Indian Education Sector Growth and Challenges

8/9/2019 Indian Education Sector Growth and Challenges

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INDIAN EDUCATION SECTOR: GROWTH AND CHALLENGES

KD Raju

1. Where are We Now?1.1 Background

One of the most outstanding achievements of the past century has been the realizationthat education is an indispensable asset of every individual, every community and everynation. It can accelerate the march towards a better and higher quality of life. Educationalone can convert the dream of peace, freedom and social justice into a practical reality.The critical, comprehensive and fundamental role of education has been analysed,delineated and understood. Its difficult for one to keep himself aloof from the process ofeducation and educational development. Almost every one is a stakeholder in education.The National Educational scenario in India, as envisioned in its different educationpolicies, is a key instrument in ensuring access, equity, quality and relevance of educationat all levels. Education has been identified as a critical input for economic development,

more so, for human resource development. It is considered to be a key instrument ofnational development and individual welfare. It not only develops basic skill and abilities,but also fosters a value system conducive to, and in support of, both long term andimmediate national development goals.

The education sector in India is facing challenges and witnessing sea changes inthe recent past. The number of students and the demand for more educational institutionsare increasing. This includes the entry of foreign institutions and emerging of privatesector as a major player. The increasing demand in the higher education sector along withgrowing enrolment rates, government is not able to provide sufficient infrastructure andmake investments in the education especially, higher education sector. This gap ispresently filled by the private providers in the country. As a growing economy, the

adoption of appropriate model is important for the country. It will make important role tomake the country a knowledge economy by the year 2020. This is significant in a timethat more than one lakh students are going abroad for higher studies at the cost of morethan $1.5 billion a year.

The entire world is integrated through trade, information, science and technologyand the recent advancements has necessitated education sector in all the countries toemphasise on the development of communication skills and adequate knowledge ofinformation technology. This unprecedented development and the emergence of a newworld wide economic order has immense consequences and has direct bearing oneducation policies and strategies across the globe. It is time for all those concerned with

policymaking, planning, administration and implementation of education to revitalize thevery thinking on the subject and put it on the right track.

The objective of the paper is to make a comprehensive analysis of our strategiesand policies since independence in the education sector in the first part. The second part

Deputy Secretary, PHD Chamber of Commerce and Industry, New Delhi. He is also a FulbrightScholar and Doctoral Scholar at the Jawaharlal Nehru University, New Delhi. The views expressed arepersonnel. Earlier draft of this paper was published as PHDCCI working paper N0. III.


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examines where we want to reach in the next two decades. This is examined in thebackground of the opening of education sector under the General Agreement on Trade inServices (GATS) of the World Trade Organization Agreement (WTO). The third partgives some conclusions and policy direction to attain the goal.

1.2Constitutional StructureUntil the late 1970s, school education had been on the State List of the IndianConstitution, which meant that States had the final say in the management of theirrespective education systems. However, in 1976, education was transferred to theConcurrent list through a constitutional amendment, the objective being to promotemeaningful educational partnerships between the Central and State Governments. Today,the Central Government makes the national policies and the States have to follow it. TheNational Policy on Education (NPE) was formulated in 1968 and the National PolicyResolution of 1986, which was later, updated in 1992, where specific responsibilities fororganizing, implementing and financing its proposals were assigned.

The Central Government as well as the State Governments is empowered to make

necessary legislation to control and administer the education system in the country. InPart III of the Constitution,1 Article 15 (4) provides that nothing in this article or inclause (2) of Article 29 shall prevent the State from making any special provision for theadvancement of any socially and educationally backward classes of citizens or for theScheduled Castes and the Scheduled Tribes. Article 21 (A)2 provides that the State shallprovide free and compulsory education to all children of the age of six to fourteen yearsin such manner as the State may, by law, determine. However, this provision is stillwaiting for making it operational. To operationally this provision, Right to EducationBill, 2005 was introduced in the Parliament and still the modalities for implementationare working on. Article 30 provides for protecting the rights of minorities, not onlyreligious, linguistic minorities also.

In the directive principles of the state policy, Article 45 provides for compulsoryand free education to children until they complete the age of 14. With the objective ofoperationalizing this provision, the 86th amendment is made. According to theamendment, early childhood care below the age of six is assured by the government.Article 46 provides for protecting the interests and special needs of scheduled caste andscheduled tribe. Article 51A (k) provides that it is the duty of the parent or guardian of allchildren to give opportunities for education between the age of six and fourteen.

1.3Indias knowledge Potential1.3.1 Strength

India has a great pool of young generation which will be the main contribution to thegrowing economy in the future. It has great potential to make it into a knowledgeeconomy by 2020. According to 2001 census, there are 41.2 million are in the age groupof 6-24.

1 Fundamental Rights.2 Included by 86th Amendment in December 2002.


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Table I

Population in Age Group (2003)

AgeGroup

Total SC ST

6-11 13.1 2.6 1.411-14 7.8 1.1 1.4

6-14 20.9 3.7 1.9

14-18 9.0

18-24 20.3

06-24 41.2

Source: Department of Secondary and Higher Education, Govt. of India

The National Commission on Population expects working age population to compriseover 63 per cent of the aggregate by 2016. India has made tremendous progress to fightagainst illiteracy and reduced it into a reasonable level. India produces a large number ofskilled workers especially, in the information technology sector and exports them to

various parts of the world. The business exports including professional service exportsreached $15.4 billion in the first half of 2005-06. The share of service sector to the GDPhas increased to 54% in 2005-06.3 However, there is a huge gap between the actualpotential of India and its out put and to make it a knowledge economy.

Figure I

Literacy Rate

Literacy rate for the population aged 7

years and above

18.3328.3 34.45

43.57 52.2165.38

0

20

40

60

80

1951 1961 1971 1981 1991 2001

Literacy rate

Source: http://www.education.nic.in/stats.asp

The literacy rate of population above 7 years and above has shown an increasing trend

over the period of last 50 years. The literacy rate has increased from 18.33 percent in1951 to 65.38 in 2001.

3 Economic Survey, 2005-06, p. 3.


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Figure II

Adult Literacy Rate

Adult literacy rate for population aged

15 years and above

27.76

34.08

40.82

48.54

54.32

57

0 10 20 30 40 50 60

1961

1971

1981

1991

1996

1998

Adult literacy rate


The adult literacy rate has also shown an increasing trend. It has increased from 27.76

percent in 1961 to 57 percent in 1998. The OECD countries will face the problem ofaging in their population for the next 20 years, which will affect the workforce andultimately the economy. This will give more employment and labour mobility to theskilled workers from the developing countries. At present more than 35% of the Indianpopulation is below the age of 15.4 The young generation is the asset for the future, butto make it as a trained manpower is the task before the country.

1.3.2 Weakness

It is an embarrassing situation to note that only 63 per cent of the population are literate(male 73% and female 50%). At the time of independence in 1947 the literacy rate wasonly 14%. The growth in the past is a good achievement, but nearly 430 million peopleare illiterate even now. According to UNDP it is nearly 650 million people, whencompare to China the literacy rate is 93%. The drop-out rate in schools from lowerprimary to higher secondary, including those who never attended school is 90% to 94%.5The Government of India made a promise, reiterated in the National Education Policy(NEP 1986) and the Programme of Action 1992, to provide free and compulsoryeducation to all children at least up to the elementary stage and to work towards provisionof education of a satisfactory quality to all children up to 14 years of age before thecommencement of the 21st century. The Right to Education Bill, 2005 was introduced inthe Parliament to achieve this objective. Still the Bill is pending for approval both housesof Parliament. There should be special initiatives and outreach programmes are requiredto bring 100 million children into the mainstream for making India a knowledgeeconomy. The government spending has to be increased from the present level of 3% to

the suggested 6% in the NEP 1986.

1.4 Government Expenditure on Education in India

The total budgetary expenditure on education by the Education Departments of theCentre and States has increased from Rs. 644.6 millions in 1951-52 to Rs.33827 millions

4 http://www.rediff.com/news/2004/feb/04inter.htm, 09.06.2006.5 Iwatch.org.


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in 1995-96. There were 130 plan schemes with a total Eighth Plan outlay of Rs. 74430millions.6 But the fund allocation to education sector is steadily declining from a level of6% during 1990s to a lower level of 3.6 % in 1996-97 and it came to a lowest point of2.8% in 2002. Presently India spends only 3%, even though the National Policy oneducation suggested 6% of GDP way back in 1986. When compare to other countries,

USA spends 10-13% of the budget on education; France 6.5%; Indonesias 8.1 per centor more; Philippines spends 17%; Malaysia spends 20% and Thailand 27%. OECD(organization of economic cooperation & Development.) country average expenditure oneducation is 5.5%. In the 1st plan the Government of India allocated Rs. 153 crore foreducation (0.7 percent of GDP). In the 9th plan, the allocation is to the tune of Rs.20,381.6 crore (3.7 per cent of GDP). The proportion is much less in comparison withmany countries.

However, there been a significant increase in the real per capita expenditure oneducation. In 1993-94, the average per capita spends on education in rural India was Rs.128, or 1.5% of total expenditure (total expenditure being Rs. 8,533). By 2001-02, it wasRs. 245 or 2.5% of total spending, measured in constant prices (total expenditure being

Rs. 9,800). For the top 5% of rural households, the increase in real expenditure ofeducation has been quite spectacular - from Rs. 575 in 1993-94 to Rs. 1,158 per personper year (in 2001-02).

Figure III

Government Expenditure on Education and Total Government Expenditure on all

Sectors

0

100000

200000

300000400000

500000

600000

700000

1951

1959

1967

1975

1983

1991

1999

Government

expenditure on

education

Total

government

expenditure on

all sectors


Government expenditure on Education has shown an increasing trend over the last 55years. The expenditure on education has increased from 64.46 crore in 1950-51 to84179.46 crore in 2001-02. The compound growth rate of government expenditure oneducation is 15.81 percent. However, the compound growth rate of governmentexpenditure on all sectors is 14.87%. Investment on education must be increased by 25%

6 Department of Education,National Policy on Education, Government of India,http://www.education.nic.in, 08.06.2006.


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every year. Investment on science, technology, R & D, if increased, if doubled, will lay afirm foundation for growth.

In 1995-96, the average expenditure per student pursuing primary education inrural India in a government school for students going to local body schools, private aidedschools and private unaided schools were Rs. 223, Rs. 622 and Rs. 911 respectively

(National Sample Survey Organization 1998). Educational institutions are classifiedaccording to the type of management by which the institution is run. All schools run bythe state, central government, public sector undertakings or autonomous organizationscompletely financed by the government are treated as government institutions. Allinstitutions run by municipal corporations, municipal committees, notified areacommittees, zilla parishads, panchayat samitis, cantonment boards, etc. are treated aslocal body institutions. Private aided institutions are those, which are run by an individualor a private organization and receive a maintenance grant from a government or localbody. Private unaided institutions are managed by an individual or a private organizationand do not receive a maintenance grant either from a government or local body.

There exists considerable variation in the cost of education across the states ofIndia. The governments education expenditure as a percentage of GDP has never everrisen above 4.3% of GDP, despite the target of 6% having been set as far back as 1968 bythe Kothari Commission. Finding the money to bridge this gap will be quite a challenge.Using 2001-02 figures, public expenditure on education was Rs. 84,179 Crore (at 4.02%of GDP). So to have achieved the 6% target, we would have had to spend Rs. 125,641crore, an additional Rs. 41,461 crore over what was spent, about a 50% increase. But thepublic expenditure on education as a percentage of government expenditure across allsectors has been as high as 14.6% and averages 13.5% over the past few years. Theeducation cess collection in 2004-05 was Rs. 5010 crore.7 The cess collection is targetedto collect another Rs. 7000 crore per year. This is about 3.3% of GDP. The allocation foreducation has been enhanced by 31% from Rs.18, 337 crore to Rs. 24, 115 crore ($5.4billion).8 However, the ministry of HRD has estimated that another Rs. 40, 000 crore peryear would be required only for primary education sector.

1.5 Household Expenditure on School Education in India

The state of education in India is improving slowly. The literacy rates among poorhouseholds are low and across occupational categories, the lowest is among Agriculturaland Non-agricultural Wage and Self-employed Farm workers in rural areas. The Non-agricultural Wage earners in the urban areas also have very low literacy rate. Bothdropout and non-enrolment rates are also high in either regions. This is because of thelack of expected future earnings. Many studies in the literature attribute such poorperformance in the educational sector to poverty, and child labour supplementing family

income is considered to be the main cause for such maladies.

A study conducted by NCAER in 1994 found that the expenditure per householdon educating children aged 614 years in rural India was estimated to be Rs. 680 perhousehold or Rs. 378 per pupil per year. Expenditure on schooling for girls was about 68per cent of the amount spent on boys. A large proportion of this expenditure was incurred

7 Economic Survey 2005-06.8 Ibid.


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on books, stationery and school uniforms, followed by private coaching and fees. Thisexpenditure increased or decreased with the annual fluctuations in the cost of books,stationery and uniforms.

The study further found that only about 75 girls for every 100 boys go to privateschools. The expenditure on girls is much lower, especially in private schooling, whereas

parents do not think twice about spending large sums of money on educating boys inprivate schools. There is an increasing dependence on private schooling in recent yearsthat has affected female education more than male education. The household expenditurewas also found to be higher among large landowners, relatively rich and salaried persons.

The patterns of expenditure in rural and urban areas are different. In rural areas,the expenses are high on uniforms, books and stationery. In urban areas expenditures arehighest on tuition fees and private coaching fees.

The proportion of children going to private schools is highest among the high-income households. It is interesting to note that over 70 per cent of ST and SChouseholds study in Government schools. Only about 43 per cent of Christian and 49 per

cent of Muslim children attend Government schools, while most of the remainingChristian children go to Government-aided schools. The expenditure on education isrelatively low among STs, SCs and Muslims, amounting to about three per cent of thehousehold income for the respective social group.

Table II

Percentage of Share of Household Expenditure on Education in Total Household

Expenditure

OccupationalCategories

Rural Urban

MIMAP*-Only

Poor

Self employed

Farm

3.7.1% 3.50%

Self employedNon-Farm

1.47% 5.73%

Salary 3.97% 5.58%

Agricultural Wage 2.31% 3.59%

Non-AgriculturalWage

2.47% 3.51%

Others 3.13% 7.99%

All 2.87% 5.04%

NSSO** Poor 0.79% 1.66%

Total (poor&non-poor)

1.60% 4.00%

*Note: Micro Impacts of Macroeconomic and Adjustment Policies Survey 1994-95 (NCAER)

**Excludes Boarding and lodging costs of education and also transport cost.Source: National Sample Survey Organization


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However, the MIMAP survey (NCAER, 1998) - an all-India household survey ondemand and supply issues in schooling - shows that the major reasons for such poorperformance of the educational sector are both unconstrained and constrained demand.Unconstrained demand refers to factors having no constraint but simply lack ofwillingness and constrained demand factors are constrained by poverty conditions,

participation in household economic activity, etc. In general, unconstrained demandfactors stand out as the major reason in rural areas while in urban a larger percentage ofpoor attribute to constrained demand factors.

Therefore educational reforms in India should basically focus on the demand leadsupply transformation towards skill enhancement. This seems to be missing in thegovernment-owned and operated educational sector. In this context, the role of the stateshould be reduced to provide the basic education.

1.6School EducationIndias education system has expanded exponentially over the past five decades, andthere has been a considerable increase in the spread of educational institutions during the

period 1950-51 and 2003-04. During this period the number of Primary schools increasedby three times, while the Upper Primary Schools and secondary/Hr. Secondary schoolsincreased by more than 19 times each. The total enrolment at the Primary, UpperPrimary, Secondary and Sr. Secondary stage increased by 11, 43 and 72 timesrespectively. The number of Colleges for General education and Professional educationincreased by about 25 and 13 times respectively while the number of Universitiesincreased by 11 times during the period. But its current achievements are grosslyinadequate for the nation to realize its potential greatness. Developed countries arecharacterized by high quality of adult literacy and universal school education.

Figure IV

Primary, Upper Primary and Higher Secondary Schools

0

200000

400000

600000

800000

1000000

1200000

1990-9

1

1992-9

3

1993-9

4

1994-9

5

1995-9

6

1996-9

7

1997-9

8

1998

-99

*

1999

-2000

*

2000

-2001

*

2001

-2002

*

Primary Schools Upper Primary Schools High schools



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There has been an impressive improvement taken place in school-enrolment inour country. The Gross Enrollment Ration (GER) in the relevant age group of 6-11 yrsi.e. class (I-V) is 98.2 percent, in the relevant age group of 11-14 yrs i.e. class (V-VIII) is62.4 percent and in the relevant age group of 6-14 yrs i.e. class (I-VIII) is 84.8 percent.However, the dropout rate is quite disturbing at 31.45 at Primary Stage, 52.32% at the

elementary stage. It is 62.69% at the secondary stage i.e. Class (I-X). 9 These high dropout rates from both primary and secondary school, combined with low enrolment rates atthe higher levels deprive tens of millions of children of their full rights as citizens. Out ofapproximately 210 million children in the age group 6-14 years on Sept. 30, 2004, nearly84.8 per cent were enrolled in schools, compared to 82.5 per cent in 2002-2003 and netattendance in the primary level is only 66 per cent of the enrolment. Further, less than 7per cent of the children ever pass the 10th standard public examination.

Hence in spite of the claims of fair work done by the states with regard toimproving access and enrolment in elementary education, any progress made has beenovershadowed by high dropout and wastage rates which, in turn, were the result ofshortfalls in other related elements of elementary education. Unless something is done to

drastically reduce drop-out rates, by the year 2016, there would be approximately 500million people in the country with less than five years of schooling, and another 300million that will not have completed high school. In other words, about two-thirds of thepopulation will lack the minimum level of education needed to keep pace with and takeadvantage of the social changes occurring within the country and worldwide. 10 Thetarget before India at this stage is not only to eradicate illiteracy and bring every childwithin the fold of school education but also to ensure good quality in school education.This alone would lay a solid foundation for a learning and knowledgeable society

Extending the primary school system to over 500,000 villages in India hasbrought education to the masses. Unfortunately, this huge quantitative expansion hasbeen accompanied by a tremendous dilution in the quality of schooling. High drop outrates in rural areas is one result of single room schools, with few teaching aids andinadequate instruction both in terms of quantity and quality.

To improve the quality of education by reducing the class size would require afurther 20 per cent increase in the number of classrooms. Together, this will necessitateincreasing the total number of classrooms by 65 per cent within 20 years. An enormousincrease in the number of teachers will also be required to achieve the alternativescenario, i.e., eliminating primary school drop outs and reducing the teacher-pupil ratiofrom the present high level of 1:42 down to around 1:20, which is the UMI referencelevel. Together, this will require an additional three million primary school teachers,more than twice the number currently employed. Similar increases will be required at

middle and secondary school levels. The training of such large number of teachers willrequire the establishment of additional teacher training colleges and much larger budgetallocations for teachers salaries. Qualitative improvements in education should reflect achange in pedagogical methods and lay emphasis on several dimensions.11

9 Selected Educational Statistics, 2003-04, MHRD, New Delhi10 Garry Jacobs Vision 2020: Towards a Knowledge Society, paper prepared for Planning Commission11 Ibid.


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1.7 Teachers and Teacher Pupil Ratio

Likewise there has been a substantial increase in the number of teachers in all types ofschools. The total no. of teachers in primary schools increased from 5.38 lakh in 1950-51to 20.97 Lakh in 2003-04 i.e. by more than three times while the number of femaleteachers increased from 0.82 lakh I 1950-51 to 8.37lakh in 2003-04 i.e about ten times.

The total number of teachers in Upper Primary schools increased from 0.86 lakh in 1950-51 to 15.92 lakh in 2003-2004 i.e. by more than eighteen times while the number offemale teachers increased from 0.13 lakh in 1950-51 to 6.48 lakhs in 2003-04 i.e. byabout fifty times. The total number of teachers in High/Hr.Sec/Intermediate schoolsincreased from 1.27 lakhs in 1950-51 to 20.24 lakh in 2003-04 i.e. sixteen times while thenumber while the number of female teachers increased from 0.20 lakh in 1950-51 to 7.74lakh in 2003-04 i.e. by about thirty nine times.

Figure V

Teachers in Primary, Upper Primary and Higher Secondary Schools

0

1000

2000

3000

4000

50006000

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99*

1999

-2000

2000

-200

1

2001

-02*

Hr. secondary teachers

Upper primary school teachers

Primary school teachers


On the basis of the school enrolment and the number of teachers, the TPR showsthat at the time of independence there was a widespread dearth of educational institutionsin the country and the utilization of institutions was also not optimum. During the year1950-51 the Pupil Teacher Ratio in Primary school was 24:1, middle school it was 20:1and in High and Higher Secondary schools it was 21:1. In 2003-04 this ratio has nowincreased to 45:1 in primary schools, 35:1 in upper primary schools and 33:1 in highschool and higher secondary school. Though the number of educational institutions hasincreased considerably after independence and also the number of teachers, the higher

TPR indicates that the increase in enrolment at each level is comparatively more than theincrease in number of teachers. The increased enrolment at various levels alsounderscores the need for opening of a greater number of educational institutions as wellas employing more teachers for improving the quality of education.

To improve the quality of education by reducing the class size would require afurther 20 per cent increase in the number of classrooms. Together, this will necessitateincreasing the total number of classrooms by 65 per cent within 20 years. An enormous


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increase in the number of teachers will also be required to achieve the alternativescenario, i.e., eliminating primary school drop outs and reducing the teacher-pupil ratiofrom the present high level of 1:42 down to around 1:20, which is the UMI referencelevel. Together, this will require an additional three million primary school teachers,more than twice the number currently employed. Similar increases will be required at

middle and secondary school levels. The training of such large number of teachers willrequire the establishment of additional teacher training colleges and much larger budgetallocations for teachers salaries. Qualitative improvements in education should reflect achange in pedagogical methods and lay emphasis on several dimensions.12

1.8 Financial Implications

According to official estimates, the proportion of out-of-school children in 1999-2000was around 24 per cent of the total population in 6-14 age group, which amounts to afigure between 4.7 to 5 crore according to the population estimates of the TechnicalGroup on Population Projection (Planning Commission). The HRD ministry is claimingthat 3 crore out of the nearly 5 crore out-of-school children have been brought back toschool after spending Rs 16,000 crore under the SSA. However, the Tapas MajumdarCommittee appointed by the union government had estimated the total financialcommitment required to bring all Indian children in the 6-14 age group under the purviewof school education to be Rs 1,36,922 crore over a ten year period (1998-99 to 2007-08),which comes to an approximate 0.72 per cent of the estimated GDP during this period.The year-wise estimates are given in Table below.

Table III

Financial Commitment Needed for

Universalisation of Elementary Education during 1998-99 to 2007-08

YearRecurring

(in Rs crore)Non-recurring(in Rs Crore)

Total(in Rs Crore)

Totalexpenditure as

% of GDP

1998-99 100 0 100 0.007

1999-00 1500 2000 3500 0.24

2000-01 4000 3000 7000 0.46

2001-02 6000 4000 10000 0.62

2002-03 8500 4000 12500 0.73

2003-04 10000 4000 14000 0.78

2004-05 13000 4000 17000 0.9

2005-06 16000 4000 20000 1.01

2006-07 20000 4000 24000 1.16

2007-08 27250 1572 28822 1.32

Total 106350 30572 136922 0.72

Source: India Education Report, A Profile of Basic Education, NIEPA

12 Ibid


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The government is claiming that it has achieved over 60 per cent of the target inuniversalising elementary education by spending only 0.11 per cent of the expenditureestimated by the Tapas Majumdar Committee. Here the need is to reflect on thecommitment towards universalising elementary education.

According to the Selected Education Statistics published by the MHRD, there

were around 18.7 lakh teachers in the primary and junior basic schools in 1998. Thegovernment claims to have appointed 4 lakh new teachers and 6 lakh new instructors overthe past five years, i.e. a 55 per cent increase in the number of teachers. Even if we takethe average salary of the new as well as the old teachers existing in 1998, i.e a totalnumber of 28.7 lakh teachers, to be a meager Rs 1500/- per month (the salary of a para-teacher), their annual salary bill would have totalled Rs 5166 crore. The government hasclaimed that the appointment of all the primary and junior basic school teachers havebeen covered under the expenditure of Rs 16,000 crore spent on the Sarva SikshaAbhiyan (SSA). This implies that either the entire sum of money spent on the SSA wentto meet the salary bill of the teachers (that too for a little more than three years) or thatthe addition of 10 lakh new teachers over the past five years.

In its Interim Budget of 2004 the government has claimed that between 2001 toFebruary 2004 it has approved the opening of 93,028 new schools, the construction of50,992 new school buildings and 1,09,399 additional class rooms with 1,06,920 toiletsand 67,803 drinking water sources. The Selected Educational Statistics published by theMHRD suggests that the number of existing schools till 2000 was 8,45,007. Thegovernments claim amounts to suggesting a highly commendable increase in the numberof schools in the country by 11 per cent in the last three years. Here on an average thegovernment has spent Rs 40.25 lakh for building each school under the SSA. Even if weassume that the entire amount of Rs 16,000 crore has been spent only on constructingnew school buildings, then the government could have built only around 39,750 newschool buildings and not 50,992 as claimed in the Interim Budget.

1.9 Higher and Professional Education

The participation rate in higher education in USA is 89%, in industrial countries 60% andin developing countries around 9% whereas in India it is only 6 percent. It is necessaryfor us to ensure that higher education is accessible to all, at least to all those who desireand deserve it.

At the present rate of expansion in higher education there will be studentspopulation of 11.7 million by the end of 10th five year plan and the government hasprojected participation for 14% by 2020, and for that as per the governments estimates 8-10 million seats are to be created in coming 8-10 years with the projected participation as

above.India has 217 universities, 74 deemed universities, 13 institutions of national

importance, 85 research institutes, 9,427 general colleges, 1,068 engineering, technicaland architecture colleges, 783 medical colleges, 900 teacher training colleges and 1,991other colleges. The teaching community is 4.57 Lakh. The enrolment in higher educationwas more than 10 million in 2005. When compare to other countries Japan have 4000Universities and China have 900 universities. India produces 10 million graduates,3,50000 engineers, 25000 medical doctors, 12,000 PhDs every year. India is estimated to


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have about 20 million students enrolled in higher learning, with 1.4 million engineeringstudents, 60,000 medical students and 50,000 PhDs.13 However, the gross enrolmentratio is only 9 per cent in 2001 which is very low compared to other countries. It isalmost 50% in developed countries and even countries like Thailand (37%) and Indonesia(27%) have higher enrolment rates.

There is a huge gap between the demand and supply side in the globalizedeconomy. Our higher education system to be revamped and the institutional promotionshould be in accordance with the industry needs and demands. The gap needs to bebridged through private participation and investment.

Figure VI

Colleges for General and Professional Education

0

2000

4000

6000

8000

10000

12000

1990

-91

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99*

1999

-2000*

2000

-200

1*

2001

-2002*

Colleges for professional education

Colleges for general education


The above graph shows an increasing trend in colleges for professional and generaleducation. The number of colleges for general education in 1991-92 was 4862.Additional 3875 general education colleges are constructed over a period of 10 years. Thenumber of general education colleges stood at 8737 in 2001-02. The number ofprofessional colleges was 886 in 1991-92. To tackle the demand of industry and businessfor managerial manpower additional 1523 professional colleges are constructed. Thenumber of professional colleges stood at 2409 in 2001-02.

The Indian Universities have been established many years back and are starvingfor sufficient infrastructure and facilities. The quality of education varies widely fromone institution to another especially in the professional level. Several universities in Indiado not have a flexible academic structure and the degrees from these universities willhave a lower value in the job market than foreign universities. The syllabi are obsolete;there is a lack of multidisciplinary courses, teachers apathy, excessive examinationorientation, poor infrastructure, little research to speak of, bureaucratic meddling, etc.These maladies have been identified by a series of education commissions as the ills thatplague the system. It is true that Indian universities have many problems with regard to

13 India Brand Equity Foundation report on Global Competitiveness Report 2005-06


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fundraising to match up with the quality of foreign institutions. But the apathy cannot beexcused at the cost of development of the country.

Table IV

Growth of Higher Education System in India

Year Colleges Universities* Enrolment (mn)

1950-51 578 28 0.2

1960-61 1819 45 0.6

1970-71 3277 93 2

1980-81 4577 123 2.8

1990-91 6627 184 4.4

2001-02 11146 272 8.8

2002-03 15343 300 9.3

2004-05 17625 342 10.5

Source: UGC Annual reports and other publications

* Including deemed universities

There is a clear case for tremendous increase in capacity in our existinginstitution/Universities, besides the need of many more such institutions. TheGovernment alone cannot meet this mammoth task nor does it have money, so it isobligatory on the citizens, industry and the non-governmental/ private educationproviders to come forward for sharing this onerous responsibility and provide access to

all those who desire.

Now there is an urgent need to work for the development of the educational sectorto meet the need of the emerging opportunities, increasing younger generation populationand challenges of the 21st century. Knowledge is the base for overall growth and if thenation has to be competitive and to be at par with the globalisation pace, we will have torespond to the market forces. Encouraging investment in education both public andprivate by itself will also contribute towards employment, as education is labourintensive.

Supply should cater to all those who aspire for higher education of their choiceand be employable. Accordingly output at secondary level should also be calibrated and

the quality standards through Accreditation should meet the confidence of the marketforces. The demand and supply should be synonymous to future growth. Thus, a long-term integrated policy on education, which encompasses standards from the school to thetertiary level, which can deliver the required proficiency, is to be put into place onemergent basis. To reach and achieve the future requirements there is an urgent need tore-look at the Financial Resources, Access and Equity, Quality Standards, Relevance andat the end the Responsiveness.


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1.10 Technical and Vocational Education

Indias labour force reached 375 million in 2002 and it is continuously increasing and itis projected to 7.5-8 million a year.14 Skill production and training are the strength of thegrowing economy. The technical institutions in the country are working to achieve 10million jobs in the next 10 years. Technical education in India is considered one of the

best in the world. Premier among the training institutes offering technical education arethe Indian Institute of Technology, Indian Institute of Science, Regional EngineeringColleges, School of Planning & Architecture, and the International Centre for Science &Technology. Among the various schemes which encourage technical education are theRajiv Gandhi National Institute for Computer & Allied Schemes, University GrantsCommission Schemes, and schemes at National Institute of Foundry & ForgeTechnology.

The Technical/Vocational Education and Training is multi-sectoral in nature.Each department in Central as well as State Governments is responsible for manpowerdevelopment in that sector. The vocational higher secondary programme aims to developskilled manpower through diversified courses to meet the requirements of mainly theunorganised sector and to prepare people for specified works through a large number ofself employment oriented courses. At the middle level of the technicaleducationpolytechnics are running three year to four year courses leading to the awardof diplomas. There are more than 500 polytechnics have more than 65000 enrolment.15

Figure VII

Relative Share of Private and Public Institutions

Source: Shaping the future of higher education in India by Pawan Agarwal,Fulbright

New Century Scholar (2005- 06).

14 http://www.ilo.org/public/english/region/ampro/cinterfor/news/gasskov.pdf, 08.06.2006.15 http://www1.worldbank.org/disted/policy/program/voc-02.html, 06.06.2006.

0

10

20

3040

5060

70

80

90

100

Engineering Pharmacy HotelManagement

Architecture TeacherEducation

MCA MBA Medicine(Allopathic)

Physiotherapy

Private Public


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At the lower level of the technical education, vocational training system of India offerstraining through Industrial Training Institutes (ITI) and Industrial Training Centers (ITC)offering certificate courses in more than 67 trades nationally recognised trades, 43 ofwhich are engineering and 24 non-engineering courses. State governments operate some4,650 ITIs with a total capacity of 678,000 training seats. Out of this, nearly 373,000

seats are established in some 1,800 government ITIs, and the residual 305,000 are insome 2,850 private ITCs. The number of vocational training institutes in India has showna rapid increase over years, being mostly driven by private training providers.

1.11 Regulatory Laws and Agencies

Indian education sector is mainly regulated by two agencies created through law. TheUniversity Grants Commission (UGC) through the UGC Act, 1956 and the All IndiaCouncil for Technical Education (AICTE) created by AICTE Act 1987.

The statement of objects and reasons of the University Grants Commission Act,1956 says the Constitution of India vests Parliament with exclusive authority in regardto co-ordination and determination of standards in institutions for higher education or

research and scientific and technical institutions. The UGC (Establishment of andMaintenance of Standards in Private Universities) Regulations, 2003 specifically controlsthe establishment of private universities in the country. Virtually this regulation killed allthe private universities in the country especially more than 100 universities working inthe state of Chhattisgarh along with the Supreme Court judgment in the case of Prof.Yashpal & another vs State of Chhattisgarh & others.16 The general trend in India is thatall the laws are acting as barriers rather than regulatory in nature.

The AICTE is entrusted with statutory authority for planning, formulation andmaintenance of norms and standards, quality assurance through accreditation, funding inpriority areas, monitoring and evaluation, maintaining parity of certification and awardsand ensuring coordinated and integrated development and management of technical

education in the country.17 Obtaining approval for setting up of a higher educationinstitution is a lengthy and cumbersome process under the Act.18 The regulation and feesfixation is based on unrealistic assumptions rather than financial viability. The AICTEnotification19 on regulations for entry and operation of foreign universities/ institutionsimparting technical education in India is acting as a barrier to the entry of foreigninstitutions. A draft bill entitled The Private Professional Educational Institutions(Regulation of Admission and Fixation of Fee) Bill, 2005 is to be introduced before theParliament for defining the parameters for private institutions, domestic and foreign. Thedraft Bill allows for 50 per cent admissions under management quota and feespermitting reasonable profit. However, it is more controlling in nature rather thanregulatory.

2. Where Do We Want to go?

Education is vital for social and economic growth of every country. A good educationsystem relies largely on a complex interface of human resources, pedagogical methods,

16 Supreme Court, Writ Petition No. 19 of 2004.17 http://www.aicte.ernet.in/AboutAICTE.htm, 08.06.2006.18 More than 30 documents of no-objection to be submitted for approval.19 AICTE Notification No. F. 37-3/Legal/2005, 16 May 2005.


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curricula, infrastructure and academic standards. These are all important variables, atevery level and in every field of education.20 Our country is passing through changes andthe transition phase of economic reforms. Where do we want to go or lead our country isimportant in economic as well as futuristic terms? It is competing with other countries inall fields including education. To achieve the objective of a knowledge society in the 21st

century, India has to revamp the whole education system in the country. The Mid-TermAppraisal of the Tenth Plan (2002-07)21 states that one of the objectives of the Plan wasto increase private participation in higher education. However, the regulatory regimes arestill acting as barriers for private investment rather than facilitating private participation.The ongoing negotiations under the GATS agreement are giving opportunities as well aschallenges. The challenges facing our education sector are many. These factors andvariables will decide the direction of the sector in the coming days.

2.1 Financial Constraints

One of the most important things that have to be noticed is the issue of financialconstraints before the government. The State Government has already been spending 20-30 percent of its revenue budget on education. It will not be able/could not afford tospend more.

It is without doubt that the government has to spend on elementary education,they have to spend on secondary education and the budget outlays of the government alsoreflect that. The government is also moving towards compulsory secondary education andwe applaud that step. But that basically means that even for the secondary education theyare only comfortable with being able to deploy half of that budget for the next five years,the other half have left to the Planning Commission to manage those resources. Thisactually means that there is really very little left for higher education.

In India, at least, the spending per student has been going down over the years.The share of education in our five-year plan outlay has been falling. The first five-year

plan gave education 7.86 per cent. By the fifth plan, the share of education was only 3.27per cent of the outlay. Even if you take both central and state government spendingtogether, it does not get better. Current spending on education in India is not more than3.5 per cent of GDP. The Center itself concedes that the minimum should be 6 per cent.Again, out of the amount spent, very less is being envisaged to be spent on highereducation, it is not even 3-4% of GDP. This compares unfavourably with theinternational reference level, especially with countries such as South Africa, whichinvests 8 per cent of GNP on education. A near doubling of investments in education isthe soundest policy for increasing the countrys GDP per capita by many folds. Thereforethere is a need to evolve policy through which Private/non-governmental resources ismobilized.

2.2 Autonomy

When we talk of autonomy then it is not just for the private institutions and the self-financed institutions but also autonomy for the institutions, which are under the

20 National Knowledge Commission, http://www.knowledgecommission.org/focusAreas/concepts.aspx,1.05.2006.

21 Mid-Term Appraisal of the Tenth Plan, Planning Commission, Chapter 2, Human Development page65


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government either fully or partly financed by the government. The type of autonomywhich ensures that the stakeholders are protected-particularly the students-againstdilution in quality or being misled. Concerning autonomy, the law must delegate thenecessary decision making power to the institution for changes in curricula andteaching methods, for internal self-governance, for interaction with other organisations

nationally and internationally and for economic transactions.It is also very important that accountability must follow autonomy. In all fields

where the institution has been given the responsibility to make its own decisions, thedecision process should be transparent and results should be made public. On the otherhand quality assurance systems will be important cornerstones in our system of highereducation. The quality assurance system must be independent of political and institutionalinteraction and it must have a basis in the legislation.

This means that an effective law on higher education should only regulate what isessential to regulate, it cannot effectively be regulated in any other way and it should bewritten to allow for change, in order to be applicable as the higher education systemdevelops. Hence in my view there should be full operational, financial and academicautonomy coupled with accountability.

When it comes in forms of financial autonomy as has been observed byeducationists in the past, the case for subsidy in the supply of education to the individualconsumer is based on the premise that education is a mixed good involving substantialexternal benefit. However, it is widely agreed that such external benefits tend to taper offat higher levels of education and that there should be greater correspondence betweencosts involved and fees charged. Such an approach favours enhancement of tuition feesand other related fees.

Student loan schemes are an essential complement of cost -recovery and thecharging of fees. Many students are unable to afford the cost of higher education out of

their families current income, and loan schemes permit them to pay out of their futureearnings. About fifty countries, both industrial and developing, have such schemes,including more than half the Latin America and countries such as China, Ghana, Egypt,Jordan, Kenya, Korea, Malawi, Malaysia, Morocco, Pakistan, Philippines, and Sri Lanka.

An elaborate and well-designed scholarship and loan scheme for the needy, tomake higher education, accessible to all, would prove to be an effective mechanism offinancing higher education. Full-cost recovery, however, can be ruled out; just as heavysubsidization of higher education is theoretically unsound. It may be noted in this contextthat even in a highly developed country like the US where private universities chargemuch higher tuition fees than state universities, tuition fees form less than 40 per cent of

the costs; the rest come form alumni support, endowments, etc. It can be suggested that:1. Those who can afford to pay should not be subsidized, particularly in the light scarce

available financial resources. Even if government commits to providing need basedscholarships to all students it is currently subsidizing, at worst, it may be stillspending what it is spending today, but at best, it may have surplus funds to invest inhigher education.


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2. Those who are subsidized by public funds owe something in return, either by way orrepayment or services.

Other time tested as well as innovative sources may be tapped; some examples includeeased bank loans, innovative financial instruments, mobilization of industry andindividuals to institute scholarships with tax and naming incentives, alumni support and

endowments, cross-subsidization within institutions, but without diluting merit.

When we talk of autonomy then there are other very important issues, which ifdealt judiciously can help the institutions and particularly private institutions insustaining and improving their quality. The issues of reservation and admission are veryimportant in this regard.

2.3 Accessibility, Affordability and Equal Opportunity

The matter of access and equity of higher education is another very important issue in themanagement of higher education. This should be based on the simple principle that hasalready been stated No talented and deserving person should be denied access to highereducation. This guiding code presumes a lot of things.

1. Sate with the help of private sector, should take primary responsibility offinancing higher education, as fees will not be able to play a central role in thehigher education economics.

2. A different system of screening beyond two-digit percentage shall have to beworked out to ensure merit.

3. Education has to be freed from political and other influences.

4. The concept of earning while learning or exchange of labour or skills foreducation needs to be promoted.

5. Acquiring of multiple degrees and diplomas simultaneously has to be encouraged.

6. Standards of evaluation have to be strengthened.

7. Disparities and discrimination of age, gender, and socio-economic backgroundneed to be tackled.

8. Return to the system for continuing or additional degrees/diplomas. The list maygo on with no full stops.

Other things vis-a-vis fees, which have again been a very contentious issue looking atmarket forces as the determinant of fees rather than trying to have them imposed by somecommittee per se. Here we can seek an example of industry, though education cannot beequated with industry as it has a public good element in it. Nevertheless there is no harm

in learning from the experiences from the other sector. If one does some learning fromthe private sector one finds that with the post liberalisation era one has now access tomany more number of goods in a particular category and they are available at a muchcheaper price and on demand. Something simple as getting a two-wheeler, which is animportant thing for any common man and is not something that one, is talking about cars.There used to be a waiting list. There was a premium on it and there were whole lot ofmalpractices, one had to wait for one or two years and without much choice left either totake it or leave it. Similarly with so many other goods, today the dealers fall after the


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customers and try their products for someday and pay only if they feel satisfied. Similarlyin education we need to strongly look at increasing supply because one of the demands ofequity also is that all those who would like to have access to education can have access toeducation. And when there is sufficient supply definitely it will ensure competition, andprices slash (cost of education).

2.4 Need of an Independent Accreditation System

There is a need of an independent accreditation agency with a conglomerate ofgovernment, industry, academia, society etc. means all stakeholders of the education toensure that the stakeholders particularly the students are not taken for a ride. They shouldbe able to know whether a particular institution delivers value or not, then things can beunder control to some extent. Equally important is the question in terms of being able tosee that each institution would have different standards of quality. Therefore it has beenfound that when you go into a price fixation mode you tend to reduce all institutions tothe lowest common denominator and that is not in the interest of the nation and least ofall in such an important area as education. And if there is an accreditation agency thatwill ensure that the stakeholders are aware of the quality institutions, the most importantissue, which troubles us, is that it needs to be seen that each institution would have adifferent quality level and a different vision and mission.

The institution, which excels in obtaining Accreditation, should be encouraged tolevy higher tuition fees from those who can afford, compared to those who do not receiveAccreditation. It is also important that all institutes of higher learning must make publicthe acceptability of their courses and degrees. (i.e. the status, recognition andacceptability of their courses by other institutions). Any misrepresentation of facts to thegeneral public, should make the institute and its promoters, directors and staff liable forcivil prosecution

Technical education, both vocational and professional, constitutes the foundation

for development of science and technology, and business. India is rightly proud of theinternational standing of its IITs, and IIMs, but a handful of world-class technicalinstitutions are not sufficient. A large number of the countrys engineering colleges,medical colleges, business schools, other science and technology institutions need tostandards and given the required autonomy.

2.5 The Effect of Globalization

Globalization is a term which is frequently discussed not only in the academic field butalso in the economic development and policy studies. The spread of connectedness ofproduction, technologies and communication in the world is the generally accepteddefinition of globalization.22 Through the globalization process, education is also

considered as a commodity and corporatization and branding is already started in thehigher education field. Many argue that if the education sector wants to be more efficient,it should be leave it to the market forces. This argument mainly undermines theconsideration of education provided as a public and social good.

There has been a very aggressive approach by USA, UK and Australia in fewdecades on spreading their education outside the country and these countries have taken

22 INFED, Globalization, http://www.infed.org/biblio/globalization.htm, 1.05.2006.


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some of the issues in their parliamentary bills to expand and develop the vocational andhigher education outside the country. In Asia, Singapore, Malaysia, Dubai are suchplaces, which have made few locations of Education offering with quality whileproviding minimum infrastructure. As commented by Dean, London Business School thatIndia lacks in offering basic infrastructure and location to offer quality education from

the reputed universities of the world. There is a need of very clear view on EducationPolicy on the internationalization of the higher and other level of education in either formby inviting the foreign players in the Indian education and by providing the Indianeducation players through and official channels to the countries, which have opportunitiesfor Indian educational institutions.

2.6 The World Education Market

It has been estimated that in the 1990s 1.5 million students were studying abroad. Out ofthe 5,14,000 foreign students who were studying in US, more than 54 per cent are fromAsia. In 1996, the US provided exports of education and training services had reached 8.2billion dollars, and its trade surplus in education amounted to 7 billion dollars.23 Highereducation was the fifth largest service exported by the US. The U.K, Germany, Australiaand France are the other leading exporters. In 1995 global market for international highereducation was estimated at $ 27 billion.24 In 1996, education and training servicesgenerated $7.5 billion in export. This proves the US interest in the liberalisation of thissector. In many countries, service sector contributes the main export earner. Educationservices were the third largest service in 2000-01. In New Zealand also it was the fourthlargest service sector in 2000.25

Some of the regional groupings like OECD countries are targeting internationalstudent mobility as a focal point of revenue, which came to $30 billion in 1999. Out ofthese, 1.5 million foreign students were in OECD countries, of which 56 per cent arefrom non-OECD countries. Most of the international trade in higher education services

takes place within the OECD countries, which received 85 percent of the worlds foreignstudents. Out of which 45 percent are from Asia especially India which had sent 48,515students which contribute 3 percent of the total.26 Recent estimate given by GlobalAlliance for Transnational Education indicates that about 27 billion dollars worth ofhigher education is exported to Asia and Pacific by three countries namely USA, UK andAustralia. A business of 37 billion dollars trade in tertiary education services in Asia andPacific region is projected for future. The data shows that education has huge markets,especially in Asia.

2.7 Trade in Education Services Under the WTO

Trade in education is a billion dollar business and it is increasing every day. The demand

for higher education is growing and the developed countries are looking the emerging23 Vijender Sharma, WTO, GATS and Higher Education in India, Peoples Democracy, vol. 26, no. 6,

2002, p. 1. http://pd.cpim.org/2002/feb10/02102002_wto_edu.htm, 03.05.06.24 G.D. Sharma, Trade in Education Service Under WTO Regime An Indian Response , (New Delhi:

2001)25 OECD Centre for Educational Research and Innovation, indicators on Internationalisation and Trade

of Post-secondary Education, (Washington, D.C. USA: Department of Commerce, 2002).26 Kurt Larsen and Stephen Vincent Lancrin, The Learning Business: Can Trade in International

education Work, Centre for Educational Research and Innovation (CERI), 2003.


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economies as a potential market. Since the conclusion of the General Agreement onTrade in Services (GATS) in 1995, education is also one of the category of services comeunder the agreement. The GATS established a multilateral framework of principles andrules for trade in services with the objective of expansion and progressive liberalisationof such trade as a means of promoting economic growth of all trading partners and the

further development of developing countries. It provides for disciplines on transparency,most favoured nation (MFN) treatment, market access and national treatment. Educationis one of the twelve services included in the Uruguay Round. The whole education sectoris divided into 5 sub-sectors categorized by the United Nations Provisional CentralProduct Classification (CPC). These sub-sectors are: primary, secondary, higher, adultand other education services.27

GATS and Education Services under Article 1.2 of GATS28 classify four modesof supply in educational service trade. They are:

Cross border supply: Under this mode services are supplied across the borderswithout moving students and service providers. It includes courses throughdistance education, online courses, educational testing services and educationalmaterials that are provided overseas. It also includes sale of books, educationalmaterials and CDs, service provided through satellite transmission, and audiovideo conferencing, which can cross national boundaries.29

Consumption abroad: This includes students or consumers travelling from onecountry to another. Under this category India is one of the largest importers ofeducation services i.e., sending students abroad like US and other countries. Itexports services when students come to India for study.

Commercial presence: It means an actual presence of an education providerthrough the establishment of offshore campuses or facilities or partnershipagreement with institutions in the host country.

Presence or movement of natural persons: As the title suggests, it means themovement of teachers or researchers travelling to another country in order toprovide educational services to the foreign students. For example visiting lectures.

According to Article 1.3 of GATS, government services remain outside thepurview of GATS, provided that they are neither supplied on a commercial basis nor in

27 Division 92, Groups 921, 922,923, 924 and 929 respectively.

http://unstats.un.org/unsd/cr/registry/regcs.asp?Cl=9&Lg=1&Co=92, 2.05.2006.28 Article 1.2 of GATS provides that:(a) from the territory of one Member in to the territory of any other Member;(b) in the territory of one Member to the service consumer of any other member;(c) by a service supplier of one Member, through commercial presence in the territory of any other

member;(d) by a service supplier of one Member, through presence of natural persons of a Member in the

territory of any other Member.29 Duc Nguyen-Hong Robert Wells, Restrictions on Trade in Education Services: some Basic Indexes,

Productivity Commission Staff Working Paper, Canberra, October 2003.


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competition with one or more service suppliers. Under the GATS, education services areclassified into five categories,30 which include:

Primary Education Services: These include services related to primary and pre-schooleducation but exclude child day-care and adult literacy programmes.

Secondary Education Services: These cover high school, vocational education andtechnical training.

Higher Education Services: These include two areas. The first relates to teaching ofpractical skills (training) after 10+2 level and also includes pre-degree, technical andvocational training institutes like (polytechnics). The second category relates toconventional education provided by Universities and colleges in the country includingprofessional institutions.

Adult and Continuing Education Services: These include adult learning and continuingeducation programmes in general and vocational subjects and also refresher and trainingprogrammes.

Other Education Services: These cover all other services not mentioned or defined abovebut ultimately fall under the purview of learning and training.

India has received requests (for opening up of services) from several countries(Australia, Brazil, Japan, New Zealand, Norway, Singapore, USA) in education servicesin the new round of service trade negotiations launched in January 2000 (GATS 2000round), which mostly focus on higher education, adult education, and other educationservices. USA also specified training services and educational testing services and Brazilhas also requested in primary and secondary education services, while there were norequests from the European Community. All requests to India are for full market accessand national treatment commitments in modes 1, 2 and 3.

2.8 Indias Import Interests in Education Services Mode 2: Indian students studying in foreign universities (US, UK, Australia)

o Over 60,000 studying in US courses

o Several thousand in Europe

Mode 3: foreign institutions entering India through twinning and franchisearrangements

o Indian students getting foreign degrees, doing professional courses at localbranch campuses of foreign institutions in India

UK-based Wigan and Leigh College

Indian School of Business tie up with Kellogg, Wharton, and LondonBusiness School.

Western International University,Arizona.

NIIT tie up with ITT Educational Services, USA.

30 The classification of educational services under Unite Nations Central Product Classification System(UNCPC) 1991 includes all these categories.


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Tata Infotech tie up with Hertfordshire University, UK.

Mode 1: Prospects for distance education and degrees from foreign academicinstitutions

Mode 4: Foreign faculty and scholars teaching in India

2.8 Indias Export Interests in Education ServicesMode 1: Prospects for tele-education in management and executive training.

o Experience with distance learning, use of new technologies (IGNOU).

o Education process outsourcing with remote tutoring from India.

Mode 2: Students from developing countries studying in Indian engineering andmedical colleges.

o Around 5,500 students from neighbouring developing countries (2001)

o Exchange programmes and twinning arrangements

Mode 3: Setting up of overseas campuses, franchising by Indian institutionso MAHE, BITS, Central Institute of English and Foreign Languages

o Over 100 CBSE schools abroad, catering to diaspora.

Mode 4: Indian teachers, lecturers teaching abroad in Middle East, Africa,researchers/scholars on visiting arrangements abroad

o Some 10,000 secondary school teachers overseas

o Recruitment of Indian teachers in Maths, Science, English

Potential as a regional hub for exporting higher education services

There is a high demand for Indian teachers in the US and other countries.Unsurprisingly, given that the annual remuneration package of a school teacher (withthree years experience) in even the most highly rated English medium CISCE and CBSEschools averages a modest Rs.80,000-100,000 against the $35,000 (Rs.16 lakh) offeredby American and British local governments (with private schools offering better pay andperks), theres considerable excitement within Indias long-neglected teacherscommunity about this new development which many regard as a golden opportunity.31Recently the Ministry of Human Resources asked the Ministry of Commerce to removeeducation from the list of services to be opened.32 Withdrawal means that the free entryof foreign institutions will be subject to new law and regulations.

2.9Foreign Institutional Presence in IndiaThere are 131 Indian institutions collaborating with foreign institutions, 107 providingvocational courses, 19 technical courses and only 5 for general education. Some of theforeign institutions have been operating in India before the guidelines for foreigneducational institutions came into effect. In July, 2005 India committed to the WTO thatforeign educators would be allowed entry to India with the sole condition being that their

31 India School News, March 3, 2006.32 Indian Express, February 4, 2006.


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fees would be fixed by the government. Foreign direct investment (FDI), even up to100% in education, including higher education is already being allowed under theautomatic route.33 All the foreign institutions working within the country neither istaken permissions accordance with the law of the land nor registered with concernedgovernments. It was reported that some of the providers are not recognized even in their

own country of origin. The recent AICTE Notification34 spells out regulations regardingentry as well as operation of Foreign Education Providers, such as no-objection visa fromembassy of country of origin, collaborations and partnership only with alreadyoperational Indian partners, vague clauses for clearing of curriculum with government,penal clauses etc.

The CNR Rao Committee appointed by the Ministry of HR for studying thissubject submitted its report. In response to the report, the government is expected to beconsidering a proposal to set up a two-phase approval system for foreign universities. Itwill require foreign universities to get approval prior to setting up Indian operations. Inthe first phase, foreign universities will be given a limited period trial, a sort of probationperiod. On the basis of performance in the trial period, these universities will be allowed

to set up long-term operations. The proposed system will apply to all modes of operation-franchisee agreements, twinning programmes, study centres, programme collaborations,and offshore or branch campuses.35

The proposal also calls for strong disincentives, such as forfeiture of substantialsecurity deposits. This has been suggested to ensure that foreign players and theirpartners do not discontinue their operations after a few years, leaving students in thelurch. A short-term approval will be extended to those varsities that are accredited in theircountry of origin. The institution will be expected to submit the latest audit report of theaccreditation agency.

The following points have to be taken into consideration with regard to foreign

institutions. Foreign institutes should register with authorities.

Appropriate regulatory framework should allow entry of only good quality foreigninstitutions with recognized degrees and working in their own country.

Provision for merit cum means scholarships for students in these institutions.

Transparency should be ensured by providing reliable information about the institute.

Mutual recognition of the degree should be ensured.

Following the global leaders in education like USA, UK, and other countries

competition between institutions should be encouraged. License and quota on the foreign education providers should be discouraged to

enhance quality.

33 Lok Sabha starred question No. 11, was answered by Arjun Singh, Minister for Human Resources onFebruary 21, 2006. Order No.7(4)/2000-IP dated 11 February, 2000, issued by the Department ofIndustrial Policy & Promotion.

34 No. F37-3/Legal/2005.35 The Economic Times, July 27, 2005.


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2.10 Foreign Students in India

Indias foreign student enrolment has dropped in 2003. In contrast, that of China hasswelled from around 22, 755 in 1995 to 1,11,000 last year.36 In comparison, while Indiaboasted of 11,888 foreign students in 1995, the figure fell to 8,145 in 2003. Nepalesestudents formed the largest foreign component in India, with 873 students, in 2002. This

was followed by 550 students from Mauritius and 548 from Kenya. Indias easternneighbour Bangladesh sent 545 students to study here while Ethiopia, where a largenumber of Indians teach at school level, had 281 students here.

Table V

Major Consumers of Indian Education

Sl.No.

Country 1992-03 2002-03

1 North Korea 52 108

2 Yemen 146 242

3 Bangladesh 565 372

4 Bhutan 112 2275 Iran 348 336

6 Sri Lanka 487 391

7 Nepal 725 837

8 Malaysia 597 788

9 Thailand 160 293

The main attraction of students from these countries is good quality education at acheaper cost. The marketing of Indian education in other countries are not effective andthe government and Universities are not doing anything in this direction. However,recently UGC has initiated a programme for the Promotion of Indian Higher Education

Abroad (PIHEAD), which will run through the Tenth Five-Year Plan (2002-07). Besides,Educational Consultants of India (EDCIL) has taken up schemes to promote Indianeducation abroad. It is in the coming years to prove whether these initiatives will increasethe enrolment of foreign students in Indian universities. The information about coursesand universities should be readily available on websites. Some integrated efforts can bemade to attract neighbouring foreign students to inform them in a cost-effective manner.

2.11 Indian Institutions and Students Abroad

Many Indian institutions are setting up branches abroad and are considered high qualityinstitutes. Government of India has taken various initiatives to promote Indian educationabroad. In April 2002, the Committee on Promotion of Indian Education Abroad(COPIEA) was constituted to monitor all activities aimed at promoting Indian educationabroad. A system of registration was introduced under which institutions would have tofurnish information on operations and adhere to certain guidelines relating to publicity,maintenance of standards, charging of fees, granting of degrees etc. However, COPIEAhas not been effective even though Indian education has been able to establish a brandimage. Efforts should be made for greater market access to other countries.

36 Business World, April 10, 2006. See also Silicon India.com


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Very few institutions from India are used the chances of globalization. The Birlainstitute of Technology and Science, Pilani and Ranchi have opened institutions in Dubaiand Oman respectively. The Universal Group in Nepal and the Central Institute forLanguages, Hyderabad opened centers in Kyrgizstan. Incidentally, all are DeemedUniversities and privately financed except the last one. The Indira Gandhi National Open

University (IGNOU) is focuses on distance education and is planning to spread itsoperations to many countries. Movement of faculty and researchers to foreign Countriesare small in number and the foreign teachers in India are negligible.

India accounts for 4% of the worlds overseas students, the second largestexporter of students after China. More than 66 percent of Indian students are studying inthe US and pursuing post-graduate degrees; only 22 percent are undergraduate students.Business, management, engineering and computer science students account for more than75 percent of all Indian students in the US. The flows of students from the developedcountries to India are meagre. India is now exporting more than 1,00000 students everyyear at the cost of more than US $1.5 billion. These students in the US are alongcontributing roughly $1.27 billion, out of which 75% are funded personally or by family

(i.e. $950 million, Rs. 4280 crore).37

Table VI

Country wise Number of Indian Students Studying in Foreign Universities: Selected

Countries

Sl.No.

Name of theCountry

1999-00 2000-01 2001-02

1 US 39084 47411 66836

2 Australia 4578 6195 9539

3 UK 3962 4302 6016

4 Germany 1282 1412 2196

5 New Zealand 201 355 9526 Japan 195 202 199


2.12 Vocationalization of Education

There is a gap between the need of the employment terminals i.e. industry and theacademic institutions. With the reducing government employment opportunities andincreasing economy-oriented employment, close links need to be fostered betweenvocational institutions and user industry and also technical and professional institutionsand industry. It is important to recognize the level of involvement of the industry and thuscreate interest of the industry in developing the quality, financial support, acceptance of

the produce, creation of more employment etc. The higher education systems have verycontrolled way of qualifying the recognition of offering the degree or the diploma. Thesesystems do not allow majority of the institutions to offer quality developmentalprogrammes, which are needs of the economic manpower. There should be anindependent accreditation body to assess the purpose, quality and offering of the

37 IIE fact sheet on India. Open Doors Report.


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programmes for undergraduate programmes, from one-year masters to three year ofmasters or even higher education.

2.13 Public-Private Partnership

There has been some effort both by the government and the private education institutionsto develop the teaching staff at various levels. However, this needs to be intensified withappropriate attention to all the aspects related in order to prepare quality and sufficientnumber of educational staff. Such efforts need a very serious structuring for the researchbase institutions.

It is a very popular and known fact that funding of the institutions either private orthe government, is not going to be supported by the state or central governments for long.A public-Private Partnership Model should be developed and encouraged by thegovernment to create a self-sustainable model of education in times to come.

2.14 Institution-Industry Interface

Looking at the whole scenario, there is a need for interaction between universities,

academic institutions of higher learning, industry, R&D institutions and fundingagencies. This could be achieved by a synergy process wherein they will be partners invarious activities, complementing each other in reaching their visions, objectives andgoals. Generally, this is perceived as an activity for interaction but there is need to re-look in order to develop such a process wherein there will be more than interaction. Thiscould be achieved by Partnership. A few interventions needed are (i) Develop a databaseof facilities available in the university, Industry and R&D institutions. (ii) Involvement ofIndustry in the curriculum development and also implementation of the curriculum (iii)Faculty exchange and participation in industry and vice-versa in university andspecialized institutions (iv) Participation of executive who have Ph.D., involve them inresearch and development both in industry as well as universities (v) Industry to utilize

the human resource and infrastructure available in the universities for problem solving,testing, certification etc. (vi) Conducting advanced programme in technical, managementand other need-based areas, tackling contemporary issues of mutually beneficial nature(vii) setting up a business development cell on partnership and (viii) Promotingentrepreneurship in education system

We have to be optimistic that private-public partnership and the Industry interfacewill take place in the field of education at all levels, and particularly in the backwardregions, which is the need of the hour. To achieve excellence, we thus need to create areal partnership between government, educators and industry Partnerships that canprovide our high- tech industries with skilled workers who meet the standards of theirindustry.

It is important to mobilize resources, arrest the process of declining resources,liberalise the conditions and procedures for grant of autonomy to institutions of higherlearning, adopt new ways and means to raise funds to make the system more efficient,responsive and accountable and encourage participation of private enterprise for creatinga network of institutions.


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3. How Do We Achieve the Goals?

There is no doubt that Achieving the goal of a knowledge economy is not an easy task. Itneeds considerable additional financial investment and planning. Not only is there anoverall shortage of funds, there are also several competing demands on the slender statesfinances. But education is an investment in human resource development, and all future

development essentially revolves around the quality of the human resource. While a partof the financial requirement can be met by mobilizing and judiciously utilizing local(community) resources, a large part has to come from the state funds. But the mostimportant is that private education providers should be encouraged and they should comeforward to invest in education in these areas. But for that a favourable environment has tobe created. Private participation in the financing and management of education should beencouraged also in semi-urban areas to bring about efficiency in the system and make itmore effective and relevant. The government needs to adopt the pro-active approach andshould increase the present level 3% spending to 6% of the GDP.

With the changing scenario at a much faster pace including service sector playingvibrant role, the system should aptly respond to dynamic flexible and innovative practicesat a matching pace. The flexibility, responsiveness, timely action would be detrimental tomarket forces trying to occupy larger share in the name of innovation and become theexpertise for larger market share. Information Technology advances is a very goodexample for our country whereby responsiveness could result in greater market share.

The National Commission on Population expects working age population tocomprise over 63 per cent of the aggregate by 2016. India has made tremendous progressto fight against illiteracy and reduced it into a reasonable level. India produces a largenumber of skilled workers especially, in the information technology sector and exportsthem to various parts of the world. The business exports including professional serviceexports reached $15.4 billion in the first half of 2005-06. The share of service sector to

the GDP has increased to 54% in 2005-06.38 However, there is a huge gap between theactual potential of India and its out put and to make it a knowledge economy. At presentmore than 35% of the Indian population is below the age of 15.39 The young generationis the asset for the future, but to make it as a trained manpower is the task before thecountry.

In India 65% of people are engaged in the agricultural sector; 26-30% are belowthe poverty line and 36-40% not literate. Out of every 100 children joining primaryschool, only 60 complete Class V; 40 complete VIII; 25 complete X; 15 complete XIIand only 8 reach to college. High levels of financial and institutional commitment arerequired to ensure basic infrastructure in schools, bolster teaching quality and improveacademic standards. Secondary education needs to be recognized as a crucial

intermediary step between elementary and higher education. Innovative strategies arerequired to make secondary school education more productive, less strenuous, skilloriented and more appealing to students. The reforms in India should basically focus onthe demand lead supply transformation towards skill enhancement. This seems to be

38 Economic Survey, 2005-06, p. 3.39 http://www.rediff.com/news/2004/feb/04inter.htm, 09.06.2006.


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missing in the government-owned and operated educational sector. In this context, therole of the state should be reduced to provide the basic education.

It is now understood that the largest share of new jobs in India would be createdin the unorganized economy that employs up to 92 per cent of the national workforce andproduces 60 per cent of GDP. Technicians and other skilled workers and craftsmen form

the backbone of manufacturing and infrastructure development. A larger and much moredynamic system of vocational education is required to train and equip them in greaternumbers. The objective of the future technical and vocational training should be to trainand create the skilled labour force which is needed for the un-organized sector, key to theeconomic growth.

The Indian Universities have been established many years back and are starvingfor sufficient infrastructure and facilities. The quality of education varies widely fromone institution to another especially in the professional level. Several universities in Indiado not have a flexible academic structure and the degrees from these universities willhave a lower value in the job market than foreign universities. The syllabi are obsolete;there is a lack of multidisciplinary courses, teachers apathy, excessive examinationorientation, poor infrastructure, little research to speak of, bureaucratic meddling, etc.These maladies have been identified by a series of education commissions as the ills thatplague the system. There is a huge gap between the demand and supply side of highereducation in a globalized economy. Our higher education system to be revamped and theinstitutional promotion should be in accordance with the industry needs and demands.The gap needs to be bridged through private participation and investment.

India is one of the countries sending large number of students abroad for studyingand thus there is a large flow of foreign exchange outside the country. This can beprevented if there is commercial presence of world famous institutions in India. On theother hand, foreign students coming to India is very less when compared to countries like

the US or UK. Indian education should be marketed all over the world and thus it canmake an education hub in the next 10 years. When considering the fact that India is thesecond largest provider of higher education in the world, it should be able to exploit thepossible markets all over the world.

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Indian Education Sector Growth and Challenges

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