I presume none would disagree if we defined one of our important goals in the area of higher education as follows: To enable every one to get a higher education in the subject of one's choice to the level one desires. Assuming a consensus on the objective, what is more important - the means (ways of increasing supply of higher education so every one has access) or the end (ensuring enough supply for all)?
It is extremely sad that our policy advisers seem to consider the means to be more important than the end, even if the choice of means makes it very unlikely that the end can be achieved. Our policy advisers are so caught up with ensuring "equality" and "non-commercialisation" of the means that they are losing track of the fact that we are moving farther and farther away from achieving the end. Fortunately, we have grown out of this thinking in our approach tox other important objectives like providing food, clothing, shelter and health care for all, but we are still mired in it in the area of higher education.
The Central Advisory Board of Education (CABE) Committee on Financing of Higher and Technical Education (CABE Committee), headed by Planning Commission member Bhalchandra Mungekar, submitted its report on Financing of Higher and Technical Education, to the Human Resource Development Minister Arjun Singh recently. I have not been able to find a copy of the report online but The Hindu (July 08, 2005) reported on the recommendations of the Central Advisory Board of Education (CABE) Committee on Financing of Higher and Technical Education (CABE Committee) and has stated the following.
- Since revenue generation through student fees beyond 20 per cent of the recurring requirements of universities could well affect access to higher education, the Central Advisory Board of Education (CABE) Committee on Financing of Higher and Technical Education (wants the fees to be capped to yield not more than 20% of revenues) and has favoured a progressive taxation system where the affluent are taxed more to benefit the middle and lower income groups. While the committee preferred a "sound differential fee system" in higher education based on the principle of 'ability to pay,' the practical difficulties in implementing such a regime have made it suggest a progressive taxation system with the proviso of looking at more than just the income tax.
If the fees are to be capped at 20% of the recurring expenditure, where will the rest of the 80% come from? The CABE Committee wants to raise it from fresh taxes, but how much can be raised from taxes other than the income tax. We already have an education cess - are they proposing increasing the education cess beyond the current 2%? We need to do the sums to see how much that will generate and if that will be enough.
Assuming the government somehow manages to raise the 80% through fresh taxes, how is the government going to channel the funding to the student? Will it be through the institution or directly to the student? If the government asks students to pick the institution of their choice and then pays the institutions the 80% shortfall based on the number of students enrolled, it would be better. But if the government makes grants directly to the institutions, then there is room for favouritism in disbursing grants, misue of grants and government interference in the running of the institutions.
The government does not have the funds to bridge the gap and underwrite the 80% and I have serious doubts about raising enough through fresh taxes to bridge the gap. The private sector has no motivation to step in here, since this is precisely the kind of adverse selection that Pratap Bhanu Mehta says will discourage the private sector from getting involved. If private parties are not allowed to recover the costs, and have to raise fresh capital each year just to bridge the 80% shortfall, it simply won't be worthwhile for the private sector to invest in education. If the private sector is disincentivised, let alone not being incentivised, the supply will never increase.
- Student loans will be counter productive in the long run "creating a view that higher education is not a public good but a highly individualised private good as the responsibility of funding shifts from the State to households [through introduction of fees] and within families from parents to the children themselves [through loans]."
The committee believes that higher education is a public good and should therefore be provided by the state for free to all. If that would be possible, that would be ideal and I would be all for it. But in the practical world, that's never going to happen. The state simply does not have the funds to provide higher education to all for free. If the committee's objective is to really provide higher education to all, which is what the objective ought to be, the end is far more important than the means and we should explore every possible way to increase the supply of education and enable students to pay for their education, if the state can't provide it for free. Loans are an excellent way of doing so and I am unable to understand what the counter-productive effect will be.
If the choice is between not providing higher education for all and higher education for all funded by loans, to be repaid by students after they land jobs as a result of their education and begin earning, there is no argument - the choice has to be the latter. The debate on education being a public good or not is moot, at least till the state is in a position to fund higher education for all. Indeed, using loans to fund education now might help the state get to the point of funding education for more students if not all, since every new student, with an education funded by a loan, who joins the workforce will increase productivity and output and as a result tax collections too.
The loan model works very well in housing and has boosted the housing stock and enabled millions of people to own their homes. In the case of housing, one could argue that loans could end up stimulating speculative investment in real estate causing booms and busts, but investment in education can never be speculative in the way it is in the housing sector. One invests in education for oneself only for benefiting from it directly and not to create multiple saleable assets that appreciate over time.
- If the total allocation for education is raised to the elusive six per cent of the Gross National Product (GNP) from the current four per cent, then higher and technical education should get at least 1.5 per cent of the GNP. Of this, one per cent should be for higher education and 0.5 per cent for technical education. At present, about 0.4 per cent is spent on higher education and 0.1 per cent on technical education.
At the current level of education spending of 4% of GNP, 12.5% of total education spending is allocated for higher education. The CABE committee wants to double this so that 25% of total education spending is allocated to higher education if the total education spending is raised to 6% of GNP. This can only happen at the expense of funds allocated to primary education.
By qualifying their statement with a big IF, the CABE Committee themselves seem to be doubtful on the possibility of raising the allocation for total spending on education to 6% of GNP. But even if we somehow managed to achieve that, how does one justify spending more on higher education at the expense of primary education when many children get no education at all whatsoever? The state has a far greater role to play in ensuring supply of primary education, especially in the rural areas and small towns, where it is in short supply. As much of state funding as possible should go to ensuring universal access to primary education first - loans simply cannot work at the primary level. Is this just a case of each one asking for more for onself, with the higher education policy makers asking for a bigger share for higher education and the primary education policy makers asking for a bigger share for primary education, or does the CABE Committee have a justification for asking for an increase in funding for higher education at the expense of primary education?
- Growth of self-financing courses in higher education institutions and private higher education should be regulated to avoid vulgar forms of commercialisation. While stating that philanthropy in education should be encouraged by the Government through appropriate fiscal incentives, the committee noted that the "overall role of private sector in education cannot but be limited."
I agree with the committee on the need to regulate higher education (both public and private) to ensure high quality and standards and avoid the kind of situation we had with the various fly-by-night universities that cropped up in Chhattisgarh. But I am unable to understand why the emphasis is on the "growth" being regulated and wonder if it is a freudian slip - do they actually want to regulate the supply or regulate the quality?
On the one hand they say philanthropy in education should be encouraged with fiscal incentives, but by capping fees, they are providing a very strong disincentive as mentioned earlier. The committee also seems to have made up its mind that the role of the private sector has to be limited - that is a very strong statement of their emphasis on the means. Indeed the very reason for fee caps seems to be to disincentivise the private sector from getting involved. The CABE Committe is glossing over the fact that the government does not have the funds and is unlikely to raise enough in the near future and without substantial private funding, there is no hope of achieving the end of providing higher education for all.
- foreign universities that enter India with a view to exploiting the situation here and essentially to raise resources need to be prevented." there should be tough and detailed regulations to enable only those foreign universities having high academic standards wishing to provide good quality education to use the provisions in WTO/GATS to enter the higher education scene in India.
Again, I agree with the committee on the need to regulate the operation of foreign universities in India to ensure high quality and standards. But their emphasis on "tough and detailed" regulations to prevent foreign universities from "exploiting" the situation here and "raising resources" is indicative of an attitude that is a relic of the colonial past. They seem to be worried that foreign universities would come in to India, charge high fees and take the money out of the country.
As long as we can regulate the foreign universities to ensure high quality and standards, I would not really worry so much about their taking money out of India. In fact, they are already taking money out of India even without having a presence in India and the government and the policy makers can do nothing about that. A back of the envelope calculation indicates that there might already be a flow of close to a billion dollars a year from India to the U.S. through students who go to the U.S. for higher studies, paying for their education in U.S. universities. Add to that, the outflows to the U.K. and Australia, two other countries who have been aggressively recruiting in India in recent years and it would be a sizeable sum. If we allowed foreign universities to set up campuses in India, we might actually curb this outflow substantially since many students might opt to stay back in India and enroll with the foreign universities in their Indian campuses and we would save on the outflows that currently go to cover living expenses abroad.
The focus of the debate on funding higher education in India has to shift from the means ("fee-caps", "equality", "regulating growth", "non-commercialisation", "exploitation") to the end of ensuring higher education for all through a variety of means through both state and private finances, but with proper regulation aimed to ensure high quality and standards, not just in private insitutions, but in public institutions as well.
We need to lobby with the policy makers to change their emphasis from the means to the end and also ask them to set targets for increasing the supply of higher education and hold the regulators accountable to those targets, so that the regulators focus on encouraging and incentivising growth of supply, while making sure quality and standards are adhered to.
