A Pragmatic Solution to India's Education Problem

The education problem of India has many facets, and all cannot be efectively covered in a short article so I am attempting to ofer a big picture perspective here.

The following statistics (for 2008) tell a story:

K-12 enrolment: 37% (132M of the 361M school age children

currently enrolled)

Tertiary education Gross Enrolment Ratio (GER): 11% (21%

in BRIC countries)

Employability of Graduates: 20 % (80 % considered unft for

the workplace)

The benefts of having an educated and skilled population are obvious – not only will it help India’s own development; it will also allow India to beneft from its much younger Demographic profle relative to the world. This need seems to have been understood by the government of India and it has set itself the goal of achieving a GER of 15% by 2012. The focus of this article is not on the intent, but the path chosen by the government to achieve this goal.

The National Knowledge Commission was appointed by the Prime Minister of India, specifcally to propose a solution to this problem. The commission, led by Mr. Sam Pitroda, has suggested, in summary, that the government spend a lot more money to create numerous new institutions, improve the current institutions, and fundamentally change regulation and governance. While the NKC has made some excellent recommendations, it seems uncomfortable with the idea of for-proft education in any segment.

In its report the NKC acknowledges that of the 1700 management schools in India (as of 2007), more than 1000 came into being after 2000, as a result of “entrepreneurial initiative”. Strangely, every single one of these “entrepreneurial” entities is set up as a non-proft.

Broadly in line with the NKC recommendations, the government has announced that it will spend INR 850B (Approx. USD 17 B) in 2007 - 2012 to achieve this goal - 5 times the amount for the previous 5 year period. This money will be spent on new institutions including 30 central universities, 8 IITs, 10 National Institutes of Technology (NIT), 20 Indian Institute of Information Technology (IIITs), three Indian Institutes of Science Education and Research (IISERs) seven Indian Institutes of Management (IIMs) and two Schools of Planning and Architecture(SPA)

“Allowing private enterprise to participate aggressively and openly improves quality, often drops prices, and addresses different segments more effectively thus improving penetration (read enrolment).”

In simple words, the Government plans to do it all largely on its own, with its own money, and by deploying its own manpower. Private participation is expected to be in non-proft / PPP models, essentially of a “non-commercial” nature. Unfortunately, the government’s track record has been quite dismal when it comes to operating educational institutions. Most of the Higher Education system of India is in a shambles, with the IITs and IIMs being visible because they are exceptions, and even these are often embroiled in political controversy.

This is a critical point of time for India, and the decisions taken now will set India up for its success or failure in this century. It is important that the government face the realities of its own abilities, and also look

globally to see how similar challenges have been met elsewhere. Also, I believe we need to fnally get rid of our “License Raj” hang-ups about education being on a higher moral plane, and therefore necessarily non-proft.

The underlying philosophy when thinking about the education industry needs to be not too different from any other industry. The government needs to create strong regulatory bodies. Then the force of private enterprise should be unleashed to address this problem. Over almost 20 years of liberalization, we have repeatedly heard how “this industry is diferent” – be it power or healthcare, and have eventually agreed that it actually was not that diferent, and that allowing private enterprise to participate aggressively and openly improves quality, often drops prices, and addresses diferent segments more efectively thus improving penetration (read enrolment).

Sure, in countries such as the UK and the US, while they do have a strong private sector in education but that was not the force behind increases in the GER. That is because they had the one luxury India does not have – time. To illustrate my point, I would like to quote the example of Brazil – a good example also because it is certainly comparable to India. Brazil also needed to see drastic increases in its GER, but it was practically static from 1991 – 1996. However, enrolments went from 1.9 Million in 1997 to 4.7 million by 2006 – a 150% increase in 10 years. What Brazil did was simply the following:

1. Create a transparent, but rigorous regulatory system. (Similar to the IRAHE proposed by the NKC). The focus was on the academic standards and the learning, not on structural aspects.

2. Encourage private participation in higher-education. They were open to people making a proft, as long as they deliver quality and meet the regulatory norms.

3. Create incentives for the private players to focus on the social and developmental needs of the country as well. For example, in 2004 Brazil ofered a tax break to the private institutions which set aside 10-20 % of their spots for low income students, provided scholarships etc.

I think the simplicity, elegance, and efectiveness of the Brazilian system is something India should learn from.

The government reduces its role instead of increasing it. The money saved in this manner can be utilized to channel and guide the entrepreneurial forces in the right direction (such as funding the tax cuts mentioned in point 3 above), and on creating a strong , transparent and independent regulatory framework. Most importantly, it legitimizes the role of private players, so that the stronger, cleaner and more professional players also participate.

I do not for a moment propose that pure capitalism will lead to equitable growth in such a sector, and believe that the government has an important role to play – especially in the K-12 segment. However, the government needs to choose its battles, and use the private sector as a useful force in its plan for the future. That will unleash vast amounts of capital, intellect, and create the kind of capacity required, and will do so efciently. With the current system, the government not only prevents open private participation, but also attracts private money and intent of the worst kind. With a few exceptions such as the Tata institutions, most private players in India blatantly make money while claiming to be charitable institutions. The education sector is the biggest spender in the print media in the country today. Full page ads for “charitable institutions” scream across the newspapers and all this communication is delivered to the doorsteps of the powers that be every day, and yet we seem to be comfortable in our delusion of education in India actually being non-proft.

I think it is time to take a close look at the facts on the ground as they are today, for the government to recognize its own strengths and weaknesses, and also to realize the power of entrepreneurship. In the telecom sector India added 15 million new subscribers in January 2009. Such numbers are possible because the government allowed private participation while regulating the industry closely. If we could do a fraction of that number in higher education, it will change India’s future.