Higher Education in India: Contemporary Issues and Opportunities for Foreign Participation
Rohan Mukherjee Centre for Policy Research Dharma Marg, Chanakya Puri New Delhi – 110021
[email protected]
This paper was presented at the Fourth India-Canada Policy Dialogue, jointly organized by the Asia Pacific Foundation of Canada (APFC) and the Centre for Policy Research (CPR) on April 2-3, 2008, in New Delhi.
ABSTRACT Higher education in India is approaching crisis. The participation of foreign universities has the potential to address important deficiencies. Historically, foreign participation has had an unimpressive record and has faced numerous functional and ideological barriers. However, subtle changes are emerging in the government’s views on the subject. The ability of foreign universities to take advantage of these changes will depend to a great extent on their intentions vis-à-vis the scale and duration of their involvement. Ultimately institutions that envision a symbiotic relationship with the Indian education system are most likely to succeed in entering and thriving in the domestic market.
Electronic copy available at: http://ssrn.com/abstract=1326011
Introduction This paper presents an overview of the contemporary issues and challenges of Indian higher education, and looks in particular at ways in which potential foreign participants can legitimately play a role in the sector. It does not seek to make a case for increased foreign participation, but presumes it to be a medium-term outcome of the process of India’s integration into the global economy. Section I presents a brief overview of higher education in India today. Section II discusses important systemic challenges (access, equity, quality) and argues that these problems stem from the lack of public investment and a flawed regulatory structure, resulting in the rapid and unregulated growth of private provision. Section III maps the existing government perspective on foreign and private participation and attempts to show that there has been an increasing dissonance in the government’s view of foreign institutions. This signals a growing public debate that can be successfully leveraged by potential entrants. Section IV concludes by briefly suggesting that in the final analysis, meaningful foreign participation hinges on the regulatory system’s ability to successfully balance two conflicting objectives – building a world-class educational system, and ensuring that education remains a non-commercial activity that embodies national values and priorities. The basic argument of this paper is simple. The Indian system of higher education is in a state of decline, primarily due to the adverse effects of its regulatory structure. The participation of foreign universities, while not a panacea for all of the system’s ailments, offers an avenue for easing some of the pressures building up within it. Historically, foreign participation in the sector has had an unimpressive record and has faced numerous functional and ideological barriers. However, of late there is a discernible
2 Electronic copy available at: http://ssrn.com/abstract=1326011
dissonance in the public discourse on this subject, particularly from within the government and its agencies. The ability of foreign universities to take advantage of these changes will depend to a great extent on their intentions vis-à-vis the scale and duration of their involvement. Ultimately those who envision a symbiotic relationship with the Indian education system are most likely to succeed in entering and thriving in the Indian market.
I. Overview of Higher Education in India India currently has the largest number of higher education institutions in the world, and the third largest student population in the world attending them1. Most recent estimates place the number of institutions somewhere over 18,000 and the number of students over 11 million2. Behind these numbers are six decades of phenomenal growth, initially fuelled by public investment but lately more due to the unabated growth of private sector provision. Since 1990, the number of institutions has been growing at a compounded annual rate of six percent. While this is significant, growth in institutions has not matched the growth in demand for higher education. More importantly, growth of good quality institutions has been negligible. As a result, Indian higher education has often been characterized as a sea of mediocrity containing only a few islands of excellence. Aside from concerns of access and quality is also the issue of equity. Socially and economically disadvantaged groups in the system are under-represented and their educational attainments tend to be below average. The key problems faced by Indian higher education pertain to issues of access, equity and quality. However, these are but symptoms of a deeper malaise, related to the
3 Electronic copy available at: http://ssrn.com/abstract=1326011
two primary constraints of the system today – the decline in public investment in higher education, and the existence of a flawed, overly rigid and ineffective regulatory framework. These problems have steered the sector into previously uncharted waters, particularly in the realms of privatization and foreign participation, both made more relevant by changes in the global trade regime and the education sectors of other nations. In this sense the present is an important juncture in the history of Indian education, and it remains to be seen whether the government can successfully manage the sensitivities of the system in order to optimally utilize India’s much vaunted demographic and educational advantages. As for institutions interested in penetrating the Indian market for education, this is a time to carefully observe developments in the legal and regulatory structure, particularly with reference to emerging ideological differences on the issue of foreign participation in higher education.
II. Systemic Challenges Access In 2001, approximately 35 percent of India’s population was aged 14 or below3. Based on the current burgeoning demand for basic education and a gross graduation ratio at upper secondary level of 20 percent4, this projected ‘demographic dividend’ is poised to put considerable pressure on the higher education system in the coming years. Although estimates vary, the Gross Enrolment Ratio (GER) in higher education can be estimated at somewhere between 7 and 11 percent5. While this makes India better off than many South Asian and Sub-Saharan African countries, it does not compare favorably with countries like Egypt (35 percent), Turkey (31 percent), Brazil (24
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percent), Iran (24 percent), China (20 percent), South Africa (15 percent), and of course Canada (62 percent), the United States (83 percent) and the Republic of Korea (91 percent)6. The data both globally and within India suggest that a high per capita income is positively correlated with a high GER7. While the direction of causality cannot be conclusively established in this study, it is sufficient to note that such evidence provides some support to theories that emphasize the importance of human capital to long-term economic growth, and the need for channeling the benefits of economic growth into investments in human capital. Thus one of the primary objectives of the system at the moment is to expand access to higher education in order to meet growing demand. However, it is important to note that expanding access is not equivalent to expanding supply. A broader conception of ‘access’ is required, that emphasizes inter alia the need for expanding the supply of good quality institutions. Of course, even this measure alone will not necessarily ensure that higher education reaches every person that desires it.
Equity There are three main axes of disparity that exist in the domain of higher education – gender, caste, and region. All three become important when considering a strategy of expanding access. The enrolment of women in higher education is traditionally measured by the Gender Parity Index (GPI), which is a ratio of female GER to male GER. The GPI in 2005 using Census and UGC data is calculated to be 0.758. When compared to a relevant-age population ratio of 0.91 (i.e. female population aged 18-24 as a ratio of male population aged 18-24), it appears that women are significantly under-represented in higher education. It is especially pertinent that the GPI throughout school (grades I to
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XII) is 0.919. This suggests a tendency for women to drop out of the education system after grade XII, possibly due to various social pressures at play. Inequalities of caste (and tribe) are also significant. Constitutionally designated disadvantaged groups - Scheduled Castes (SC) and Scheduled Tribes (ST) - are underrepresented, and persistently under-perform relative to their peers. Compared to the overall GER of the country (between 7 and 11 percent), the GER for SCs is 6.7 percent and for STs 4.9 percent10. Although various government schemes exist to subsidize the education of students from these groups, few efforts have been made to systematically look into the achievement levels of these students in order to determine the effectiveness of these schemes. Nonetheless, the issue of under-representation remains important. In this context, the issue of overlapping disadvantages is worth noting. For instance, while the overall GPI for India stands at 0.75 (as shown above), the GPI among SC students is 0.64, and among ST students 0.5511. Thus women in these disadvantaged categories are considerably less likely to participate in the higher education system than women in general. Lastly, regional inequalities in higher education deserve mention in order to highlight the uneven nature of growth in the sector over the last few years. Approximately 58 percent of all higher education institutions are located in only six states – Uttar Pradesh, Andhra Pradesh, Maharashtra, Karnataka, Madhya Pradesh and Tamil Nadu12 – which are also among the ten most populated states of India13. This selection of states reflects the considerable growth of institutions in South and West India relative to other regions. Variation also exists in terms of enrolment, with the GER across states and union territories ranging from 26 percent in Chandigarh to 4 percent in
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Arunachal Pradesh. Similarly, in the case of gender parity, states and Union Territories like Goa, Chandigarh, Kerala, Delhi, Punjab and Pondicherry are most favourable for women relative to men, whereas Bihar, Arunachal Pradesh, Jharkhand, Orissa and Rajasthan are at the opposite end of the spectrum14. All of the above, and other regional data within India, suggest significant imbalances in the capacity and sophistication of systems for higher education between the South and West on the one hand, and the North, East and Northeast on the other.
Quality Quality is a critical factor in the assessment of a higher education system. It can be measured externally according to pre-defined institutional parameters, or by simply looking at the educational and job market outcomes of an institution’s graduates. Institutional assessments are carried out by two accrediting agencies in India – the National Assessment and Accreditation Council (NAAC) and the National Board of Accreditation (NBA). The former, an affiliate of the University Grants Commission (UGC), deals with colleges imparting general education; the latter, an affiliate of the All India Council for Technical Education (AICTE), deals with professional and technical colleges. Below is a brief analysis of data from the NAAC15. Although the NAAC covers not more than 3500 colleges (roughly one-fifth of the entire college system), its grading system provides a useful insight into the quality of institutions across the country. A simplified scale comprising its two previous grading systems (in use from 1998-2002 and 2002-07 respectively), which currently covers all the colleges accredited by it, shows that as of 2007, only 28 percent of NAAC accredited
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colleges received an above average grading while 47 percent received a below average grading, and 25 percent were average. The grading system employs a holistic set of measurement tools that evaluate most of the important aspects of an institution, and therefore it is of some concern that the bulk of colleges qualify as average or below average. Another indicator of quality is the academic performance of the students of a college. In this regard, the UGC collects data on the number of students passing their final exams in graduate and post-graduate courses in all colleges recognized by it16. The data for 2002 show some alarming results. For instance, amongst all the students appearing for final examinations in commerce, only 56 percent passed. Similarly, only 49 percent passed in computer science/applications, 61 percent in science and 61 percent in management17. Performance was relatively better in engineering (79 percent), medicine (75 percent), nursing (97 percent) and education (89.5 percent). Overall, of all the students taking final exams in all disciplines in 2002, only 63 percent passed. These figures bear out the adage that quantity (of institutions) does not necessarily imply quality. If exam results are not entirely convincing, we might choose to look at the labor market performance of graduates. Although not much information is publicly available on this subject, a small dataset on recent engineering graduates from a handful of Indian states published by the Institute for Applied Manpower Research (IAMR) in 2005 reveals some interesting information18. Surprisingly, states like Kerala, Uttar Pradesh and West Bengal emerge as attractive job markets for degree-holders in the major sub-disciplines of Engineering19, whereas states with a proliferation of engineering colleges like Andhra
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Pradesh, Karnataka and Tamil Nadu have relatively lower rates of employment for students with the same qualifications. Prima facie, this suggests that a regulatory environment that promotes the large-scale expansion of colleges is less effective (or discerning) in keeping out low quality institutions, thus leading to the production of a large number of relatively non-employable graduates. The data also show that diploma holders in engineering are much less likely to succeed in the job market than degree holders. This is particularly relevant given that in 2003, 60 percent of engineering graduates were diploma holders20.
Public Investment The problems of access, equity and quality stem in part from a lack of public funding for higher education. Public institutions without adequate funds to hire good faculty, offer scholarships to disadvantaged groups and expand enrolment are finding it harder to meet growing demand. It took the politics of caste to give an impetus to public spending in the XIth Five-Year Plan, when the government injected a substantial amount of funding into higher education, not for improving quality but for expanding the number of seats in order to accommodate its decision to institute a quota for Other Backward Castes (OBCs) in universities and institutions funded by the federal government21. Barring this recent politically motivated action, one can observe a gradual withdrawal of the state from higher education over the years. On education in general (all levels), the government currently spends approximately 3.66 percent of GDP (2005-06 estimate)22. While this is higher than countries like Indonesia, Cameroon, Gambia, etc. it is lower than Brazil, Mexico, Iran,
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Botswana, Uganda and other developing countries, not to mention almost all of Europe and North America23. In India, higher education has received less attention in terms of public spending than other levels. In 2005-06, it is estimated that university and technical education together accounted for only 15 percent of total revenue expenditure on education by the federal and state governments24. In terms of GDP, in the period from 1990-91 to 2004-05, the share of university and higher education fell from 0.77 percent to 0.66 percent, whereas the share of primary education rose from 1.78 percent to 1.89 percent25. Per student, in real terms there was a 28 percent decline in public expenditure from 1990-91 to 2002-0326. These data are indicative of an insufficient and declining government commitment (at federal and state levels) to higher education. Moreover, the funds poured into the system every year are utilized mostly for revenue expenses, of which salaries are a major component. In 2004-05, capital expenditure accounted for only 1.84 percent of total education expenditure by state education departments27. With funds drying up from the federal government, this leaves only a small amount of finance for the growth and development of higher education in the states.
Privatization As a result of the government’s gradual withdrawal from higher education, the private sector has begun to play an increasingly important role. Rapidly entering spaces previously occupied by the state, it has transformed the contours of education – particularly professional and technical education – in less than a decade. Indeed in the span of one year, from 2003-04 to 2004-05, the total number of institutions in the system shot up by 12 percent (1503 institutions)28. Given the lack of public investment, it is safe
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to assume that most of these were private institutions. UGC data on recognized colleges show that of the more than 17,000 colleges in the country, at least 20 percent are privately owned and funded, while another 37 percent are privately owned but receive some form of aid from the government. Levels of privatization vary across major states, ranging from 63 percent of colleges being private and unaided in Andhra Pradesh, to 9.3 percent in Haryana29. The incentive for private providers has been to deal in disciplines that exhibit verifiable market demand, thus justifying the asking of higher fees from students who anticipate higher incomes upon graduation. Students, on the other hand, are attracted increasingly towards professional courses that have greater potential in the labor market, and are willing to pay higher prices for them. There seems to be a convenient matching of demand with private supply in the face of declining public investment. However, the situation is not so simple. Private providers, in the interest of maximizing profit, have every incentive to ‘minimize costs’ by compromising on the quality of education provided in their institutions. Although a certain reputation effect operates in the case of the better known private players (e.g. Amity, NIIT, Aptech), the majority of private colleges and universities are not known for their scrupulous academic standards. Thus there are serious implications for quality in private provision, and this is borne out by the growing scarcity of employable graduates in the technical and professional fields, a fact highlighted by the popular NASSCOM-McKinsey study of 200530. Related to the potential compromise of academic standards is the issue of unfair trade practices. Private providers are known to exploit the supply shortfall of higher education in order to maximize revenues through ‘capitation fees’, misrepresentation of courses, corruption in admissions practices, and other methods that ultimately harm the
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interests of students. From time to time, the government and the judiciary have taken steps to regulate such practices. However, as the next section will demonstrate, government regulation and judicial intervention are often confused, complex and counterproductive.
The Regulatory Framework Ultimately, one cannot shy away from the role of the state in higher education. Yet the manner in which the Indian state has intervened in this sector has been less than optimal for its development. The most fundamental structural flaw lies in the institutional architecture of the UGC itself. Its setup is uniquely flawed in that it is the sole authority on almost all regulatory matters in the university system, including access (fees and admissions), finance (funds disbursal), quality (accreditation via the NAAC) and entry into the market (the conferral of degree-granting powers). In essence, the UGC is a superregulator. Instead of a regulatory framework that arranges incentives in order to promote academic excellence, we are left with a discretionary and highly centralized structure that discourages academic innovation, promotes standardization over standards31, and is not responsive to the dynamics of academia in the various disciplines. This form of regulation imposes significant costs on the system that exacerbate the constraints on public investment. For instance, the requirement that every university, be it at federal or state level, can only be set up via a legislation specific to it, not only presents a significant barrier to entry but also raises the public cost of setting up a new university32. Aside from governments and regulatory agencies, the judiciary too has contributed to the muddle of policies and regulations currently in existence. Although it is
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often brought into the picture when the legislature or executive has already abdicated its responsibilities towards higher education, its interventions nonetheless have sent mixed signals to stakeholders. In a series of judgments from 1992 to 2005, the Supreme Court of India vacillated on the issue of autonomy in fee setting and admissions for private and minority-run institutions, once reversing its own past judgment and another time having to clarify it in a new judgment33. During this period, the views of the Court on financing education have seemed somewhat consistent in moving away from their open suspicion of private enterprise in education. Yet on issues of access (especially caste-based reservations) and minority rights, the Court has remained ambivalent, likely due to the political sensitivities involved34. On the whole, there has been little clarity from the Supreme Court on its views pertaining to access, equity and privatization in this domain. The result of all the above has been the de facto privatization of higher education. While the Courts and regulatory agencies have been reluctant to acknowledge the importance of private investment as a supplement to public investment, the market has belied their ideologies and continued growing. Consequently the regulatory framework has been caught off-guard and is unable to fully comprehend the new dynamic or develop appropriate tools for dealing with it. On the other hand, those within the system that do understand the possibilities of private investment have used it to their advantage. It has been argued that political parties of all stripes have permitted privatization because they recognize the potential of private funding as an effective (and costless) tool to alleviate the current “fiscal exhaustion” of public budgets, to accommodate the new quota regime, or to act as a new (and more abundant) source of patronage35. Ultimately, the UGC and AICTE will need to develop a coherent body of regulation for the private sector that
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recognizes its importance in the financing of higher education but also holds it accountable to standards of academic excellence and equitable access. Until then, institutions and students will continue to bear the burden of an uneasy relationship between public and private in this domain.
III. Foreign Participation Foreign participation, while not a self-contained solution for the ills of the Indian higher education system, can provide avenues for easing some of the pressures building up within it. In terms of sheer numbers, the entry of foreign institutions would help expand the supply of higher education. As for quality, the application of international best practices particularly from institutions of repute with campuses in multiple countries, would help set higher benchmarks and tend to foster domestic competition at all levels of the quality hierarchy. We might thus envision a Massachusetts Institute of Technology or a University of Manchester spurring competition with top-tier Indian institutions like the Indian Institutes of Technology, leading to innovations in teaching, curriculum design, recruitment, etc. across the board. Similarly, other foreign institutions lower down the quality hierarchy in their home countries could spur competition with their counterparts in the Indian system. The benefits of foreign participation in terms of equity are less certain, but appropriate regulations pertaining to affirmative action (not necessarily in the Indian tradition of quotas) might address this aspect of the Indian educational paradigm as well. Regulation, as we have seen in the previous section, is often the problem itself; one that no amount of foreign participation can remedy. Indeed, imaginative and flexible
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regulation is a prerequisite for reforms like foreign participation in the Indian system. Unfortunately, the regulation of foreign education providers has followed a path similar to that of private providers. Starting from a stance of outright distrust, regulators have gradually permitted the entry of some institutions, albeit with many strings attached. The following sub-sections will map the regulatory landscape in terms of foreign participation and briefly discuss the current scenario before moving onto possible strategies for the entry of foreign providers into the Indian market.
The Regulatory Landscape In the new millennium, two simultaneous processes have shaped the regulatory landscape for potential foreign participants in India – first, the rapid privatization of higher education, and second, the growing importance of the international trade regime under the World Trade Organization (WTO) and the General Agreement on Trade in Services (GATS). Taking the cue from other nations that have moved quickly to safeguard their domestic education systems36, Indian legislators and policymakers have begun to appreciate the need for national legislation and policies governing the entry of foreign institutions into the domestic arena. However, as with most regulatory efforts in this sphere, the government’s response has been hasty and heavy-handed. Rather than making an ally of the market, regulation has sought to erect significant barriers to the entry and operations of potential private and foreign providers of higher education. Although little has been done on the ground, there is a host of regulations, policy documents and pending or withdrawn legislations that provide an instructive perspective on current thinking among policymakers and legislators grappling with the issue of
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foreign participation. The most important regulations in this regard are as follows (for more detail, see Appendix): 1. UGC (Establishment and Maintenance of Standards in Private Universities) Regulations 2003 – currently active. 2. AICTE Regulations for Entry and Operation of Foreign Universities / Institutions Imparting Technical Education in India, 2005 – currently active. 3. The Private Universities (Establishment and Regulation) Bill 1995 – withdrawn from Parliament in the 2007 Monsoon Session37. 4. The Private Professional Educational Institutions (Regulation of Admission and Fixation of Fee) Bill 2005 – pending (status unknown). 5. The Foreign Educational Institutions (Regulation of Entry and Operation, Maintenance of Quality and Prevention of Commercialisation) Bill 2007 – yet to be introduced in Parliament. Broadly speaking, the contents of the above regulations embody the distrust and fear of private (and foreign) enterprise inherent in India’s educational bureaucracy. Private/foreign institutions are typically required to clear numerous administrative hurdles before being granted approval. For instance, the AICTE has a mandatory application procedure for foreign institutions that involves a file passing from the AICTE to an ad hoc standing committee, then an ad hoc expert committee, then a sub-committee of the expert committee, and then back to the AICTE before final approval is granted, conditional on a security deposit of an amount not specified in the regulations. Aside from erecting barriers to entry, regulators and legislators have also sought to control almost every detail of the operations of such institutions on Indian soil. Each of the three
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Bills mentioned above have proposed to control at the very least the admission and feesetting procedures of private/foreign institutions, if not appointments, scholarships and the distribution of seats between faculties. The Indian judiciary, while normally a voice of reason in matters of state incapacity or mal-administration, is yet to express an opinion on foreign participation in India (see Section II for the judiciary’s views on private participation). The collective picture then seems rather unwelcoming for foreign providers aspiring to be a part of the Indian market in the near future.
Status of Foreign Participation The current regulatory setup has resulted in a kind of adverse selection. Based on its suspicions of the sector, the government frames complex and demanding regulations to govern private/foreign institutions. These regulations impose costs that legitimate foreign institutions are unwilling to bear. At the same time, they attract illegitimate providers looking for short-term gains, who recover the cost of regulation by exploiting students. Typically, the presence of such institutions in India is characterized by minimal capital investment (sometimes none at all) and high student fees for qualifications that may or may not be accredited in the home country of the institution. These practices serve to confirm the suspicions of regulators, thus perpetuating the notion that foreign providers indulge in unfair practices. While this statement may be true of a large number of such providers currently in India, it takes a slightly more nuanced understanding to see that the phenomenon is an artifact of the current regulatory framework rather than an inherent quality of foreign education providers.
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As of 2005, there are 131 foreign education providers operating in India, enrolling “a few thousand” privately funded students. Although the government of India permits 100 percent Foreign Direct Investment (FDI) in higher education through the automatic route, foreign providers mostly tend to offer technical programs via “twinning” arrangements with Indian institutions, whereby a student completes a portion of his/her studies in India, and the rest in the home country of the foreign provider. Some foreign providers also collaborate with Indian institutions to have their courses taught in India. Fee levels are uniformly high in all arrangements38. Both twinning and program-based collaborations corroborate the low-investment high-return model of foreign provision mentioned above, suggesting that the current scenario of foreign participation is far from optimal for legitimate foreign entrants and the Indian education system in general.
The Increasing Dissonance of Public Discourse From what has transpired thus far, one might conclude that the prospects for foreign participation in Indian higher education are supremely bleak. While this may be true in some measure, it is not an entirely accurate representation of a landscape that is constantly shifting and changing, driven every which way by a divergent set of ideologies. If there is one thing that commends the current regulatory framework to potential foreign entrants, it is this lack of coherence in outlook and approach towards changes in the global and domestic scene. It is no accident that despite three separate attempts, the Indian parliament has been unable to adopt a unified strategy towards privatization or foreign participation in higher education. Or, that it has taken the Indian
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judiciary thirteen years and five judgments to arrive at something barely resembling a decisive view on private institutions. Not only is there incoherence within the branches of government, but also between them. For instance, in 2005 the government was preparing a Bill to extensively regulate private and foreign professional education providers when the Supreme Court decided (in the Inamdar case) to grant private colleges autonomy in admissions and fee setting, within reasonable limits39. Although this led to the Bill in question being indefinitely shelved (to date), the political outcry in response to the Court’s decision drew a different and quick response from the government. With unprecedented support from all political parties, it amended the Constitution via the Central Educational Institutions (Reservation in Admission) Act, 2006, to mandate reservations for SC/ST and Other Backward Castes (OBCs) in higher education institutions. These events were a reminder that politics, more than policy, is likely to impact regulatory outcomes in higher education, as it is with most other spheres of public action. It is therefore no surprise that the current Foreign Educational Institutions Bill that was due to be introduced in Parliament last year has been withheld due to the lack of political consensus between members of the governing coalition. While the parties of the Left have criticized it for not being strong enough, there have also been differences within the Cabinet between the Minister of Human Resource Development and the Minister of Commerce with regard to the desirability of reservations in foreign institutions40. The growing dissonance within government on the issue of foreign institutions is also exemplified by two important policy documents – the recommendations of the National Knowledge Commission (NKC) on higher education, and the 2006 Consultation
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Paper on Higher Education and GATS released by the Department of Commerce (DoC). Based on the objectives of “expansion, excellence and inclusion,” the NKC has, inter alia, emphasized the importance of diversifying the resource base of higher education through higher user fees, efficient use of resources, and private investment. Keeping in mind the objective of quality, it has recommended that the government “formulate appropriate policies for the entry of foreign institutions into India…while ensuring a level playing field for foreign and domestic institutions within the country. 41” The DoC is less restrained in its enthusiasm for foreign participation. Based on the objective of expanding capacity and access in the system, the DoC argues for “a mechanism whereby private and foreign investment in higher education can be encouraged subject to high quality standards and efficient regulation. 42” Its argument rests on the inadequacy of public investment for India’s current needs, and the economic gains of having students who would otherwise pay large amounts to go abroad, studying in equally reputable institutions at home. The NKC, due to its recommendations (among other reasons), has faced considerable resistance from the Ministry of Human Resource Development (MHRD) and the UGC. Similarly, the DoC and MHRD have taken up stances on opposite sides of the debate. Needless to say, both the NKC and DoC are uniformly reviled by left-leaning political parties, academic institutions and media. While all of the above certainly suggests a growing discord within policy circles with regard to foreign participation and investment in education, on a deeper level it is indicative of a relatively new phenomenon – public debate surrounding the issue at hand. It is no longer the case that the government, unified in its ideology, shuns foreign entities without question. The present wave of dissent and disagreement from various quarters of
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government and civil society signifies a public willingness to at the very least talk about foreign investment in higher education, a subject long considered taboo in a country whose public institutions have vigorously upheld the ostensibly charitable (i.e. noncommercial) nature of education and its importance to the national interest and identity. For foreign institutions, governments and interest groups, this increased noise offers an unprecedented opportunity to promote their cause and be heard by an increasingly attentive audience. How they might go about this is taken up in the next section.
Opportunities and Strategies for Foreign Providers At the outset, it is important for aspiring foreign entrants to note that there is little to be gained from a short-term perspective on the Indian education market. The opportunities that exist in the present regulatory framework are limited, and limiting. Vision and strategy are both essential for navigating the system and engaging in meaningful collaborations that go beyond the existing types described above. Vision is critical along three dimensions. First, in understanding the long-term objectives and underlying value structures of the Indian education system; second, in realizing that change in this system occurs not as an overnight transformation but slowly and in a piecemeal fashion; and third, most importantly, in comprehending the institutional implications of international education in a globalizing world. In the context of the third point, a broader view of entering the Indian market would look beyond traditional collaborations like student enrolment, twinning programs and program-based collaborations. It would consider domestic commercial presence as a realistic possibility and work towards it. It would be premised on the realization that in
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the future, the best educational institutions in the world will be those that can develop international brand recognition, with commercial presence in multiple locations, and international networks of students, professors and professionals. This would by no means signify an era of ‘multi-national universities’ (à la multi-national corporations), yet scale will increasingly become important for sustainability as domestic players seek to expand their operations abroad. In such a scenario, where territorial distinctions are gradually blurred, there would be sufficient incentives for institutional development in local settings, i.e. the model of foreign participation would evolve into one characterized by high investment and high return. As regards strategy, institutions must learn to conceptually separate the functional and ideological barriers to foreign participation in India. The former operate at the institutional level, whereas the latter operate at the policy and regulatory level. Functional barriers include the lack of reliable market intelligence, good quality partners, trained faculty, or even capable students. These barriers can be addressed by collaborative efforts that involve student and faculty exchanges and general capacity building. However, what makes the problem of foreign participation intractable is the ideological basis of the regulatory framework, particularly the inherent suspicion of private or foreign capital, and the ingrained belief that education ought to be a non-commercial activity. While such fundamental values are hard to change exogenously, they can be shifted just enough whereby the increased difference of opinion within government and the growing exposure of the educated classes to the new debate can be used to lobby for policy changes in the right quarters.
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For this, foreign institutions need to engage in the long-term process of building relationships across a spectrum of policymakers, academics, administrators and even students. It is also important to step up the level of institutional activity and build interpersonal and inter-institutional relationships of the kind that can pave the way for more meaningful future collaborations. At the personal level, connections between students (and faculty) become particularly relevant when one considers that today’s Indian students going abroad might well be tomorrow’s key decision-makers in government, the private sector and civil society. At the institutional level, collaborations that involve foreign institutions developing capacity in Indian institutions are highly desirable for both sides. For domestic partners, they represent an opportunity to upgrade institutional capacities to a higher standard. For foreign partners, they represent an opportunity to expand (and diversify) their set of options beyond the traditional circle of IITs, IIMs, and national centers of excellence. By helping to build capacity in second-tier Indian institutions, foreign institutions can develop strong partners for the future and create new markets for educational services instead of jostling for space in a rapidly saturating market for top-tier Indian institutions.
IV. Concluding Remarks Foreign participation in Indian higher education hinges on the ability of the domestic regulatory system to successfully balance two conflicting objectives – building a world-class educational system, and ensuring that education remains a charitable activity that embodies national values and priorities. While the latter might seem rather anachronistic when juxtaposed with the realities of the modern education system, it is
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nonetheless a valid concern that must be factored into the calculations of external actors. Fostering the ‘right’ kind of foreign participation will depend on understanding that the tension between these two objectives is not of a zero-sum nature. Regulators need to realize that it is possible to have aggregate gains that promote both objectives without trading away anything except a degree of control over the system, which in its current state is highly controlled and inflexible. On the part of foreign institutions, it is prudent to be sensitive to local conditions and the objectives of education provision in a given context, and above all to accept a degree of control over institutional autonomy in order to benefit from longer-term involvement. Lastly, it bears reiteration that foreign or private investment is by no means a panacea for the ills of the Indian higher education system. However, it can certainly contribute to a sector currently in dire need of improvement. 1
Indian Council for Research on International Economic Relations (ICRIER), Higher Education in India: The Need for Change, Working Paper No. 180, June 2006. 2 Provisional estimates from the University Grants Commission (UGC), UGC Annual Report 2005-2006 (New Delhi, UGC). 3 Census of India 2001, Census Data Online, Tables C2 and C14, accessible via www.censusindia.gov.in. 4 UNESCO Institute for Statistics, Global Education Digest 2007 (Montreal, UNESCO, 2007). 5 7 percent from National Knowledge Commission, Compilation of Recommendations on Education (New Delhi, NKC, 2007); 8 percent calculated by author using Census of India 2001, Census Data Online, Population, accessible via www.censusindia.gov.in; Registrar General, Ministry of Home Affairs, Govt. of India, Population Projections for India and the States 1996-2016 (New Delhi, Registrar General, 1996) and UGC, UGC Annual Report 2005-06 (New Delhi, UGC) – see footnote 14 for methodological note; 10 percent from Ministry of Human Resource Development (MHRD), National Level Educational Statistics at a Glance (2004-05) (New Delhi, MHRD); 11 percent from ICRIER, Higher Education in India. 6 UNESCO Institute for Statistics, Global Education Digest 2007. 7 For a graphical representation of the relationship between per capita domestic product and GER across Indian states, see ICRIER, Higher Education in India, p.12. 8 The MHRD estimate for the same year is 0.71. See MHRD, Selected Educational Statistics 2004-2005, (New Delhi, MHRD, 2007), p.71. 9 MHRD, Selected Educational Statistics 2004-2005. 10 MHRD, Selected Educational Statistics 2004-2005. 11 MHRD, Selected Educational Statistics 2004-2005. 12 MHRD, Selected Educational Statistics 2004-2005. 13 Census of India 2001, Census Data Online, Population. Accessible via www.censusindia.gov.in. 14 Calculated by author from Census of India 2001; Registrar General, Population Projections for India and States 1996-2016; and UGC Annual Report 2005-06. For the purposes of calculating national and statelevel GER in 2005, the population in age group 18-24 in 2005 is estimated based on the population share of the same age group in 2001, i.e. the proportion of individuals aged 18-24 is assumed constant between
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2001 and 2005. The same approach is applied to estimating male and female populations aged 18-24 in 2005. 15 Relevant data were not available from the NBA. 16 UGC, University Development in India, Basic Facts and Figures, Examination Results – 2002 (New Delhi, UGC). 17 The figure for computer science/applications is heavily skewed due to the presence of Tamil Nadu, with an exceptionally high number of students appearing for the final exam (68 percent of all students appearing in this discipline) and exceptionally low number of students passing (33.6 percent). In the absence of Tamil Nadu, the countrywide percentage of students passing in this discipline jumps to 82 percent. 18 Institute for Applied Manpower Research (IAMR), IAMR Manpower Profile 2005 (Delhi, IAMR, 2006). 19 Specifically chemical, civil, computer science, electronic/communications, electrical and mechanical engineering. 20 IAMR, IAMR Manpower Profile 2005. 21 The increase amounted to a 34 percent rise in the federal government’s education budget for 2007-08. See Vijender Sharma, “Indian Higher Education: Commodification and Foreign Direct Investment,” The Marxist, Vol. XXIII, No. 2, April to June, 2007, p.11. 22 MHRD, Statement indicating the Public Expenditure on Education. Accessible via www.education.nic.in. 23 UNESCO Institute for Statistics, Global Education Digest 2007, Statistical Table 13. 24 MHRD, Analysis of Budgeted Expenditure on Education 2003-04 to 2005-06, MHRD Dept. of Higher Education (Planning and Monitoring Unit), New Delhi, 2006. 25 MHRD, Selected Educational Statistics 2005-2006, Table 35. 26 Data compiled from MHRD, Analysis of Budgeted Expenditure on Education, various years. 27 MHRD, Analysis of Budgeted Expenditure on Education 2003-04 to 2005-06. 28 MHRD, Selected Educational Statistics 2005-2006. 29 University Grants Commission, UGC Directory of Colleges 2003-04 (New Delhi, UGC). 19.4 percent of colleges in the entire dataset were uncategorized due to unavailability of information. 30 McKinsey & Company, and NASSCOM, NASSCOM-McKinsey Report 2005: Extending India’s Leadership of the Global IT and BPO Industries. Accessible via www.mckinsey.com. 31 Pratap Bhanu Mehta, “Critiquing the Regulatory Regime,” Indian Express, July 15, 2005 32 Pratap Bhanu Mehta, “Regulating Higher Education,” Indian Express, July 14, 2005 33 1992: St. Stephen’s vs. University of Delhi; 1993: Unni Krishnan v. Andhra Pradesh; 2002: TMA Pai Foundation vs State of Karnataka (reversed Unni Krishnan); 2003: Islamic Academy of Education vs State of Karnataka (for clarification of TMA Pai); 2005: P.A. Inamdar & Ors. vs. State of Maharashtra & Ors. 34 Devesh Kapur and Pratap Bhanu Mehta, “Indian Higher Education Reform: From Half-Baked Socialism to Half-Baked Capitalism,” CID Working Paper No. 108, Harvard University, Sep 2004. 35 Devesh Kapur and Pratap Bhanu Mehta, “Indian Higher Education Reform.” 36 See Grant McBurnie and Christopher Ziguras, “The Regulation of Transnational Higher Education in Southeast Asia: Case Studies of Hong Kong, Malaysia and Australia”, Higher Education, Vol.42, July 2001. 37 PRS Legislative Research, Parliament Session Wrap, Monsoon Session: Aug 10 to Sep 10, 2007. Accessible via www.prsindia.org. The reason was that the subject of the Bill was a State Subject under the Seventh Schedule of the Constitution. 38 ICRIER, Higher Education in India. 39 Akshaya Mukul, “UPA claims credit for law still in the works, PMO non-committal,” The Times of India, May 24, 2007. The Bill in question was The Private Professional Educational Institutions (Regulation of Admission and Fixation of Fee) Bill 2005. 40 Indo-Asian News Service (IANS), Staff Writer, “Arjun Singh may agree to FDI in education after all,” March 30, 2008. Accessible via www.indiaenews.com. 41 National Knowledge Commission, Compilation of Recommendations on Education. 42 Department of Commerce (DoC), Higher Education in India and GATS: An Opportunity, Trade Policy Division, Department of Commerce, Government of India, (New Delhi, DoC, 2006).
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APPENDIX Domestic Regulatory Landscape for Foreign Participation in Indian Higher Education UGC (Establishment and Maintenance of Standards in Private Universities) Regulations, 2003 [ACTIVE] Promulgated in response to the Chattisgarh phenomenon, whereby multiple fraudulent universities were established via a single omnibus state legislation in the state of Chattisgarh. Aimed at universities set up by state Acts. Each university to be set up by a separate Act of state legislature. Restrictions are placed on the establishment of possible off-campus and offshore centers. Programs of study must conform to appropriate regulatory norms. Detailed information on programs must be submitted to the UGC. Admissions procedures and fee setting are to be governed by UGC guidelines.
AICTE Regulations for Entry and Operation of Foreign Universities / Institutions Imparting Technical Education in India 2005 [ACTIVE] Aimed at prospective and existing foreign institutions and domestic institutions collaborating with foreign institutions in any form. All foreign institutions wishing to operate in India must undergo the following procedure: o Submission of Detailed Project Report to AICTE, including credentials and proof of accreditation in home country. o AICTE Standing Committee (ad hoc) to consider proposal. o On recommendation of Standing Committee, AICTE Expert Committee (ad hoc) to visit and assess institution (expenses paid by institution).
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o On recommendation of Expert Committee, the Sub-Committee of the Expert Committee decides whether to grant approval (to be periodically renewed). o If approved, applicant must provide a security deposit (amount unspecified) that may or may not be refunded after a specified period, depending on any violations of norms. The operations of foreign institutions are governed by AICTE Rules, Regulations, Norms and Guidelines. In case of collaboration, foreign institutions can only partner with existing Indian institutions. Institutions must guarantee that their degrees are equivalent to corresponding degrees awarded in their home country. Fees are regulated by AICTE. Educational innovations are only allowed if they are already well established in India or in the institution’s home country. Foreign institutions are bound by the ‘advice’ of AICTE on admissions, entry qualifications and the conduct of courses.
The Private Universities (Establishment and Regulation) Bill 1995 [WITHDRAWN] Intended to provide for the establishment and incorporation of self-financing universities and for regulation of their functioning. Private universities can be set up by Indian nationals via registered societies, public trusts and section 25 companies. Procedure as follows: o Applications to be made to federal government o Government may consult UGC, who will also seek input from general public before giving recommendations.
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o On recommendation of UGC, government may require a detailed project report, to be submitted to the government of the state in which university is proposed. State has six months to review the report and pass it on to the federal government. o On receiving the report, the federal government shall refer it to the UGC, which will obtain views of experts and give its recommendations within six months. o If report is successful, sponsoring body of the university is required to set up a Permanent Endowment fund of at least Rs. 100 million (approx. $2.5 million) to be invested in long-term interest bearing securities issued/guaranteed by federal government. At this point, the university will be notified. Private universities will not be permitted to affiliate any institutions and cannot have more than one campus. Representatives of the federal and state government will be members of the Board of Governors, and a representative of the UGC will be a member of the Board of Management. The UGC will have veto power in the formulation of the initial statutes of a private university, thus controlling all matters pertaining to appointments, admissions, scholarships, distribution of seats and fees.
The Private Professional Educational Institutions (Regulation of Admission and Fixation of Fee) Bill 2005 [PENDING] Aimed primarily at private (aided and unaided) professional colleges affiliated to a university, and prospective foreign education providers. Proposes the creation of a countrywide Admission and Fee Regulatory Committee to regulate the fees and admissions of private professional institutions. Seats in institutions are proposed to be divided into Management Category (MC) and General Category (GC), the former filled
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at the discretion of management, and the latter at the discretion of government. Proposed allocation of seats is as follows: o In minority-run aided institutions, the management may reserve up to 50 percent of intake under MC. o In minority-run unaided institutions, the management shall reserve at least 50 percent of intake under MC. o In a general aided institution, the management may reserve up to 15 percent of intake under MC. o In a general unaided institution, the management may reserve up to 50 percent of intake under MC. o In all institutions, 15 percent of seats from the GC may be filled on an all India basis by the federal government. o Reservation for SC/ST out of GC seats as prescribed by university to which an institution is affiliated. MC seats are to be filled via a common entrance test conducted by an association of private aided/unaided institutions; GC seats are to be filled via one or more qualifying exams prescribed by the university to which an institution is affiliated. Importantly, the Bill requires foreign education providers to be deemed as universities by the federal government. Such institutions would then be subject to the following regulations: o Admissions to be based on the university’s own national common entrance test. o 50 percent of seats to be reserved for students from the state in which the university is located. o Reservation for SC/ST and other disadvantaged groups as prescribed by UGC.
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o National Admissions and Fee Regulatory Committee to decide fee structure. o UGC permission required for foreign providers to start admitting students.
The Foreign Educational Institutions (Regulation of Entry and Operation, Maintenance of Quality and Prevention of Commercialisation) Bill 2007 [TO BE INTRODUCED] This Bill continues to require foreign education providers to be notified by the federal government as deemed universities; however it exempts Indian institutions teaching courses or running programmes in collaboration with a foreign institution. New entrants are required to have a corpus fund of at least Rs. 100 million (approx. $2.5 million). Application procedure for new entrants is as follows: o All applications are to be submitted to the Secretary of the UGC. o Upon submission, UGC Secretary will forward the application to the relevant regulatory agency or agencies (UGC, AICTE, Medical Council of India, Bar Council of India, or other professional councils), which must give its recommendations within three months. o On the recommendation of the relevant agency, the UGC Secretary must within the next three months submit his/her recommendations to the UGC. o The UGC will consider this report and advise the federal government as to the fitness of the applicant for deemed university status. o The federal government may then notify the applicant as a deemed university. Out of the income earned from its corpus fund, the foreign provider must use not more than 75 percent for the development of its institution in India, and return the
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remaining amount to the corpus fund. Importantly, institutions of repute may be exempted from the provisions of the Act by the federal government, provided they invest at least 51 percent of the capital investment required to establish their institution in India, and that they do not repatriate any surpluses to their home countries.
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