Essay on the Privatization of Education in India

Essay on the Privatization of Education in India


Since the impact of privatization is penetrating all sectors of the economy, it is bound to affect education sector as well. As it is very difficult to meet the democratic aspirations of the people for further expansion of educational system due to paucity of resources it is therefore, being felt that the private sector is inducted in education so that it car share the burdens of the state in funding education.

Development of Thought:

In India, the privatization of edu­cation has been taking place at the school level without much resistance. But it has not made much dent into other levels. However privatization, though necessary has some drawbacks. Private education trusts often become merely profit making business ventures with no social ideals or objectives.

If privatization of education comes into conflict with the equity objective, state intervention would be desirable. It is necessary that state intervention be in­creased in private sector institutions to increase the quota of seats to the poor and deprived sections and help in promoting human resources development to keep pace with the emerging requirements.

It is important to see that a thorough change is at­tempted without merely making cosmetic changes. Only then can our educa­tion system be revamped in the desired direction.

The wave of privatization is sweeping across the world. Within an economy, it is aimed at breaking the monopoly of the public sector in a number of areas, more especially areas connected with infrastructure. The essence of privatization lies in the induction of private ownership in publicly owned enterprises.

This can range from total denationalization (zero public ownership) to various degrees of private ownership in the form of joint ventures. This is the narrow sense in which the concept is used, but in a broader sense, it connotes besides private owner­ship. Introduction of private management and control in public enterprises.

The process involves the private sector in the ownership or operation of a state owned enterprise. Since the impact of privatization is penetrating all sectors of the economy, it is bound to affect education sector as well. The question arises: Why is privatization being recommended in education.

Firstly, it is alleged that the policies followed in India under the Nehru- Mahalanobis Model placed excessive responsibility for the expansion and devel­opment of education on the state. Consequently, the expansion and establishment of education institutions and facilities have been shouldered mainly by the State.

At the elementary levels of education, the state-sponsored schools have been responsible for the spread of literacy, more especially in rural areas, but even in urban areas, bulk of the schools are state run or aided by the state.

At the level of secondary, higher secondary and the college and university as well, public sector has played a dominant role in the development of education system.

A stage has now come when the state is finding it very difficult to meet the democratic aspirations of the people for further expansion of educational system due to paucity of resources, because the demand for funds for the educational sector has to compete with the demand for resources for the other sector.

It is, therefore, being felt that the private sector be inducted in education so that it can share the burdens of the State in funding education.

Secondly, the expansion of the horizons of knowledge is taking place at a rapid pace all over the world; the underdeveloped economies must keep pace with this explosion of knowledge.

Emphasizing this point the World Bank has stated: "Today knowledge explosion is dividing the world into fast moving, rich economies that use knowledge effectively and slow moving, poor economies that do not. Education or knowledge industry is becoming a key factor in the pro­cess of development.

This being so, education is no longer viewed as a social service, it is con­sidered a necessary economic input and as such investment in education is treated as a factor contributory to human resources development.

In this effort towards human resource development, the private sector is also expected to play its part since it is a major beneficiary of the knowledge industry.

Thirdly, according to W.W. Rostow, the world is passing through the fourth Industrial Revolution (1985). This encompasses genetics, communications, ro­bots, lasers and new industrial material and the various tools and products incor­porating the micro chip.

The growth of Satellite TV and the developments in computer technology have further escalated the information revolution. These technological developments have increased the requirements of highly educated and well-trained technical manpower.

The public sector is hampered by lack of resources and cannot meet the needs of industry and other sectors of the economy. Therefore, the private sector must be initiated in the programmes of training skilled manpower to take advan­tage of hi-tech opportunities.

Fourthly, privatization can respond more promptly and efficiently than the public sector which is hamstrung with structural and operational inflexibilities to market signals or market demand for labour and take effective steps to promote human resource development to keep pace with the emerging requirements.

Fifthly, over the years, the public sector has failed to generate resources from the recipients of education. Education has become more or less a free public service.

This has devalued education in the eyes of the recipients. Privatization, by charging the full cost or a substantial portion of the cost and at times, by charging cost-plus pricing for the service provided is likely to generate greater responsibility among the recipients of education i.e., the students.

As a consequence, students are likely to insist on greater efficiency in teaching and improvement in its quality.

Lastly, privatization, by generating more resources from student fees, will help to reduce fiscal burden on the Government.

The major components of privatization of education include the following: Establishment, in the private sector of institutions imparting education and skills viz., schools, colleges, polytechnics, research laboratories, professional colleges in agriculture, engineering, medicine, management etc. Withdrawal of subsidies by introducing full costing in the individual and the institutional domain.

In case this is not possible all at once introducing a system of gradual withdrawal of subsidies by increasing fees over a time and in the interregnum, continuing a declining scale of state support. To introduce the culture of private organization by granting the management the right to hire and fire academic and other sup­porting staff.

To grant the right to the management to start or stop courses in response to market signals. To persuade the users of the output of educational institutions to contribute towards the funding of educational expenditure.

In India, the privatization of education has been taking place at the school level without much resistance. A dual system has come to be established at various levels of school education.

In the public sector, we have primary, second­ary, and senior secondary schools which impart instruction through the mother tongue at the primary stage and thereafter, English is introduced as a language along with other subjects. Up to the 10th standard, all children have a common syllabus.

Thereafter, they go in for specialization in different areas at the higher secondary level. The fee charged in these schools is very nominal. Thus a very large number of students coming from low income groups can afford instruction in these schools.

As against these schools which are directly under the management and control of the state, we have schools run in the private sector which in popular parlance are called "public schools''-a misnomer, because most of these schools are established and run by private entrepreneurs in education, on commercial lines.

These schools impart instruction through the medium of the English language. They charge very high fees which cover not only the current cost of education but also contribute towards the cost of buildings and other equipment.

The educational entrepreneurs, taking advantage of the high demand for education in English medium schools, generally get land allotted at a nominal cost in the name of some educational society formed for the purpose. In the initial stages, some temporary structures are put up.

Later on, as students are admitted, funds begin to flow in the name of development fee, building fee, tuition fee, games fee, cultural programmes fee etc. These institutions charge cost plus pricing for the services rendered by them.

Since they are unaided schools and do not receive any grant from the Gov­ernments they pay very low salaries to their academics and other staff.

The prevalence of high degree of unemployment helps them to recruit qualified staff which works under a rigid discipline and is liable to summary removal at the will of the management. The high degree of insecurity of service enables the manage­ment to extract the maximum output from the staff.

Some of the schools functioning under the auspices of reputed educational denominations do pay better salaries and pay scales, but even these do not compare: favorably with the State-run schools.

Over a period of time, these schools are able to construct huge buildings and purchase costly equipment to modernize their establishments.

In this way, a large percentage of unaided private schools have converted education into business enterprise. Earlier these schools were confined to metropolitan areas and big cities, bait now they are spreading even to smaller towns.

Even the charitable trusts like the DAV managements, Khalsa Dewan, Gurudwara Prabandhak Committees, Sanatan Dharam Foundation, etc. Which initially were motivated by the urge to impart instruction in Indian languages and propagate Indian culture have been swept off their ideological postures by the entrepreneurial pragmatism of privatization.

However, they continue to use the trade-marks of their religious or social organization to get concessions and facili­ties, especially land at throw away prices from the Government.

In several cases, a chain of English medium schools is operated under a particular organization. With the passage of time, the philanthropic spirit of the founders of these organizations has been replaced by a commercial approach which legitimizes the selling of education at the highest price possible.

These schools cater to the needs of the rich business class and also to the middle and the upper middle class wanting desperately to transcend their present status.

In other words, the privatization of school education is rapidly churning out the children from high income groups into English medium 'public schools' while their counterparts from the poor and lower middle classes continue to go to State-run schools.

In these English medium public schools, parents pay the full cost of educa­tion (generally leaving a good profit margin for the educational entrepreneurs) while, in the state run schools, highly subsidized education is imparted in the vernacular.

At the higher education level, the scenario is very different. Malcolm Adiseshaiah (1992) has classified higher education institutions in India into four groups: those founded, funded and run by the state governments; those founded, funded and run by private agencies; those founded, and run by private agencies but funded by the government; and those founded and run by private agencies but funded partly by government and partly by non-governmental sources.

Majority of the institutions in higher education belong to category 'd', but under pressure from teachers association, they are moving into category 'c'.

The Acharya Ramamurti Committee to Review the National Policy of Edu­cation (1986), in its report towards an Enlightened and Humane Society (1990) mentions: "Though education has been in the Concurrent List in the Constitution since 1976, it remains primarily a state activity.

Bulk of the investments is made by the state governments. Free and compulsory education is expected to be provided by the States for all children up to 14 years of age. In most states, education is free in the entire school stage. Up to class XII education is free for girls in all the states.

The fee structure for higher education in the colleges and universities has virtually remained unchanged for many years. The pattern of educational development has, consequently, come to be dependent on the avail­ability of public resources for education."

Data reveal that the share of the Government in financing education has increased from 68 per cent in 1950-51 to 85 percent in 1980-81. However, the share of fees has declined from 20.4 per cent in 1950-51 to merely 12 per cent in 1980-

Sudipto Mundle and M. Govinda Rao have calculated the subsidies going to education at different levels. Data reveal that since elementary education was to be provided on a free and compulsory basis as per constitutional directive the recovery was expected to be negligible.

But the unfortunate fact of the educa­tional scenario is that even at the secondary and University/higher education level, recovery cost is less than two per cent.

In other words, education at all levels is practically available at a nominal cost. It may also be noted that about 74 per cent of the total subsidy (Rs 9,576 crores) finances elementary and sec­ondary education and 19 per cent is devoted to university and higher education.

Data regarding State-wise recovery rates of cost of education at various levels in 14 major states of India for 1987-88 reveal that lowest recovery rate in higher education is observed in Uttar Pradesh (0.13 per cent), followed by Madhya Pradesh (9.5 per cent), Kerala (7.85 per cent) and West Bengal (7.56 per cent).

However, the recovery rate of Bihar even in technical education is dismally low at 0.53 per cent. There is no doubt that some states have recently taken some strong measures to increase the recovery rate by raising tuition and other fees, but still the overall scenario that obtains in the sphere of higher education indi­cates that there is a considerable degree of lack of courage to raise the level of fees, even through bulk of the beneficiaries belong to the relatively upper income groups.

Dr. B Shiva_ Reddy has analyzed the impact of subsidies on the recipients of education from the point of view of equity. For this purpose, he has classified subsidies under two heads: General Subsidy (GS) and Specific Subsidy (SS). GS is enjoyed by all students irrespective of economic or social groups to which they belongs.

However, mainly aimed at students belonging to lower socio­economic groups and hence benefiting only a specific section of student's viz., Scheduled Castes (SCs), Scheduled Tribes (STs) and Listed Backward Commu­nities (LBCs). In 1980-81, about 22 per cent of higher education subsidy was a specific type. SS not only covers tuition fee but also other educational expenses.

The Supreme Court, in its judgment on the Mohini Jain vs. the Govern­ment of Karnataka case, declared in 1992 that the right to education was a fundamental right and that the charging of capitation fee was arbitrary, unfair and, therefore, violate of the fundamental right to equality contained in Article 14 of the Constitution. Mohini Jain, the petitioner in the case, was admitted to the medical college in Karnataka, but she could not take advantage of admission as she could not pay Rs 60,000 per year as capitation fee.

There is no doubt that fees at state-run medical colleges are pitifully low and, therefore, they subsidies education of the more affluent sections of our society and thus there is a case for raising fees in such institutions, but this does not entitle the private entrepreneurs in education to charge such heavy capitation fees that it virtually denies equality of opportunity to the poor for professional education.

S.P. Sathe has rightly argued: "If access to such professions is avail­able on merit, respect for meritocracy is enhanced. On the other hand, if one can have access to these professions on money power, it would lead to further deni­gration of merit as a value

Consequently, the State may allow private institutions to provide education but such institutions have to be subjected to control of the state and have to conform to what the Constitution of India enjoins. Privatization of education if comes in conflict with the equity objective, state intervention would be desirable.

This is precisely the import of the Supreme Court judgment. Amartya Sen also pleads for state intervention in health, education and social security.

To quote, Amartya Sen: "Given the limitations of market-based allocation of health ser­vices, education and social security, it is not surprising that the market-relevant economies, even when very rich, frequently have lower achievement in terms of standard indicators of quality of life than poor economies making better use of public delivery of health care, education and social insurance."

A distinction has to be made between privatization and commercialization of education. India has a long tradition of private effort in higher education. Tilak, Maharishi Karve, Madan Mohan Malaviya, Sir Syed Ahmed Khan, DAV Trusts, Sanatan Dharam Sabha, Khalsa Dewan, Jamia Milia Islamia and many other charitable trusts started educational institutions to widen educational opportunity in the society.

But modern educational entrepreneurs are not guided by philan­thropic motives of the earlier reformers, but intend to invest in educational institutions to realise higher rates of return on their investments, because the demand for professional education is very high and the risk involved in this investment minimal.

But this approach comes in conflict with Article 21 in conjunction with Article 14 of the Constitution and thus it has compelled Justice Kuldip Singh to hold that "capitation fee, charged with the connivance or permission of the State amounts to violation of the right to equality."

Thus both from the point of view of accentuating social inequality and resultant adverse effects on educational standards, the decision of the Andhra Pradesh Government to permit filling up 50 per cent seats on the basis of capitation fees was held violate of the Con­stitution.

Article 21 enjoins on the State to enable people the right to live which has been expanded and interpreted by the Supreme Court as the right to live with dignity. Besides this, Article 41 directs the State as under: The State shall, within the limits of its economic capacity and development, make effective provision for securing the right to education.

Further, the State has been directed under Article 45 to Endeavour to provide free and compulsory education for all chil­dren until they complete the age of 14 years within a period of 10 years of the commencement of the Constitution.

There is unanimity regarding the provision of free and compulsory education because in the theory of public finance, it is argued that primary education is an essential social good as it involves many social benefits.

It is also held that taking into account the widespread social benefits of literacy, the rate of return on primary education is the highest. But higher edu­cation is also a merit good because it enhances the capabilities and efficiency of the citizens.

It is, therefore, incumbent on the State to ensure that higher education is provided to meet the demands of competent and skilled manpower. The state should ensure that the entitlement to higher education is based on the principle of merit, rather than the capacity to afford.

It is this aspect of higher education that has compelled the Supreme Court to declare right to education as a fundamental right even in sphere of higher education.

Since all fundamental rights are enforceable only against the state, how is that the Supreme Court struck down the legislative sanction provided by the Andhra Pradesh Assembly to charge capitation fees by the private entrepreneurs of education. Explaining this riddle, E.Nagasaila and V.Suresh clarify: "It is only because the SC held that there is a fundamental right to education and the state is duty-bound to provide the same, and any private venture in the field of edu­cation can be only by way of delegation of the state's duty, could the charging of capitation fees be struck down as being arbitrary and hence violated of Article 14 which guarantees equality to all citizens.

If the state's duty to provide education at all levels is not recognized, then the private entrepreneurs are under no obligation to act either fairly or in accordance with larger goals of the Con­stitution and would be quite justified in having profit as the only motive in running education institutions."

In the theory of privatization as applicable to industry, the firms have been insisting on an exit policy and their inalienable right to hire and fire staffs, their right to stop the production of a product which no longer enables the firm to earn profit or even the right to close the unit if it becomes sick.

The question in the privatization of education is: Would it be possible or desirable to grant this right to private entrepreneurs of education? Finally, the right to hire and fire staff existed in the pre-independence period in educational institutions run by the private trusts and this led to ruthless exploitation of both teaching and non teaching staff.

It was precisely this policy of hire and fire which led to the development of teachers' organization and gave them the characteristics of trade unions.

As a consequence, they were able to win the right of security of service. The pendu­lum seems to have swung to the other extreme and this absolute security of service is the cause of serious deterioration in work ethics.

On account of the trade union pressure, it may neither be possible nor desirable to introduce Jaissez faire in higher education, but it would certainly be desirable to introduce measures of accountability in the system.

The unfortunate part of the present situation is that even promotions have become automatic- based on the years of service put in and the competitive spirit of achieving higher academic merit either from advanced reading or research is being relegated to the background.

Secondly, the right to start or stop courses, depending upon viability, that is, profitability of a course would commercialize education. This would be very unhealthy development because in the education sector, everything should not be judged on the touchstone of the profit motive.

There are courses in Sanskrit, other less known languages, social sciences, physical sciences which may not attract a very large number, of students, yet from the point of view of preservation of past knowledge and culture, they may be important in their own right.

Since privatization should not be treated as synonymous with commercialization, the right to start or stop a course cannot be given to private entrepreneurs due to the very nature of the business in which they have made an investment.

However, the need for rationalization of staff due to the limitedness of resources and failure to generate more resources from the recipients of education has to be accepted.

Education is a public and merit good and as such, it is incumbent on the society to provide education to its people. It has been enshrined in our Consti­tution under Article 41 that "the state shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want."

Obviously, as the development of the society takes on rapid strides and the economic capacity of the state is enlarged, it is obligatory on the part of the state to allocate more resources to education with a view to (a) provide free and compulsory elementary education to all children up to 14 years of age, (b) to provide secondary and higher education to more and more of its citizens so that they can exercise their right to live with dignity, and (c) that the state shall Endeavour to provide equality of opportunity among not only individuals of opportunity but also groups of individual suffering from various disabilities such as that of caste, sex, economic and social deprivation etc.

On the question of privatization, it would be relevant to consider the forms of privatization: Zero privatization of education with total responsibility to be taken over by the State at all levels. Mild privatisation of education and by gradually increasing recovery cost of education by way of fees to 50 per cent level. The remaining cost should be subsidized by the state.

Intensive privatisation by insisting that at least 75 per cent cost be covered by student fees and employ­ers' contribution. Total privatisation with total freedom to private sector to es­tablish educational institution sand recover full cost from the beneficiaries or even charge cost plus pricing and generate profit from investment in education.

Out of these forms, the first and the last option cannot be considered as feasible, since in a mixed economy, it is neither feasible not desirable to depend exclusively either on the public sector to expand the capacity of public sector institutions to fully meet the needs of the economy, nor is it possible for the private sector to cater to total societal needs.

There is no doubt that the public sector institutions both at the school and the College/University, level have a much better record of responding to the social needs of SCs and STs and other backward sections of the society than the private sector institutions.

It is, therefore, necessary that state intervention be increased in private sector institutions to increase the quota of seats to the poor and deprived sec­tions. This can be made applicable to private sector institutions which receive government assistance to cover their deficits.

Even in fully financed private sector institutions, as per the Supreme Court Judgment, education is a fundamental right and no institution can be permitted to charge capitation fees which deny admission on the basis of merit and permits higher education/professional education on the strength of money power.

The state must enact suitable legislation to impose reasonable restrictions on such institutions consistent with the goals enunciated in Article 21, Article 41 and Article 45 of our Constitution.

While framing legislation, it has to be ensured that privatisation does not degenerate into commercialization of education. With this end in view, a system of grant of free ships for the economically weaker sections of society has to be built in and rein, forced.

Private sector institutions should also take affirmative action to help the weaker sections to acquire professional/higher education which is otherwise not within the reach of the society.

For nearly four decades, fees in higher education have remained stagnant at 19 -50-51 levels and thus the share of fees has come down to only five per cent of total educational expenditure. In the Universities, it is less than one per cent.

The state has been caving in due to the pressure of organised student unions dominated by student leaders belonging to affluent parents.

This trend needs to be reversed. In the course of the next 10 years, fees as a component of total recurring expenditure should contributed at least 25 per cent of total expenditure. Such stipulation should be made contingent for the receipt of grants. This re­quires a phased programme of raising fees.

The Ramamurti Committee (1990) made the following recommendation in this regard: "In the circumstances, a justifiable strategy is bringing about an appropriate increase in the fees payable by students going in for Higher Educa­tion.

This increase should be appropriately linked to at least the cost of recurring expenditure and levels of income of the parents of the beneficiaries.

The richest quartile of the people can be a 75 per cent of the cost of the education; the next richest quartile 50 per cent of the cost and the next richest quartile 25 percent. The last quartile of the economically weak (to be appropriately defined) need not bear any part of the cost".

Although apparently, the recommendation of the Ramamurti Committee appear to be very rational as it prescribes a differential fee structure on the basis of four broad slabs, in practice it is very difficult to implement.

In a country, were a small proportion of the population is engaged in salaried employment and a very small proportion pays income tax, it is quite possible that during the course of implementation, the business classes may not get caught in the net and the entire burden may be put on salary earners.

A more pragmatic approach would be to prescribe a uniform system of the higher fees and within the system to permit 25 per cent of the students belonging to weaker sections full exemption from fees.

Such a step would increase the recovery rate and thus reduce the state burden on education. Coupled with this, there should be periodic revision of fee structure so that resource generation from fees accounts for at least 25 per cent of total recurring expenditure in State run or state-aided institutions.

"Besides tuition fees, fees charged for specific purposes in the Higher Edu­cation Institutions like laboratory fees, library fees, building fees, magazine fees, games fees etc., also have to be increased on a rational basis with reference to the costs of providing the relevant facilities/services".

"With the ever-increasing number of examinees, examination fees can also be an important means of raising internal resources to meet the cost of Higher Education".

The basic purpose of Ramamurti Committee's suggestion is to increase the recovery rate in higher education costs by reducing the element of subsidy. In that sense, the recommendation appears to be overdue.

Education Cess or Graduate Tax has also been suggested by the World Bank to be charged from the users of output of higher educational institutions, more especially the corporate sector.

The Ramamurti Committee is very skeptical about this suggestion as it states: "Graduate taxes, if any, are to be imposed upon the beneficiaries i.e. the users of services of graduates, namely, employers.

However, the employers are likely to resist imposition of such taxes on ground of economic viability of their own operations getting adversely affected. This is also likely to result in discouragement of employment of the qualified."

In our country, the corporate sector is the biggest user of educated man­power, but is not prepared to contribute anything to the higher education sector. This is in sharp contrast to the situation prevailing in developed countries where the Universities receive substantial support from the corporate sector by way of grants.

Either the corporate sector itself starts funding higher education as a matter of policy, or alternatively the state should impose education Cess on the corporate sector so that a certain portion of its gross profits is utilized to fund higher education.

This education Cess should be a kind of surcharge so that it cannot be evaded. Ramamurti Committee is unnecessarily apprehensive of the resistance by the employers not to employ graduates.

The kind of manpower needed today due to the electronics revolution needs much highly skilled and educated manpower and persons trained in professional education. Such a fear, therefore, appears to be unfounded.

Universities/Higher Education Institutions can undertake Research Projects on behalf of the Corporate Sector (both the public and the private corporate sect or).

A part of the Research Project funds can be used to supplement the deficit of the Institutions or to create suitable infrastructures in the form of research laboratories, computer facilities,- libraries to conduct research in a com­petent manner.