Education in India

National Education Finance Corporation - Why has the MHRD abandoned it?

This seemed like a very good idea. The HRD Minister, Kapil Sibal, proposed the idea for a National Education Finance Corporation in early 2010, and expanded on it in the Rajya Sabha by making a persuasive case for it.

Under the present policy framework if you want to set up an institution there is no Government agency that can finance you.  So, there is no access to finance to setting up a new educational institution.  So, he will have to go to the bank to actually get financing from the bank at the lending commercial rate.  Now, human resource development is not considered as an infrastructure development and the Supreme Court has said that this is charity, this is for public service.  So, an activity which is for public service has to borrow if he wants to set up an educational institution at commercial rates.  But, an activity which is in the infrastructure sector, namely physical infrastructure, you can borrow at softer rates because that is priority sector.  So, what the policy framework within which we are working is, that anybody who wants to set up an educational institution should have access to finance. That is the first purpose.  This has nothing to do with UGC.  Secondly, if you set up an educational institution, under the present guidelines you will get grants from the UGC or from the Government or under schemes of the Government only when you have achieved certain milestones.  Now, in the meantime if you want to enhance your infrastructure -- and nowadays, with research and development expanding exponentially -- you need new capital investment.  There is no way that you can get finance.  You have to cross many milestones.  So, when you want to set up an educational finance corporation, our objective is that anybody who wants to set up an educational institution should have free access to finance as a priority lending sector.  What happens is, when you call it charity, State Government control fees.  Once it is charity, State Government control fees and they cannot increase fees in their institutions.  Many of them do the kind of practices that they are doing and that is the root cause of the problem.  When they will have free access to finance and every child has free access to loan why will he need to sell the family silver to enter into an educational institution?  So, I think it is the need of the hour and I would require you to give me suggestions as to how we must move forward because unless we build that infrastructure and capital we will not be able to move forward.

Kapil Sibal's proposal was welcomed by a few other MPs during the discussion in the Rajya Sabha.

But the Planning Commission apparently raised some objections and the MHRD seems to have given up on the idea.

"Proposal for setting up of National Educational Finance Corporation (NEFC) was prepared and sent to Planning Commission for concurrence. Planning Commission has raised certain objections to the proposal. Therefore the proposal was not taken forward." Source: Lok Sabha UnStarred Question No. 4410 Answered on 21.12.2011

I wish the MP, Rajaogpal Lagadapati, who asked the question had raised a supplementary question about what the Planning Commission objected to and whether the MHRD is pursuing any alternatives, or has given up the idea for good.

A report in The Hindu (May 10, 2010) throws some light on the Planning Commission's thinking on the NEFC as well as the idea of providing loan guarantees:

The Planning Commission has suggested that the Human Resource Development Ministry examine the option of setting up a loan guarantee authority as a separate division within the purview of the proposed National Education Finance Corporation (NEFC).

The proposed NEFC aims at refinancing student education loans and institutional loans at concessional rates with longer repayment, which will help expansion and new investments in the higher education sector, particularly universities.

While putting the NEFC on a “fast track”, Planning Commission Deputy Chairman Montek Singh Ahluwalia reportedly told the Ministry to also look into the possibility of creating an authority that would stand guarantee for education loans to students or institutions who borrow money for investment in the higher education sector, instead of only refinancing.

 Mr. Ahluwalia is said to have suggested to the Ministry that both the options of refinancing and standing guarantee could be brought under the purview of the NEFC. The proposed NEFC would have two divisions, one as a loan guarantee authority and the other to deal with infrastructure loans.

....

If the NEFC stands as a guarantor, it will have to pay only for defaulters, who would be few. The Ministry, open to the new suggestion, is working out mechanisms to cut down on defaulters before approving the loans.

The refinancing of loans for investment is also expected to curb capitation fees, since, at present, investment for infrastructure has to be borrowed at commercial rates where the interest is high and the repayment period short. To avoid this, institutions often borrow money from the market, and in order to repay it quickly, charge capitation fees from students. Once the loan is repaid, the capitation fee turns into profit. With the availability of soft loans, this is expected to come to an end.

The NEFC will refinance to the bank at a lower rate the sanctioned loan that it releases to the student or an institution. The bank makes its margin from the difference in interest rates, while the NEFC will use the educational cess released by the government, which is free of cost and also borrows from the market, so that the average cost of funds advanced as loans is lower than the rate at which it lends to banks. This differential rate will be the NEFC's margin or profit.

The Planning Commission doesn't seem to have objected to the idea of the NEFC per se - it has only provided constructive suggestions on how the NEFC could also look at providing student loan guarantees.  The report in The Hindu had indicated that the MHRD was open to the Planning Commission's idea and was working on incorporating it into the scope of the NEFC.

Why then is the MHRD claiming now that the Planning Commission objected to the idea of the NEFC and citing that as the reason for abandoning the idea of the NEFC altogether? An eminently sensible idea seems to have been buried quietly. The MHRD needs to explain its thinking instead of providing bland statements.

Periscope 3: Biometric fingerprint scanners for teachers, Professors turn entrepreneurs, Revolutionising education?

• Biometric fingerprint scanners in schools - not for students, but for teachers! 

The Haryana government has decided to introduce biometric fingerprint scanners in around 2,622 government schools across the State in an effort to keep a check on teachers and deal with increasing absenteeism. [FutureGov]

• Humanities professors turn entrepreneurs! - spot opportunity in humanities education amidst budget cuts for state colleges and set up the New College of the Humanities [Economic Times]

• Experiential learning: College students set up and run a business on campus at PSG Institute of Technology, Coimbatore. The responsibility for the business is passed down to junior batches as the seniors graduate. An excellent hands-on entrepreneurial experience for the students during their college years. [Livemint]

• Technology and the Internet are going to revolutionise higher education - but how?

"I have a vision for where this is going to go," [Gagan] Biyani [Udemy's co-founder] tells me. "The price of college is going to fall, and the Internet is going to cause that fall." He pauses and adds, "The rest of it is really difficult to figure out."

But will the revolution be led by the colleges? Unlikely, says Derek Thompson.

Colleges rarely think about efficiency, because all the signals tell them to spend more money on fewer students. Theoretically, the most efficient school would give the highest quality education to the most people for the lowest price. In reality, national rankings reward universities for rejecting the highest number of applicants, teaching the fewest number of students per class, and spending the most per capita on resources. That doesn't mean colleges are failing. It means the system suffers from an incentive to be inefficient. [The Atlantic]

Special Education Parks (SPED Parks) for rapid expansion of the supply of education

We are facing an acute shortage of schools and colleges today leading to high-cutoffs and high reservations. We need to find ways of setting up many new schools and colleges quickly - in the urban areas where the population density is steadily increasing and in the rural areas where there are not enough schools and colleges. Special Education Parks (SPED Parks) might be a way to address the shortage.

The real estate and transportation angles to increasing the supply of education

Apart from the academic challenges of what to teach, who will teach and how to teach, there are two other challenges in increasing supply:  real estate and transportation. In the urban areas, the real estate problem is going to be very acute, but in the rural areas real estate less so and transportation more so.

Let's look at urban areas first. Where is the space for new schools or colleges to start up in the cities? Or for that matter existing schools or colleges in the cities to expand? All the real estate in the cities is being taken up for residential and commercial development, a creeping phenomenon that also yields far higher returns, far quicker, than running a school. The Government itself will be unable to acquire land in the cities to build new schools. We will probably see skyscraper schools and colleges not too far in the future.

With supply falling far short of the demand, there is severe competition amongst parents to get their children into the schools that do a reasonably good job. Even average schools are now in a seller's market - they are able to charge a high premium and/or "donations". The schools demand that parents comply with their "rules and regulations" and get away without transparency or responding to parents' requests, complaints and queries (not that all schools do so). Parents have little choice but to meekly acquiesce, for fear of being asked to "take it or leave it."  Frustrated, parents are now putting pressure on the Government and the legislators and demanding fee caps (sometimes to an unreasonable extent) and other kinds of controls on school managements to rein them in.

Many schools ration the number of application forms doled out and parents are more than willing to stand in queue for over 12 hours including an entire night just to be able to get their hands on an application form. Some parents even choose to shift their residence closer to a desirable school since some of those schools restrict admissions to students living within a radius of a few kilometres from the school. Those parents who are unable to get their kids into schools in the neighbourhood have no choice but to look for schools farther away from their residence. The demand for schools in the suburbs has also been going up, and the shortage of land for schools is just as much even in the suburbs and areas farther out. It will only get worse.

If parents are able to get their children into schools that are farther away, the next challenge is transportation. Many schools do run school buses, but children have to put up with long commutes in packed buses, whether it be a school bus or public transport. Buses are hostage to city traffic during peak hours.

Higher education faces the same problem too. The recent hue and cry about high cut-offs for admission to Delhi University Colleges is a manifestation of the huge gap between supply and demand in the number of available seats in good colleges. The thousands of crores a year industry that has sprouted up to coach students for the IITs, IIMs and other institutes is another manifestation of the same. On some occasions, age has to be used as a tie-breaker when too many candidates, who have all scored maximum marks, apply for too few seats. Capitation fees and donations abound in higher education too.

What will be the situation 10-15 years from now when millions more of students will be looking for access to school and college education if there aren't enough institutions to cater to their needs?

What can we do today to address this growing problem?

A trend in Chennai could be a pointer to the way to go. When the Tamil Nadu Government encouraged the setting up of self-financing engineering colleges starting in the early to mid nineties, many colleges sprouted up to address the needs of students in and around Chennai. With enough land not being available within the city or in the suburbs, the colleges went beyond the suburbs. Today there are over a 100 engineering colleges scattered across Chennai and its two neighbouring districts within a 40-50 km radius of Chennai. Every day, each of these colleges runs a fleet of buses to pick up the students in the morning from various points in the city and drop them back in the city in the evening, with the buses presumably idling the whole day. If all the colleges that are serving the needs of Chennai's students had been clustered together in 5 locations of 20 colleges each, that may have turned out to be a more optimal arrangement in many ways.

The Special Education Park (SPED Park) model

Tweaking the Chennai model a bit, we could look at setting up Special Education Parks (SPED Parks) around the major metros and Tier 2 towns across the country . Here's how it could work.

 

A city (a metro or say a city like Bhopal or Vishakapatnam) identifies a large area (about a few hundred acres) beyond its suburbs as a Special Education Park (SPED Park). The Government acquires the land and invests in building a large number of government schools and colleges in the SPED Park and also offers land to private parties, for a price, to set up many more schools and colleges in the SPED Park.

The city builds a fast Metro Rail line or a Bus Rapid Transit Road (BRT) connecting the SPED Park to various parts of the city through the Metro network and the road network to provide quick, noiseless, pollution-free and safe access to the SPED Park for a large number of people. The SPED Park is divided into a school sector and a college sector with a number of schools and colleges in their respective sectors. All schools share large common playgrounds and sports facilities, a large auditorium, a very large state-of-the-art  library and laboratory facilities. All colleges share a set of hostels, a large library and also other facilities like state of the art laboratories,  a student activity centre, a hostel, an auditorium, a food court and sports facilities. The Metro/BRT terminus of all the multiple metro/BRT lines coming into the SPED Park is centrally located in the SPED Park and all the schools and colleges in the SPED Park can be within a 5-10 minute walk from the Metro terminus. A frequent local shuttle service can also be organised from the Metro/BRT  terminus to different parts of the SPED Park.

The benefits of the SPED Park model

• Today every school needs to invest in land not only for the classrooms but also for a playground, library and laboratory facilities and buses which are usually idle for a good part of the day and also idle during the winter and summer holidays. In a SPED Park, many schools can share all of these facilities thereby defraying the investment in the infrastructure across multiple schools. This can result in substantial savings of capital expenditure and optimal capacity utilisation of real estate and transportation. 
• The schools/colleges can pay a usage fee per month per student to enable their students to gain access to state of the art laboratories and libraries and other facilities. The institutions don't each need to invest in capital expenditure anymore. They only need to incur monthly expenditure based on the number of students on their rolls. The common infrastructure can be set up and run by an infrastructure company that invests in the capital expense and charges schools for access to the infrastructure to recover its investment over many years. This can be termed as an infrastructure investment akin to that in roads, ports, airports etc.
• The SPED Park model will help to quickly expand the supply of schools in a city at one shot in a concentrated manner - a highly cost effective solution.
• The Metro/BRT will be a cost efficient form of transport and can run trains/buses every couple of minutes during the peak school commute hours of 7.00AM to 8.00 AM to transport  the school and college students to the SPED Park and then redploy all those trains/buses to run on various other lines across the city through the day and back on the SPED routes in the evening to let students return home. This will result in optimal usage of the transport facilities.
• The cost of laying a Metro/BRT corridor from the SPED Park to various points in the city should be borne by the Government. Any student with an ID card can be allowed to travel free on the Metro/BRT by swiping his or her ID card. In case the Government wants to recover a part of the transport costs, it can recover a nominal amount per student per month from every school rather than asking each student to pay for transport separately.
• The clustering of schools and colleges can be advantageous in many ways. Schools and colleges can not only share infrastructure but also ideas, and learn from one another. They may even be able to share teachers. Within a SPED park, various other extracurricular activities can also be scheduled in the school zone from sports competitions, cultural competitions, public lectures etc to reach out to a large number of students.
• Housing colonies for teachers and the other staff working in the SPED Park can also be built adjacent to the SPED Park to enable all those working there to live close to their workplace. Indeed, the SPED Park can become the nucleus for future satellite townships.

In the case of rural areas, the SPED Park model can be adapted to suit the rural needs. Unlike in the cities, the population density is far lower in the rural areas with the population scattered across many villages. A rural SPED Park can be set up (for e.g. in small towns like Namakkal in Tamil Nadu or Barmer in Rajasthan or Kalna in W. Bengal) to serve all the villages within a 40 km radius of the town. The key will be to ensure reliable and safe bus services linking all the villages to the SPED Park to enable students to reach the SPED Park from their villages. Any student with an ID card can be allowed to travel free on the buses to and from the SPED to their villages. Every SPED Park can have a cluster of schools and colleges (for vocational education, arts and sciences, engineering, medicine, nursing, teacher training, management etc..). Indeed, Business Parks can be built adjacent to SPED Parks to house manufacturing and service businesses to provide employment opportunities to all those students graduating from the colleges in the SPED Park.

To implement a SPED park will require investment and a rethink on a variety of policy fronts:

(a) the real-estate and zoning plan for a city/town and its outskirts to plan for the city's radial growth for the next 20-30 years including the needs of satellite cities and towns.

(b) the transportation plan for a city and its satellite towns and suburbs in the urban areas and for a town and all the villages within a 50km radius of the town.

(c) our existing regulations for educational institutions that require each and every school/college to have a playground of a certain size, laboratories of a certain size, a separate library etc. If mobile phone companies that compete very aggressively in the market for customers are able to share tower infrastructure without any problems, there is no reason why school/college infrastructure cannot also be shared.

We need to ask ourselves the following question:

Knowing what we know today, if we were to design a set of rules, regulations and policies and set up the infrastructure to help us achieve our goals of

A. providing a  quality school education for every single child and

B. increasing the Gross Enrolment Ratio for higher education from about 12 to 25 or 30, and

C. most importantly, achieve these goals without fail by 2020,

what kinds of rules, regulations and policies should we have today?

The answer to that question will be quite different from the regulations and polices that we have today, which were conceived in very different times. If we are to achieve our goal of providing a quality education for all in a timebound manner, we must ask and answer this question without being hostage to our legacy views on education.

The solution to high cutoffs? It is the supply, stupid!

When the Education Minister, Kapil Sibal terms the 100% cutoffs as "irrational" and a setback,  it is he who is being irrational. The colleges announcing these high cutoffs are being as rational as they can be under the circumstances. If a few tens of thousands of students are chasing a few hundreds or may be a couple of thousand seats in colleges in Delhi, the colleges have no choice but to announce a cutoff to filter out students. Of course, everyone wants to study in a reputed educational institution. 

The much sought after Shriram College of Commerce in Delhi announced that the cutoff marks for the B.Com Honours course in their college would be 100%. It seemed that anyone who scored 99.5% wasn't good enough to join that course.  The college principal tried in vain on national television to defend his college arguing that the cutoff applies only to a very miniscule number of students who had not studied any of the commerce subjects in Class XII, yet wanted to apply for a B.Com course in their college. Even a 100% cutoff may not be enough to solve the college's problem if the number of seats for such students were just a handful and there were far more than a handful of such students who had scored 100%. In such a situation, it would effectively have to be admission by lottery with, the college needing to resort not to marks, but a random draw of lots to pick a handful of the students who had scored 100% out of hundreds of such students.

The IIT JEE with a lakhs of students fighting for thousands of seats is another high cutoff at play.

Today, we are living in an age of high cutoffs, just as much as an age of high reservation in educational institutions. The solution to address both these problems is fairly obvious. It is the supply, stupid! We've been through policy constrained supply shortages in the past in other sectors like food, telecom and transport and have found our way out of the rut we were stuck in .We need to do the same again in education. To the Government's credit, it has been trying to do its bit by trying to expand the number of IITs and setting up a few new institutions from scratch, but that is just a drop in the ocean.

What can we do to make high cutoffs and high levels of reservations redundant? Here are a few ideas worth considering and debating.

• Expand the supply of education rapidly.

More institutions will mean more students will have access to education. The rapid expansion of the supply of engineering colleges in Tamil Nadu in the early nineties has demonstrated a large number of people gained access to engineering education that was till then unavailable to them due to sheer shortage of institutions. Of course, there were quality and execution challenges in the process. When there is rapid expansion, variable quality and poor execution are inevitable in the short term, but they can be addressed over the long term by taking appropriate steps as outlined below.

• Permit a diversity of options in institutional structuring and funding

The Government today knows that it is in no position to expand the supply of education rapidly all by itself. It simply does not have the finances to do so.

We must allow educational institutions to be set up and run by the Central and State Governments, private players or through public-private partnerships of all varieties. Educational institutions should also be given the freedom to choose to incorporate themselves as non-profits, for-profits or any other mixed variety, as trusts, charities or companies. This flexibility in institutional structuring and funding will attract a large number of social and commercial entrepreneurs to the education sector who in turn will attract a huge level of investment into the sector to help expand supply rapidly.

Setting up and running educational institutions can be declared as a "priority sector" so that public sector and private sector banks can freely fund the capital expenditure required to set up thousands of new educational institutions and also to fund the working capital required to run the existing and new institutions (Currently, only educational loans to students are termed as priority sector). Even you and I should be allowed to invest in a education sector mutual fund which could aggregate the investments of a huge number of citizens like us and fund experienced educational entrepreneurs to set up and run more institutions for a reasonable rate of return.

• Ensure high quality standards through strong regulation. But DO NOT regulate the growth of institutions.

We must set up a national Registrar of Educational Institutions (REI) akin to the Registrar of Companies to regulate all accredited schools and colleges. The REI will be responsible for regulating all Government, Private and PPP run educational institutions. Every accredited educational institution (both in school education and higher education) will need to register with the REI and set up a board of directors who will be responsible for the institution and liable for statutory compliance. This registration process will be fairly straightforward to start a new institution - as easy as the procedure to set up a new private limited company.

Quality must be constantly monitored not only  in terms of the availability of infrastructure, finances or the general reputation of the educational institution, but also through the results of output testing of the knowledge levels and understanding of the students passing out, through standardised state-wide or nation-wide tests.

Every educational institution will be mandated to get itself rated once a year by a professional rating agency certified to do so by the REI. Every institution's rating shall be made public by the rating agency. The rating agencies will not be commissioned and paid by the educational institutions themselves- but will be allotted at random by the REI to prevent the institutions from shopping around for a sympathetic agency. The rating agencies will be paid by charging every student in an institution a small rating fee per year which will be paid to the rating agency. The educational institutions will not be allowed to suppress the rating agency's opinion/rating. If an institution is dissatisfied with a rating, it may petition a tribunal under the REI and the tribunal will decide whether to let the published rating remain or if the institution needs to be re-rated by another rating agency.

• Mandate and ensure information disclosure and an extremely high degree of transparency to eliminate information asymmetry.

The REI will require mandatory annual financial audits of every educational institution by a firm of chartered accountants and the audit reports will be made public. The REI will also mandate e-filing of detailed quarterly and annual reports of the assets and liabilities, the finances, fee structure, academic and administrative performance of each and every institution.  The REI will make public all the information filed with it by publishing it on the Internet for anyone to access. Parents and other interested parties will be able to review the school's performance on an ongoing basis. Those for-profit schools that make profits will have to be fully transparent about their income, expenditure and profits. This level of transparency will result in intense competition, thereby keeping the school managements on their toes. Anything that one good school does well can be picked up and copied by other schools, thereby raising quality standards overall and preventing monopolies or inefficiencies through lack of information. There will still be loopholes or even structural lacunae that may enable some schools to generate higher than average profits, but such loopholes and lacunae can be addressed with appropriate legislation or policy as and when they are discovered.

• Enable transfer of control of educational institutions from managements of poorly run institutions to those of well run institutions.

Most importantly, by enabling corporate structuring in the form of commercial entities along with a high degree of transparency, experienced school managements will be in a position to take over poorly run schools by paying the managements of such schools a consideration for buy out. Such changes of ownership and the consideration paid will also be made transparent to the public. The Government may also permit government schools to be taken over on contract by private school managements under this model, with the Government providing the funding and the private schools taking care of running the school. One of our biggest challenges today is to unlock the potential of poorly run government and private educational institutions.  A lot of money has been invested in these institutions over the years and yet they are not being run well. In the purely non-profit regime, the managements of such poorly run schools (whether they are the government or private parties) have no incentive to cede control to any other party since they cannot personally profit by taking financial or other compensation for handing over the schools to some other management.

Corporates may be able to set up universities through section 25 companies

according to the Business Standard.

“We have received requests demanding this route. The government is exploring the possibility, as it could be allowed under Section 25 of the Companies Act,” confirmed Sunil Kumar, joint secretary, Ministry of Human Resource Development (MHRD),
......

At present, educational institutions in India can be set up only by trusts, societies or companies, and it is not possible for non-profit companies, like industry associations, under Section 25 of the Companies Act, to set up institutions and get recognition from the University Grants Commission. In the primary and secondary education space, however, the Central Board of Secondary Education (CBSE) allowed companies registered under the Act to start private unaided schools last year.

Some higher education institutions have taken this route in the technical education space to escape policing by the All India Council for Technical Education (AICTE) — the body that regulates technical education in the country. For instance, many management schools have gone the Indian School of Business (ISB) way, opting for a one-year management programme (against the conventional two-year courses), and have registered themselves under Section 25 of the Act.
....

Educational institutions in India, which are set up by trusts or societies come under the purview of the Charity Commissioner, who is appointed by a state government. Section 25 of the Act, on the other hand, comes under the Central Board of Direct Taxes (CBDT), thus reinforcing the control of the Centre and not the state over the manner in which the institutions are run and financed.

However, in both the structures — non-profit or society and trust — profits cannot be taken out of the institution and have to be reinvested. Institutions registered under the Act have to use their profits, if any, in promoting the institutions. The Act also prohibits the payment of any dividend to its members. The association may enjoy all the privileges of charitable trusts, but are scrutinised by the Income-Tax Department and not Charity Commissioner, unlike limited companies.

MHRD says it is still studying the way out for students if an institution set up under the Act winds up and its assets are to be transferred to another similar institution. “As of today, if an institution set up by a society winds up, its operation and properties are transferred to another institution. But in this case, we are still studying what route a non-profit entity could acquire if it faces a similar issue,” added an HRD official.

Experts add, this arrangement will allow standards for centrally-administered institutes to be cleared by one central authority rather than different standards for different states

This was actually mooted a little over an year ago. But why all this hoopla? What is the difference between being a trust, a society or a section 25 company? What is the difficulty with a section 25 company setting up a university? A study on charities in India throws some light with a comparison of a section-25 company, a society and a trust across various parameters.

There is one uniform law across the country for companies, the Companies Act, 1956. It is this robust law protected by powerful commercial interests that makes it very difficult for the state government to take over a section 25 Company. The company form is recognised all over the world, it is more closely regulated and monitored than trusts and societies.

But the confusion still remains. Why should the state want to take over or dissolve a section-25 company running a university? In the event of the incumbent management of  a section-25 company running a university mismanaging the university, shouldn't the state be facilitating a takeover of the mismanaged section-25 company by any other interested party capable of running the university well? When the fraud at Satyam Computers came to light, the state didn't take over the company. It only appointed an independent board of directors comprising of experienced and respected professionals who set the house in order and found another entity willing to acquire the assets and liabilities of Satyam and run it going forward.

More questions than answers at this point of time.

Procedures to start a new school in Tamil Nadu to be streamlined

says, The Hindu.

A committee, headed by M.P. Vijayakumar, former State Project Director of the Sarva Shiksha Abhiyan (SSA), is now holding public hearings and it will submit its report to the Government/Department of School Education shortly. While the committee had its sittings in Chennai and Coimbatore, it will hold its hearing in Madurai on July 4 to receive suggestions from schools in southern districts.

 When someone wants to start a school or get the mandatory renewal for a school, he/she has to go through many procedures. So, the State government has constituted a committee to address the issue," Mr. Vijayakumar, committee chairperson, told The Hindu here on Sunday. The government was "seriously concerned" over the difficulties faced by school managements in getting the necessary clearance and certificates. "For instance, every school applies for renewal once in three years and there are cases where it takes two years to get the clearance. By the time, the next renewal becomes due. This was brought to our attention at the two hearings held so far," Mr. Vijayakumar, who is also an honorary advisor to SSA, said.

    According to him, the committee would hear directly from all stakeholders - State Board/Matriculation Board and nursery schools - about difficulties they encounter. Mr. Vijayakumar said the final report would be submitted in about a month.

It would be interesting to see what the report has to say. In an earlier post, I had looked at Mayank Wadhwa's note on the licenses required to start a school in Delhi.

Update: The Hindu carried a report on the public hearing at Madurai on July 4th. 

“The State government is seriously concerned over the delays in obtaining recognition certificate for starting a school and also at the time of renewal. So, this committee was formed to look into the means for simplified and streamlined procedures,” Mr. Vijayakumar said in his opening remarks.

He said that the objective of forming the committee was to examine how to reduce the time taken by various departments for issuing the mandatory certificates to schools in both urban and rural areas.

The common suggestion that came from the school correspondents and principals was that the officials of School Education Department in all districts must have powers to deal with issuing of certificates if all parameters were satisfied as per the Government norms.

Town planning approval, Fire Department certificate, building stability certificate, local body approvals and license from the tahsildhar were among the topics discussed. Some participants suggested that the norm of obtaining renewal certificate by private schools once in three years can be revised to at least five years.

“Every time we go for renewal, documents and photographs of buildings have to be submitted. That practice may be done with to simplify the job for both the schools and department officials,” a school Principal said.

GEMS to invest US$408 million in UAE schools, expanding capacity by over 20,000

After expanding into the U.K. (11 schools now) and India (6 schools now), they are now on planning to provide more than 20,000 new school places in the UAE, their home base, and foraying into South Africa.

According to a report in The National,

Plans to provide more than 20,000 new school places in the UAE have been announced by the Dubai-based Global Education Management Systems (Gems). The Dh1.5 billion (US$408 million) expansion will focus on Abu Dhabi, Sharjah and other emirates.

Gems, which runs more than 75 schools worldwide, is also looking to significantly increase its international reach. The company’s mission is to become the “leading provider of education and learning management services” globally, said Dino Varkey, senior director for business development at Gems. It is currently developing plans to open schools in South Africa, where the company already has a strong presence, and in other nations.

Gems has 25 schools in the UAE with about 70,000 pupils, which it says equates to a 14 per cent share of the total UAE education market. It is the single largest employer of British and Indian teachers outside the UK and India. “The UAE is still our home business and there is a tremendous amount of growth,” said Mr Varkey.

As it grows, Mr Varkey said Gems plans to move away from owning the school buildings in order to concentrate instead on running the schools. “Because we’re an education company, we’ll try to separate ourselves from the bricks and mortar. We’d like to leave that to others,” he said. “If we can find investors to build the school for us, we can take the land and building on a long-term lease. We have a lot of landlords comfortable with 25- to 50-year leases. It’s a quicker way for us to grow.”

Gems owns and operates 60 per cent of its schools, with 40 per cent owned by others but managed by Gems, a proportion that has more than doubled in two years. Last autumn, Gems branched into the public school sector in the UAE with a subsidiary company, School Improvement Partnership, which runs public-private partnership (PPP) schools in Abu Dhabi. “We do expect to grow our managed school business for high-net-worth individuals who want to go into education. We manage schools for them,” Mr Varkey said.

“We’re very cost-focused,” Mr Varkey said. “A parent paying $15,000 to $20,000 is very specific in what they want, whereas the parent sending [their child] to a mid-market school is not concerned about their child speaking five languages or learning the cello. They want a good education and for their kid to go to a good university. It’s very aspirational.

“Many of the mid-market schools, which include several Indian schools, offer tuition for less than Dh5,000. “Our Own English High School in Dubai charges just Dh7,500 annually. At the other end of the spectrum, the Gems World Academy in Dubai, which will open its doors in September, will charge as much as Dh92,000 a year.”

The GEMS website provides details on its plans in South Africa.

GEMS South Africa was registered in November 2006 as a company in South Africa to promote the interests and activities of GEMS Education.

GEMS South Africa will purchase and build schools in its own name and to manage schools on behalf of clients thereby promoting and incorporating cutting-edge internationally recognised curriculum developments; implanting knowledge and intellectual property into environments most conducive to the enrichment of learning, creativity and personal development; utilising highly experienced educationalists, teachers and school management experts, working collaboratively with international educational organisations while preserving the beliefs, values, traditions and cultures of the schools it owns and manages.

GEMS South Africa is currently undertaking feasibility studies for the development of two new private schools in Namibia and developing the first high volume/low cost school in South Africa.

The latter model is based upon a very successful model operational by GEMS Education in other parts of the world. GEMS South Africa believes that there is a gaping void in key strategic locations in South Africa for such private, not-for-profit schools, which it hopes to develop as a network of highly successful and prestigious schools throughout South Africa to assist in spearheading access to quality, affordable education.

GEMS' plans in India, announced in 2004 of 100 schools in India seem to have taken a bit of a back seat with only 6 schools run by them as of now in India. In an earlier post, I had discussed their strategy in India of not owning the schools, but taking on management contracts - a replication of their UAE strategy.

GEMS is looking to hire Principals for their schools and has advertised for the 2009 school year.

Description: For 49 years GEMS has provided education that enriches the lives of children and their communities. In 2009 GEMS plans to expand the network of GEMS Schools within the UAE, UK, India and Kuwait.

Each school project will differ depending on the country in which it is located and the curriculum offered. Each of these new schools will feature an international curriculum, National Curriculum for England, an American curriculum or the International Baccalaureate Programme.

We are looking for successful, experienced school leaders and ambitious senior leaders to join GEMS in our planned expansion. Roles will focus on the development and opening of schools and on providing the solid foundations from which they will grow over the coming years.

Salary / Pay: Remuneration packages will be aligned with the best leaders of prestigious schools from around the world.

Experience Required: no

This Program is open to American, Australian, Canadian, European, Kiwi and South African Participants.

Application Process Involves:

* In-Person Interview Required
* In-Person Interview when Feasible
* Letters of Reference
* Other
* Phone Interview
* Resume
* Transcript
* Written Application

Section 25 companies to be allowed to invest in higher education in India

According to a Business Standard report,

Private and foreign corporate investment may soon get to flow into Indian higher education with the government considering a move to reform policy that hinders such financing.

Currently, it is not possible for non-profit companies under Article 25 of the Companies Registration Act — like industry associations — to set up an institution and get university status and recognition from the University Grants Commission.

Educational institutions in India can be set up only by trusts, societies and charitable companies, but the profits cannot be taken out of the institution and have to be reinvested. Not only does this restriction hamper expansion, it also encourages promoters to resort to creative accounting to take out profits from the institutions.

Now, under encouragement from an influential political ally from Maharashtra, the United Progressive Alliance government is expected to clarify this clause, sources told Business Standard.

But this report doesn't indicate that for-profit higher education will be allowed - it only seems to indicate that in addition to non-profit trusts or societies, non-profit Section 25 companies will also be allowed to set up higher education institutions, which is not as big a step as what is being considered in the primary education space. A recent report had suggested that for-profit investment in primary education is under consideration.

So, what is a Section 25 company? The Indian Companies Act (1956), provides a definition of a section 25 company.

Section 25 POWER TO DISPENSE WITH "LIMITED" IN NAME OF CHARITABLE OR OTHER COMPANY.

(1) Where it is proved to the satisfaction of the Central Government that an association
(a) is about to be formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object, and
(b) intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Central Government may, by licence direct, that the association may be registered as a company with limited liability, without the addition to its name of the word "Limited" or the words "Private Limited".

(2) The association may thereupon be registered accordingly; and on registration shall enjoy all the privileges, and (subject to the provisions of this section) be subject to all the obligations, of limited companies.

(3) Where it is proved to the satisfaction of the Central Government - (a) that the objects of a company registered under this Act as a limited company are restricted to those specified in clause (a) of sub-section (1), and (b) that by its constitution the company is required to apply its profits, if any, or other income in promoting its objects and is prohibited from paying any dividend to its members, the Central Government may, by licence, authorise the company by a special resolution to change its name, including or consisting of the omission of the word "Limited" or the words "Private Limited"; and section 23 shall apply to a change of name under this sub-section as it applies to a change of name under section 21.

(4) A firm may be a member of any association or company licensed under this section, but on the dissolution of the firm, its membership of the association or company shall cease.

(5) A licence may be granted by the Central Government under this section on such conditions and subject to such regulations as it thinks fit, and those conditions and regulations shall be binding on the body to which the licence is granted, and where the grant is under sub-section (1), shall, if the Central Government so directs, be inserted in the memorandum, or in the articles, or partly in the one and partly in the other.

(6) It shall not be necessary for a body to which a licence is so granted to use the word "Limited" or the words "Private Limited" as any part of its name and, unless its articles otherwise provide, such body shall, if the Central Government by general or special order so directs and to the extent specified in the directions, be exempt from such of the provisions of this Act as may be specified therein.

(7) The licence may at any time be revoked by the Central Government, and upon revocation,

Not that big a difference from the way non-profit trusts or societies operate in India.

The Business Standard report also goes on to suggest that with the shackles of the Left Parties removed after the recent confidence vote, there will now be movement on the pending Foreign Education Providers (Regulation) Bill to allow foreign universities to operate in India.

There is also renewed hope for a Bill allowing foreign universities and institutions into India to be tabled in Parliament, judging by Human Resources Development Minister Arjun Singh’s remarks at a conference of state education ministers two days ago.

The Left parties were the principal opponents of the Foreign Education Providers (Regulation) Bill, which was cleared by the Cabinet in 2007 but never introduced in the Lok Sabha although it was listed in the agenda papers.

“We have tried to accommodate some of the concerns. We will try to introduce the Bill in the Lok Sabha session beginning August,” Singh said. The Bill seeks to regulate foreign institutions setting up campuses in India. A contentious issue is whether caste-based reservations would apply to these institutions.

Both Oxford and Stanford Universities have evinced interest in setting up campuses in India but have been hesitant about moving forward until they are clear about the degree of regulation, funding and other issues.

Experts say the moves would provide clarity on funding of higher education institutions by overseas entities. "This will probably provide funding clarity for foreign institutions like charitable organisations or NRIs wanting to set up facilities in India.

Primary education for profit likely to be allowed in India

says The Economic Times. This is a very interesting move by the Government, heralding a huge change in their thinking on funding primary education. If they implement it, there could be a surge of much-needed private investment into primary education to provide a big boost to both supply and quality. The idea of cautious experimentation by asking private players to work in partnership with a government agency is a wise one.

Source: The Economic Times, Chennai Edition, Tuesday, July 22, p1 (couldn't find the link online)

Profit-making in primary education may get okay

Gireesh Chandra Prasad
New Delhi

Come December and corporates may get to venture into preimary education as a profit-making business by partnering with government bodies. According to a proposal on public-private partnership that the government is working on, shareholders of such companies will be eligible for dividends. This is a major break from the present legal restrictions that force companies providing education to plough back profits and utilise the funds for their stated objective of providing education.

Trusts, societies and charitable companies are the most-preferred legal structure for educational institutions and promoters are barred from taking profits out of such institutions. The proposed rules will change this equation with promoters earning reasonable dividends under watchful eyes of the public sector partners they will work with.

THe new norms would allow entrepreneurs to incorporate their ventures as companies and get into education as a profit-making service. However, they will not be eligible for any tax exemption that now extends to societies, trusts and charitable companies.

The finance ministry is expected to begin the process by issuing a request for qualification - a document detailing the parameters for eligible companies. This would give details about how the proposed business model would be structured without violating the existing restriction on repatriation of profits. The ministry would also evolve a model for inviting private investments in primary health centres through public-private partnerships.

The proposed relaxation would be available only for companies getting into partnerships with government entities and not to all. The nature of these projects would be different from the few public-private partnerhsips that have already happened under the rurual health mission and the Sarva Shiksha Abhiyan, which are largely in the form of management contracts or for providing specific services.

Pearson to acquire English Language Teaching outfit in China

reports Forbes.com.

Pearson, publisher of the Financial Times, is in advanced talks about acquiring a chain of private schools in Shanghai, the first time it would own an education institution anywhere in the world. LEC comprises 15 schools and the deal offers Pearson a way of entering the heavily regulated Chinese education market ahead of the Beijing Olympics. LEC schools provides after-school education for children aged five to 12 whose parents pay for them to learn English.

The LEC deal, which has been in the works for at least a year, would run counter to competitors in the education market who have been abandoning or selling up their international operations to private equity and focusing on the US.

Pearson insiders say the shift in education is moving towards technology platforms and software in education rather than printed textbooks and the LEC schools offer among other benefits a way of showcasing products such as interactive boards.

A similar institute In India, VETA, which is into English language training, announced in October 2007, that it had received an investment of US$ 10 million from SAIF Partners, an Asian private equity firm established through strategic commitments from Softbank Corporation and Cisco. The funds would be used to implement Veta’s expansion plans to set up overseas centres in Singapore (by December), Malaysia (in early 2008), Indonesia, Korea, Thailand, Vietnam and China, and 60 centres across India.

So VETA would be competing with LEC in China.