Private engineering colleges are real estate rackets, says V Raghunathan

V Raghunathan, a former professor of finance, Indian Institute of Management, Ahmedabad, who currently heads a corporate foundation involved in social work and inclusive education, discusses the problems of the Right to Education Act and on the regulatory issues in higher education, with E Kumar Sharma.

The hurdles in implementing the Right to Education Act:
The Act says every child between six and 14 years should have the right to "to free and compulsory education in a neighbourhood school". It calls for local bodies to set up the requisite number of schools within three years. Given our birth rate, we add nearly 20 million babies every year.

This calls for 60,000 new schools every year. This is assuming 300 to 400 students per school, just to keep with the incremental demand, leave alone the additional schools required to cater to the present deficit of schools. The deficit of schools, in both government and private sector is well known.

So how will this gap be bridged in a hurry? Given that most state governments have barely enough funds to pay salaries to their employees, where will the funds come from? For that matter, how will they meet the huge deficit in number of teachers? Where are the teacher training institutions?
 
Why private schools are complaining:
The definition of 'school' in the Act includes unaided schools that receive no government aid. Such schools also have to reserve seats for eligible underprivileged children and their fees are to be reimbursed by state governments.

In Andhra Pradesh, we already have a scheme where the state pays the fees for students below the poverty line in engineering colleges. This amount runs into thousands of crores, and the state has no funds to pay. What reason is there to believe the same will not be true of school fees reimbursement?  In fact, the amounts may run even larger.  And if the state governments delay the reimbursement, the viability of many of the private schools may be seriously in jeopardy. 

What is more, such reimbursement will open yet another gate of corruption vis--vis government bureaucracy, when limited funds are released for reimbursement by the government, and the babus expect the queued up schools to 'bid' for their share of the reimbursement!

Possible solutions:
States could seek bids from CSR arms of the private sector or reputed NGOs to take over government schools, with committed capital expenditure and underwriting of operational expenses. These parties could be allowed full management control in return for free education to 40 per cent of those enrolled.

The paying students could subsidise the non-paying students. The number of rural schools can be increased by insisting that for every urban school a private party sets up, it should have to start two rural schools as well of the same capacity. This is not unreasonable. For example, until a few years ago, banks were required to open three rural branches for every urban branch.

This led to an extensive banking network across the length and breadth of the country. Similarly, any one opening a private school in semi-urban locations may be called upon to open one school in a rural location. For existing private schools, give them three years to meet a similar criterion.  

In addition, provide a tax holiday for specialized teacher training institutes (not the B. Eds).

The regulation of higher education:
Our regulatory system in higher education leaves much to be desired. The real issue is not whether we replace the All India Council for Technical Education or the University Grants Commission with another umbrella body. Merely naming a new commission is unlikely to address the systemic flaws.

Why private engineering colleges are mushrooming:
Private engineering colleges have mushroomed because they have been allowed to mushroom. Most such institutions are in fact real-estate rackets in the guise of educational institutions. A large majority of them are controlled by politicians and builders. As a consequence, the honest and not so honest colleges come to be bracketed in the same silo.   

Private engineering colleges (at least the honest ones) are complaining because the fee in most states at about Rs. 30000 to 35000 per annum is absurdly low.  

The way out:
Institutions like the AICTE and UGC must have eminent public figures from all walks of life on governing bodies. There could even be an academic Ombudsman to whom Institutions that feel they have been wronged, can appeal.

Business of higher education five years from now:
Much that may or may not happen in the higher education space will depend on how the Foreign Institutions Bill fares.  I see obstacles on the way, even though the Bill itself is well meaning. 

For example, if we insist on severe restrictions on fees and call for caste based reservations (beyond affirmative action), that is bound to be a dampener for the foreign institutions entering India. On the other hand if we don't, the Indian Institutions are bound to have serious heart burn, especially when their performance is typically bound to be compared against their foreign counterparts with much better terms of independence. How we will get past this dichotomy is difficult.

Perhaps the government will have to move away from its absurd fee policy in Indian universities and other institutions. The way to quality education is to allow the fees to more realistic, but ensuring that banks do provide mandated loans to students.

For example, today the University system is allowed to charge absurdly low levels of fees (often of the order of Rs 2000 to Rs. 3000 per annum!). At the same time, the public sector banks are mandated to lend up to Rs. 4.5 lakh per annum for higher education.

So why the Universities can't be allowed to charge more realistic fees and let the economically weaker students to borrow for their education? This will also unburden the educational system from paucity of funds. Whatever the mechanism, it is clear serious overhaul of our educational system is called for if we want our so-called demographic dividend cheque to be honored!!