Govt must do more to boost private participation in education: Experts

Call for rule tweak to allow institutes to accumulate surpluses and reinvest them

With government support in higher education saturating, various stakeholders have called for more private participation in the wake of the Union Budget announcements.

Unlike China, where universities are largely backed by the government, or America, where the share of private endowments is high, India has been in the median.

However, with Finance Minister Nirmala Sitharaman opening foreign direct investment (FDI) and external commercial borrowing (ECB) in higher education, sector experts believe the government could further push private participation.

Harvard University gets to invest an endowment worth $40 billion in various ways. Our higher education institutes lack that scope, stakeholders say.

"FDI and ECB are being allowed, but the government needs to ensure whoever lends their money to education institutes will have the wherewithal to get the money back. The institutional structure currently doesn't allow an educational institution to borrow money with ease; nor can it accumulate a surplus and/or invest in profitable ventures," says Narayanan Ramaswamy, partner at consultancy KPMG India.

Citing a Kpmg-federation of Indian Chambers of Commerce and Industry research study, he says that up to ~80,000 crore could accrue into Indian higher education over five years. But, there is a catch. “Since higher education institutes are trusts, societies and Section 8 or nonprofit companies, you can't hold more than 15 per cent of a surplus and cannot reinvest freely. So, how do you make ECB and FDI happen? We need institutional mechanisms and structural flexibility. If one can do that with pension funds, why not with higher education?” Ramaswamy asks.

For now, the Budget announcement might lead to changes in the sector that are likely to be “incremental in nature rather than a big push to education”. Especially since the finance minister had mentioned the need to respond to aspirational India, says Rajan Saxena, vice- chancellor at SVKM’S deemed university, NMIMS.

JSS Academy of Higher Education & Research, globally ranked on the basis of research and innovation, feels private funding and participation could further the government's objectives in the sector.

“Developed economies have grown in recent past on the back of science and technology innovation. Investment in such innovation needs to be driven in India. The way forward for this is private and foreign participation in higher education. The private sector in education need not be seen with suspicion, but as participants,” says B Suresh, vice-chancellor at JSS.

Adding: “Profit-driven education is inevitable but can be balanced in such institutions through government monitoring.”

The finance minister's Budget proposal for starting degree-level online education programmes, as well as holding an IND-SAT test for foreign candidates looking to study in India, have been welcomed. “The online education announcement is a good measure. It will help underprivileged sections and unreachable locations derive the benefit of quality education. Online education programmes by the top 100 NIRF ranked institutes is a welcome measure,” says Ramaswamy. NIRF is the Union HRD ministry’s National Institute Ranking Framework methodology. However, say observers, the government could also bring some changes for the proposal to take effect.

“NIRF is already a benchmark in the Budget announcement, which is a good move. But, the approval process is so rigorous that many a time, institutes don't go ahead in applying for online programmes. The whole process needs to be eased, so that online education can be offered at lesser cost,” suggests Suresh.

Higher education experts like Saxena also believe the online education proposal could be taken a step further. “Institutions should be allowed to reach out to the national market and those categorised as Category–i or II should also be allowed to access foreign markets, where demand for Indian education, especially among Indian diaspora, is high.” As a National Education Policy is likely to be announced soon, the sector also expected “significant change in education infrastructure, regulations and financial outlay for higher education”, Saxena adds.

Ramaswamy feels primary and secondary education should also have got a Budget mention. “What has been disappointing is, at a time when learning outcomes at school levels have become crucial, there is no mention of it in the Budget — and no mention of teacher development. Early childhood, too, sees no mention. Skill development gets just ~3,000 crore but how will the government make sure the job seekers are relevant? Maybe in the ~99,300 crore allocation, some get addressed.

Also, some sectoral allocations might have some budget for skill development — which we don't know yet. There is even mention of new-age skills like AI and VR but how will this be made effective is not clear,” he adds.