Factors constraining Higher Education in India

Factors constraining the segment's growth

The low penetration of higher education in India can be attributed to various factors, some of which are:

·         Regulatory framework - The segment's governance is highly bureaucratic, with the involvement of a multitude of bodies (Please refer to Part B for details). The government's resolution to disallow profiteering from education (surplus generated by educational institutions cannot be withdrawn and has to be utilised for the development of the institute) is one of the biggest roadblocks to the sector's growth. This is particularly true of streams like medical education, wherein huge funds are required for infrastructure development. Moreover, almost all other aspects of education like intake capacity, fees, courses etc. are also regulated, and hence, private players don't have any incentive to invest in the sector.

·        Access - Educational infrastructure in the country is skewed, with some regions having greater concentration of institutions as compared to others. For example, professional colleges in rural areas account for only 20 per cent of total colleges as opposed to nearly 60 per cent of total population in these areas. This has resulted in inadequate access to higher education, particularly in the case of students in rural areas who have to travel to towns and cities for the same.

·        Socio - economic conditions - Socio economic barriers have resulted in lower enrolment in higher education, especially in rural areas where discrimination based on gender and caste etc. is still prevalent. Additionally, children are prompted to supplement the family's income by working on farms rather than attend schools and colleges.

·        Availability of funds - Due to the highly regulated environment in higher education and the ‘not for profit' nature of the sector, many private players exploit legal loopholes to earn returns on their investments, thereby fostering bureaucracy and corruption. The substantial risk involved in earning profits through this mode has made bankers wary of lending to educational institutions.

·        Quality - Quality of education remains a key concern in India with many institutions lacking adequate infrastructure and facilities. Also, dearth of experienced and trained teaching faculty is another critical issue for a number of institutions in this segment. Students graduating from such institutions are at a disadvantage while seeking employment.

Box 1: Regulatory reforms planned in the sector Post the Supreme Court judgment in Unnikrishnan JP versus State of Andhra Pradesh, the President of India approved the policy on fee determination in private unaided institutions in the higher and technical education segments in March 1997 to ensure a fair fee structure in the relevant institutions.  Some of the general principles which form the present policy framework are: ·        Prevention of profit making and ensuring, as far as possible, the principle of no-profit -no-loss which underlines the scheme in Unnikrishnan ·        Without diluting the fundamental concern of avoiding commercialisation , to make allowances in the fee so as to provide for replacement and upgradation of facilities ·        Involving the state governments concerned in the process of fee determination Accordingly, fees chargeable by institutions are determined by a state-level committee consisting of few experts in addition to UGC, AICTE officials (Please refer to Part B for details). Although capitation fees have been banned in the country, many colleges across streams have been brazenly flouting this regulation and charge capitation fees under various guises from students. This is evident from the recent findings in Tamil Nadu, where some medical colleges allegedly charged capitation fees as high as Rs 40 lakhs for admission. This is just an example of the corruption prevalent in the education system. To remedy this situation, stringent regulations are called for to reform the sector. The current government has pledged to bring sweeping reforms in the sector with the Education Minister expressing his intent to focus on all areas of higher education. A 100 days plan has been drawn up based on the recommendations of the Yashpal Committee Report (a UGC/AICTE review committee constituted to review functions of UGC/AICTE) submitted in February 2008. The key changes proposed in the 100 days plan as announced in June 2009 are as follows: Legislative initiatives ·        Creation of an autonomous authority for Higher Education and Research ·        Stringent laws to prevent, prohibit and punish educational malpractices ·        A law for mandatory assessment and accreditation in higher education through an independent regulatory authority; ·        A law to regulate entry and operation of Foreign Educational Providers; ·        A law to establish a Tribunal to fast-track adjudication of disputes concerning stakeholders (teachers, students, employees and management) in higher education; Additionally this plan also entails various policy and administrative changes for renovation and rejuvenation of higher education through quality improvement, better access and higher support.  Successful implementation of these norms will result in a tighter regulatory framework, resulting in lower malpractices and higher transparency in the sector. However, having said that, CRISIL Research opines that these reforms will be more effective if implemented in stages, giving time for all participants to adapt themselves to these changes.