Privatisation of higher education is rapidly progressing in India. The Planning Commission reports that in the period 2002-2007, the share of private institutions in higher education increased from a third to over half of all enrolment. And this trend, by all accounts, will continue into the future.

Most private self-financing institutions (simply referred to as private institutions, hereafter) offer education in only a few disciplines - engineering, medicine and management being the favourites. They account for around 80 per cent of engineering and over 50 per cent of medical 'seats' available to students. The preference of private promoters for 'job oriented' disciplines is understandable; students will pay high fees only if their prospects of employment following the courses are high.

Regional imbalance

Maharashtra, Andhra Pradesh, Tamilnadu and Karnataka provide, it appears, a more conducive environment to establish private institutions, than the rest of the country. Sixty per cent of the private medical colleges in the country are located here. A similar situation holds for engineering and nursing. A majority of the private 'Deemed Universities' are also in these states.

The rapid growth of private institutions in these four states has resulted in a strong regional imbalance in the spread of professional education in the country. These states, with 25 per cent of the population of India account for over half of engineering and medical colleges in the country. Just Karnataka & Maharashtra have half of all the hotel management institutes while Andhra Pradesh and Karnataka account for nearly half of all nursing colleges.

Academics have periodically drawn attention to this state of affairs. Prof. Anandakrishnan, Chairman of IIT Kanpur, was recently reported voicing his concerns: "In one year that the number of engineering colleges has gone up to 2250 from 1600. There is a mad rush for starting up engineering colleges. Also, the state of Tamilnadu alone has 340 engineering colleges. This is a scandal in technical education, and nothing much has been done to prevent this" (Times of India, 20 Oct 2008).

But regional imbalances notwithstanding, the Central government has welcomed the growth of private self financing institutions. It helps the Centre - and the States too - to show growth in enrolment in higher education without corresponding investment from public coffers. This growth has also taken some of the pressure off governments to ensure availability of skilled technical manpower in line with the needs of the economy.

Financing private education

In fact, encouraging private institutions has become a part of this Government's long term strategy for higher education. One of the measures adopted is to ensure that there is enough cash in the hands of prospective students to pay for the high fees demanded by private institutions.

Public sector banks are being persuaded and prodded by the government to provide educational loans to students. Private banks are more circumspect with these loans as they see associated risks. Loans amounting to over Rs.20,000 crores had been given to about 14 lakh students by the end of the financial year 2007-08. This amount was 35 per cent higher than the previous year and is set to grow by 40 per cent in 2008-2009. Indeed, Finance Minister Chidambaram has been proudly proclaiming that India holds the world record in the number of students who have been provided with educational loans.

Education loans are mostly given without collateral. Students are expected to complete their higher education with the help of the loans, and begin repayment in installments from their monthly salary once they get jobs. The employment prospects of the student determine their credit worthiness; understandably, therefore, these loans are biased towards professional courses.

The money loaned by the public sector banks largely makes its way into the coffers of private institutions, as few Government institutions (IITs and IIMs being among them) charge a high fee. Banks even tie up with select private institutions to offer loans at some discount to the standard rate. The example of student loans in Kerala is illustrative. Loans totalling Rs.495 crores were sanctioned to 12,958 students in the year ending 30 June 2008. About 75 per cent of these loans were for students pursuing nursing education in private institutions in Karnataka & Andhra Pradesh. (IANS, Oct 8, 2008)

The student loan disbursement of over Rs.20,000 crores by public sector banks till the end of financial year 2007-08 stands in striking contrast with the total central plan allocation for higher education - Rs.3263 crores for 2007-08 and Rs.7600 crores for 2008-09. (Times of India, 20 Oct). The numbers spell out the difference it would make to the funding of the public higher education system if the government were to create the conditions for it to absorb the educational lending from the public sector banks.

The quality of manpower

But education is not just about enrolment numbers. What is the quality of education provided by private self financing institutions? While there are excellent private institutions that have been established over the years like BITS, Pilani and Thapar University, Patiala, the concern here is about the large number of institutions that have mushroomed in the last decade or so.

Students are beginning to shun some colleges they perceive as being of poor quality. 'Seats' are actually remaining vacant in certain colleges/subjects in Tamilnadu and Karnataka in spite of the increasing number of overall applicants. (Mint, 7 July 2008)

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Industry has not been happy with the quality of engineering graduates, more than 80 per cent of whom are from private colleges. The NASSCOM-McKinsey Report of 2005 found that that only 25 per cent of Indian engineers were employable in the offshore IT industry. But the boom in the industry has been such that even those with the poorest education have been finding jobs.

The view of respected academics on the quality of private institutions can be obtained from the work done by the National Knowledge Commission (NKC), an advisory body set up by the Government in 2005 to examine issues related to education. The NKC working group on medical education chaired by Dr. Sneha Bhargava, former Director, AIIMS, clearly finds that the rapid expansion of private medical and nursing colleges has led to falling standards and reduced quality of graduates. Student admission is not transparent in the private colleges. Many of the colleges have started functioning without adequate infrastructure, and hence provide only substandard education. The regulatory bodies are lax.

The group voices the strong opinion that "those colleges not having the scientific and ethical infrastructure and expertise do not deserve to exist. Poor quality commercial training shops producing poor quality manpower cannot be left loose on a hapless trusting public."

The NKC recommendations on engineering education find the standards of a very large proportion of institutions "at the bottom of the pyramid" to be abysmal. The working group on engineering education chaired by Prof. Ananth, Director, IIT Chennai, finds private self-financing colleges typically lacking in vision or mission, staffed mostly with inexperienced and temporary faculty and with no R&D capability. It raises concerns about the consequences of rapid expansion of engineering education without investment in faculty development and R&D.

Regulation under a shadow

If private colleges are providing a poor quality of education, who is to be held responsible? Multiple regulatory agencies exist for different streams of education in the country. Technical education is regulated by the All India Council of Technical Education (AICTE). It is the authority that licenses technical institutions. The AICTE has constituted another body, the National Board of Accreditation (NBA), to certify quality of technical institutions. Medical education is regulated by the Medical Council of India (MCI) and nursing education by the Nursing Council of India. These institutions look after all aspects of education in their spheres including quality. All the regulatory agencies have been set up by the Central Government.

The blame for the mushrooming of poor quality institutions and their concentration in a few areas must squarely rest with the regulatory bodies. The NKC agrees. The NKC working groups also comment on the reasons for this.

The working group on medical education finds that "without genuine autonomy or authority, it (MCI) is unable to fully discharge the present responsibility". The lack of autonomy alluded to is autonomy from the central government represented by the Health Ministry. In a like manner, the working group on technical education finds that the regulatory body, the AICTE, is lacking in autonomy (from the central government, represented by ministry of Human Resource Development). It stresses that quality of education is linked with the integrity of the regulators: "It is critical that Regulatory and Accrediting bodies be free of corruption and insulated from political influences. As of now neither AICTE nor the NBA satisfy these criteria."

This is a telling commentary on the regulatory bodies!

Charity or profit?

Private educational institutions in India are run by educational trusts or by societies. Educational trusts are entitled to benefits from the state such as land at concessionary rates, and also tax exemptions, as they are considered to be not-for-profit institutions. But the reality of a large number of private institutions in the southern states and Maharashtra belies their non-profit status. They run primarily based on the high fees they charge from students rather than on funds with the trust. In addition, they collect large sums in cash for favours. The only investment they have made is in physical infrastructure like land and buildings.

The situation with respect to medical institutions is described by the NKC working group. "In spite of several orders of the Honourable Supreme Court of India, from the Unnikrishnan Judgment in 1993 onwards, admissions to the vast majority of self financing Private Medical Colleges in India are still based on the collection of large sums of money, usually in cash, as capitation fees, in addition to the sizable tuition and other fees charged. A Common Entrance Test conducted by associations of such colleges to determine the merit has not changed the situation at all. There are a number of ways in which the merit list is manipulated to ensure that the candidates who have effected payment are appropriately graded"

The educational bureaucracy itself can be typically negotiated only with political influence, as is reflected in the large number of politicians associated with or promoting educational trusts.

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 •  Date-expired syllabi

The cost of private medical education is so high in India that students are even prepared to go to China to study, despite the language difficulties. The Tianjin Medical University, for example, has 400 Indian students on its rolls. Students consider the $3000-$4000 they have to spend for tuition, board & lodging per year as cheap, as they have to spend four times that in India. (Times of India, 26 Jan 2008)

Even though the strategy at the highest levels of Government may be to encourage private entities in higher education, the regulatory framework evolved over many years presents a number of procedural hurdles. Permissions and approvals are needed from the University that an institution wishes to be attached to, the government of the state where it will be located and regulatory bodies like the AICTE and MCI. The educational bureaucracy itself can be typically negotiated only with political influence, as is reflected in the large number of politicians associated with or promoting educational trusts in the southern states and in Maharashtra. Establishing a private University requires an Act of the state legislature and is therefore impossible without strong political connections.

On the other hand, the procedural hurdles and the formal non-profit orientation of private educational institutions serve to discourage corporate entities. The periodic calls for deregulation of higher technical education by industry bodies like NASSCOM and ASSOCHAM can be understood in this light.

The picture that then emerges is of mushrooming private institutions with strong political connections generally providing low quality education but charging high fees and often demanding other payouts; a regulatory environment with many controls but unable to assure quality of education or equity of access; regulatory organisations whose autonomy from Government, freedom from political influences and very integrity is under question; and lastly, a Government content to take credit for increasing enrolment in institutions of questionable quality.

Meanwhile, all indicators point to further deterioration in professional education in the immediate future with exponential increase in new private institutions. The Government response to criticism of the regulatory environment is contained in the 11th plan document: "A high-level committee will be set up to suggest a specific reforms agenda".