India Banao!

India’s higher education sector is failing. Barely 7% of Indians get to college; 99% of these lucky few receive indifferent teaching in decrepit classrooms; they lack libraries, labs, and computers; 80% are unemployable; the moneyed elite flee abroad; meanwhile, we console ourselves with the careers of the 1% that go to the IITs, IIMs, and a few other premiere institutions. National commissions to fix higher education have come and gone. However, entrenched interests have blocked all reforms. Radical structural reforms are urgently required that will simultaneously attack regulation, funding, capacity, faculty, and admissions/access. These reforms can create an open higher education system supervised by independent regulators and funded through government scholarships. Such a system is our best hope for responding to the massive need for higher education.

India has about 160 million people of college-going age. Some 11 million or 7% are studying in degree-granting institutions. There are about 16,000 such institutions, of which 15,000 are private. About 90% of students getting professional degrees in engineering and management are educated in more than 10,000 private institutions. Private medical colleges train roughly 40% of all doctors. There are about 170,000 Indian students spending nearly $3.5 billion per year abroad. By some estimates, total annual higher education spending is over $10 billion or a little less than 1% of GDP. Government funding varies enormously. At one end are the pampered IITs with approximately Rs. 1 to 2 lakhs spent annually per student. At the other end, are dilapidated colleges deep in India’s interior, where spending barely reaches Rs. 2,000.

Meanwhile, private higher education is trapped in a vicious cycle of too many desperate students, poor regulation, inadequate capacity, mediocre faculty, and inappropriate curricula. The government controls salaries, fees, courses, capacity, land allotments, and facilities. Politicians and others with access procure cheap land from the government. They have no experience in education, but run a high return low risk annuity business and are able to dispense patronage. For instance, there is a well-known politician who currently runs 70 schools and 12 colleges through his trust.

Transforming this vast, sprawling system requires radical action in five key areas. First, today’s license raj operated by the Human Resource Development Ministry has to be transformed. The UGC, AICTE, and other regulators must be freed from government control and should become truly independent. Degree-granting institutions will have to be certified by a renamed UGC, which can revoke that status if basic standards are not met. Accreditation agencies (such as the AICTE and Medical Council of India) should also be run by autonomous boards that establish world-class educational standards, degree requirements, curriculum, necessary facilities, faculty qualifications, admission standards, and research protocols. The Boards should require a CA-type national certification process for professional disciplines such as law, medicine, architecture, dentistry, engineering, etc.. Board members for all regulatory agencies should be selected by duly appointed Nominating Committees of their Boards, not by the government.

The second major area to be addressed is government funding. The Central Government must fund all students admitted to degree-granting institutions. Market rates show that students spend about Rs. 1 lakh in fees, boarding, and educational materials per year at private institutions. Government could fund 50% or Rs. 50,000 per year as student scholarships. BPL students would receive 100% funding. A national identity system with a payment processing platform would enable funds to be deposited directly in student accounts. State Governments could add to these funds or provide additional funds to institutions in their state. Institutions will have to compete for students. Standards and facilities would start to rise immediately, faculty salaries will go up, and entire industries will spring up to provide various educational services. If government funds Rs. 50,000 per student for 12 million students, it would cost Rs. 60,000 crores or about 1.1% of GDP – about double today’s spending.

Dramatic capacity increases will happen quickly if the system is fully opened. For-profit institutions should be immediately allowed if they meet standards. Foreign ownership, joint ventures, and alliances should be freely permitted as well. Student scholarships could be used across public or private institutions and will spark a massive build-out. The IITs, IIMs, AIIMS, and most other top universities already have governing boards. They should become independent, autonomous institutions free of any government interference. The top institutions could create their own endowments, set their fee schedules, provide additional student funding, and monetize their massive landholdings. Easy entry and autonomy should also spur wealthy Indian business families to endow universities as their counterparts have done around the world.

Faculty development will thrive in an open higher education system supported by scholarship-based funding. First, the top institutions will become major research hubs and train the faculty that will be required across the system. In the US, the top 10-15 universities such as those in the Ivy League, MIT, Stanford, and Chicago play a similar role. Top faculty will cluster at these elite universities and create enormous positive spillovers in their regions. Second, with faculty salaries freed from government control, sufficient talented individuals will be attracted to the teaching profession. Third, faculty development and standards will be supervised by the accreditation agencies. Fourth, the Central Government must provide adequate funds and autonomy to the Science and Engineering Research Board so that it can truly promote high-quality research. Finally, each university can also encourage research and publications through its tenure-granting process.

With sufficient capacity available across the system, the vexing issue of admissions/access can finally be resolved. Admission should be transparent, points-based, and under regulatory supervision. Affirmative action can be instituted for selected sections of society by setting suitably lower standards for admission. Sufficient capacity should be set aside for affirmative action; exact levels of affirmative action could be decided through the political process in each state, with the Central Government mandating some minimum standards for all institutions that benefit from scholarship-based funding. In principle, institutions that do not receive any government funding could relinquish affirmative action entirely – but that is probably not advisable.

Do these interconnected reforms imply rabid privatization and state abandonment of higher education? Frankly, that has already happened. Instead, these reforms will result in fair-minded regulation, higher standards, talented and sufficient faculty, and transparent access to the system for all motivated young people. Democracies rarely address problems unless a full-blown crisis erupts; higher education is now in such a crisis and a young India urgently awaits. We cannot fail them.

This article appeared in Business Standard on February 26, 2009

If you enjoyed this post, make sure you subscribe to my RSS feed!