Issues & Problems

  One of the important failings of Indian socialism was the gross neglect of literacy and primary education.  The contrast is particularly glaring when we compare with communist-socialist countries such as the USSR, Eastern Europe and Maoist China, who achieved a high level of education for the general population/labor force.  One of the less noticed consequences of this neglect is the poor (average) quality of services (e.g. equipment repair, construction & associated repair) and goods of common consumption (including drugs & pharmaceuticals) generally produced by the small scale sector (SSI) and Khadi & Village industries. In the case of drugs produced by SSIs, including spurious drugs, this can have serious consequences. 

   The education sector grew at an average rate of 6.2% per year during 1950-1 to 1979-80.  It continued to grow at around the same rate in during 1980-1 to 1991-2.  Growth has accelerated sharply to an average rate of 9.0% per year during 1992-3 to 2001-2.  This has happened despite,

a)      Government expenditure on education and training decelerating from an average growth (1993-4 prices) of 11.7% per year during 1950-1 to 1979-80 to 6.4% per year from 1980-1 to 1991-2 and further to 5.2% from 1992-3 to 2001-2.

b)      Severe constraints on private provision of education. The Supreme Court (SC) had (earlier) interpreted the constitutional provisions that enjoin the State to provide education to its citizens, as prohibiting private provision of “basic” education (schooling, BA/BSc, MA/MSc).  The definition of “basic” appears to exclude professional courses such as information technology, medicine and engineering.

c)        The SC had however allowed non-profit organizations (societies and trusts) to set up non-governmental schools, so as to “assist/help” the State to fulfill its constitutionally mandated duty. When too many legal elements and rules are grey, profit making educational institutions are not allowed or restricted, and controls are a means to generate personal income, only shady institutions can thrive.


Policy & Regulatory Framework

  With reforms the rate of growth of the sector could be doubled and its quality improved manifold without an excessive strain on limited government revenues.  The education sector in India can be transformed within half a decade given the right mix of policy, regulation and reorientation of government expenditure.  This in turn can have a profound impact on the quality of output in all sectors of the economy and the competitiveness of Indian industry, services and agriculture.  What we need is constitutionally and legally sanctioned competition in tertiary and secondary education, replacement of bureaucratic controls by professional regulations along with private-public partnership to ensure universal primary education within 3-5 years.

The key to success is removal of current bureaucratic controls and interference with aggressively promoted competition by professionally empowered regulators (not controllers).  A policy framework for the competitive supply of education by non-government organization will have the following elements:

a)      Rating Agencies: University Grants Commission /All India Council for Technical Education  / National Accreditation Council / Medical Council of India/ Professional Councils, would Register / License rating agencies in their area of authority / expertise.  Some of these rating agencies will specialize in specific subjects, but others could cover multiple topics or broad areas.  These rating agencies would devise a system for rating the quality of educational institutions and offer their services to all education service providers (private & public). The regulatory agencies must put these ratings and other required information(see below) on a website easily accessible by public.

b)      Private Entry: Free entry of registered societies (non-profit) and publicly listed (education) Companies in all fields of education, subject to the following conditions:

i) Quality Rating: Compulsory rating by accredited agency (prior to accepting any fees from students).  Ratings must be renewed every year at least for the first 3-5 years. Periodicity of compulsory rating can be reduced thereafter.

ii) Transparent Fees & Accounts: Fees must be published and known in advance. Accounts must be audited by a an accredited CA  if revenues/fees received exceed Rs. 50 lakhs (say), and and results made public. Un-audited institutions must publish their basic/ minimum accounts (revenues, expenditure, profits, capital investment, no of students, average fee per student) in prescribed format.

c)      Subsidy Accounting: Any education society that gets below market-price land or other assistance must give means-cum merit scholarships to needy students equal in value to the effective subsidy.

d)     Government Grants/Scholarship: An impartial system for determination of what would be a fair and affordable contribution of parents to children’s education based on family income/ wealth.  This system would also calculate eligibility for education loans and grants.  All those wanting scholarship grants would have to provide the required information so that their requirements of scholarship grants and loans can be evaluated.

  Such and integrated system can be modeled on the government run online system that exists in the US, but modified to suit Indian circumstances. The system would ensure that the poor and lower middle class children get the grants and the middle class the loans that they need to educate children to the level of their capabilities and interest.

e)      Removal/minimization of controls and restrictions: For instance specification of particular infrastructure and/or number of teachers etc. would be redundant, as rating agencies would evaluate institutions based on output, peer evaluation and other relevant aspects.

     However, infrastructure information could be required to be put on the institutions web site along with rating and financial summaries. The comparative information for all institutions must also be put on the regulators' web site in a form accessible to parents/public.


 The reform could be phased in gradually if political/administrative risk aversion makes it necessary. They could start with Tertiary education and extend to Secondary education within 3 years and to Primary education thereafter.  We could also start by freeing entry of Non-profit organizations (domestic and foreign) registered under the societies act, trusts and co-operatives and follow it up with entry for registered education companies(within three years).

 We could immediately allow free entry of A grade global universities (the top 500-1000 universities/colleges in the World, which have been identified by various studies/agencies) into India. 100% ownership of the local unit by the international unit would ensure 100% commitment to quality as they would like to maintain their brand equity.

  B grade global universities would have to register and get local grading like the domestic ones.  The entry of C grade global universities/colleges/ institutions should require prior approval and tight regulation.

Government Resources

  As per ASER surveys, in 2010 nationally, 46.3% of all children in Std. V could not read a Std. II level text. This proportion increased to 51.8% in 2011 and further to 53.2% in 2012. For Std. V children enrolled in government schools, the percentage of children unable to read Std. II level text has increased from 49.3% (2010) to 56.2% (2011) to 58.3% (2012).

  The government should focus its attention and resources on ensuring genuine universal primary education.  For this purpose all types of public-partnerships must be explored (e.g. management contracts, capital subsidies to NGOs). Government school teachers must be made accountable to user associations consisting of parents and grand parents of school age children and/or local government.  This can be done by giving authority to these associations (progressively) to (a) Grade teachers (negative marking for class absence), (b) determine a part of their salary (10% say) and finally (c) to dismiss them depending on the grade teachers receive over 3 to 5 years. In the medium term, all government primary schools must be provided with broadband connectivity, so that they can be provided better assured, quality teaching through a virtual class room system (e-schools)

Government’s higher education funds should be focused on promoting science education, generation of PhD s & good college/university teachers and financing of R&D in all subjects.

Case Study

 The Directorate General of Shipping (DGS) has pioneered an experiment in India to encourage regulated private entry into education. Maritime training was opened to private sector in 1996-97 with DGS authorising three credit rating agencies (CRISIL, CARE & ICRA) to rate the training institutes as well as individual courses.  This was followed up by the introduction of post-completion independent testing of students.  Two professional bodies, the Company of Master Mariners (CMMI) and Institute of Marine Engineers India (IME) were contracted for this purpose.