FDI in education still a story?

Ankur Luthra

MBA 1st Sem.

Well the answer is pretty clear the country which is ranked 9^th in terms of purchasing power parity has a well performing Stock Market makes it a destination to invest and make money. Another feature that enhances our portfolio is exports the country exports cheap, well trained and efficient manpower to the world.

What Globalisation has pushed man to the limit, changed lives for the better for those who were already rich and worsened for those who were already poor.

How it has made it difficult for the poor?

Well the cost of basic necessities especially food have been on the rise and luxuries on the contrary have declined taking the example of food grains cost of which has risen by 400% in the past 10 years and in contrast mobile phones which have become cheaper by 1600% as quoted by Mr Anjaan a leader of CPI in a chat show in NDTV. We Indians spend 60% of our income on food so the situation is indeed grim. Similar is the situation for education. Although in 62 years literacy rates have risen from 12% to 62 % on the average .But, still the cost of education is such that only 7% of our youth has access to higher education especially technical.

Now the point is: What can be done to raise this figure?

One way was to make education a lucrative business opportunity and invite FDI. It all started when NDA government in early 2000 created an environment to attract FDI and also granted autonomy to various institutes with the intent of making them self sufficient .This was basically the intention of the World Bank as in their report for developing countries in 1996 they had urged to stop all subsidies asap.

As a result of efforts of the NDA govt the numbers changed drastically from mere 20 universities and 400 colleges to 490 universities and 20769 institutes in India and also there have been around 128 foreign collaborations out of which only 10 have been approved by AICTE such a figure indeed astonishes although the numbers 128 and 20769 create a sense of pride and since the figures are of 2005 the heart in anticipation of a manifold increase over these four years consolidates the pride.

But to be honest this pride is all false because though Indians from these Institutes National Importance the IIT's IIM's, NIFT's and NIT's have become success stories but the amount of success stories is not abundant and only a few of the colleges except government establishments are at par with the global elite.

So what are the reasons that the education system still does not fulfill the desired parameters and still no proper foreign investment has been made in India?

To answer this question a look back on the education policy in the past decade is required.

Higher technical education in India was mostly in the hands of the government. It subsidises and finance's these education institutes. But in early 2000 the Central government with the desire to improve education scenario in the country took various initiatives. The very first was that all the REC's were converted into NIT's ,  followed  with the increase in the number of seats in IIT's , Nift's etc and IIIT's came into the picture and so did the concept of Institute of National Importance came into existence.

But, this was just the beginning the government later on asked two industrialists Kumar Manglam Birla and Mukesh Ambani to submit a report on reforms in education . In their report "A policy for framework and reforms in education" they stated that "barring the field of cultural and performing arts they find education to be a profitable venture and government should also allow FDI "a model was also developed by them which showed how the full operating cost could be recovered from the students.

With the intent to make education a self sufficient sector the suggestions were incorporated through a Model Act presented by the UGC by means of a paper in year 2001. By this time the State's through acts had already initiated private investment especially in engineering. But, only non profit organisations that come under Section 25 were allowed to invest. So as to prevent commercialisation with the condition that profits generated cannot be invested or diverted but have to be reused so most of the players especially Ambani's,Birla's, Jaypee group etc entered through trusts.

In these years around 128 foreign collaborations and investments came up but only 2 Joint Ventures have been approved by AICTE the two collaborations are the ISB Hyderabad with Harvard and IIITDM Jabalpur with Japanese consortium.  Another Factor that substantiates the fact is that after the report in the period of 5 years around 101 colleges gained a Deemed to be a University status.

BUT why only two official collaborations though there has been a huge private investment into the education sector. Around more than 120 technical colleges exist in each of the big states like M.P.,U.P.,Rajasthan, A.P., Maharashtra, T.N., Karnataka and West Bengal which have been accredited with producing the maximum amount of engineers.  

In India the accreditation authority is AICTE and it has laid strict norms regarding Infrastructure, Faculty Educational and Extracurricular Activities as well as Intake.

The problem with most of these colleges is the intake

1. There is no criterion for selection and no transparency in the selection process.

2. The infrastructure is not adequate for the amount of intake.

3. The business model is not in accordance with the government policy and all these institutes intend to maximise wealth.

These factors were recently highlighted when the government previous year decided to revoke the deemed university status of 8 private universities across India and few more are in the pipeline. Only a few of these colleges come even close to the quality of education being imparted in Institutes of National Importance.

These similar factors were also relevant for the collaborating foreign universities along with the fact that most of them offered courses that did not comply with the Indian norms some were shorter in duration and others were not at par with the Indian standards.

As stated earlier the norm of allowing only section 25 companies to venture into education acted as a repellent since the successful universities followed the corporate model and such conditions would not allow them to easily function and therefore most of the universities extensively market their programs across India and invite Indian students abroad.

 The biggest impact of this autonomy and privatisation drive has been on the pocket of a middle class Indian parent .There has been an unprecedented rise in the fee especially the IIM's and NIFT's have increased their fees manifold and other institutes have followed suit. Around 10 lakhs or so have to be paid in order to get a UG or PG degree from these colleges.

It is an issue of grave concern, though such a fee structure is indeed needed to run such a huge infrastructure and provide quality education and learning facilities. But, not many institutes except the elite provide good placement packages to majority of their students ensuring recovery of these costs in a period of 2-3 years.

Indian Institutes have started to change on the lines of the good foreign institutes like Harvard, Stanford, and Wharton etc. But, they should also keep in mind that students over there get decent opportunities to self finance their education through on campus and off campus part time jobs and here the scenario is totally different most of the education is financed by parents or through loans.

Around 7% of students actually enrol into institutes meant for higher education and in this scenario the figures are bound to worsen evident from the decline in applications for CAT.

So in order to address this situation the current UPA government has taken a few steps

1. The spending on education has been increased manifold.

2.  The fund allotted for scholarships has been increased.

3.  Steps have been taken to streamline the process for entrance by announcing a single entrance exam by 2013 for engineering and medical students.

4. 7 new IIT's and 6 new NIFT's have been started and 5 new IIM's have been sanctioned and started.

The Indian education system is getting inspired by the universities of the UK and US where private universities like Harvard, Stanford, Trent and Cambridge are benchmarks for education. Where we need to look up is the models followed by Canada where 72 Universities exist all of them belong to the state and 65 are amongst the best in the world.

So the government should follow an abridged PPP model so that quality education is accessible to a larger section of society at an affordable cost. This can be easily done by government collaborating with the foreign universities so that proper educational environment could be created and the learning be spread out without commercialisation.