and prevent it from
adopting a nuanced policy that can serve that objective.
So, as in the past, it should abjure from making any
such commitment. We need to look elsewhere to generate
an export thrust.
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