Wednesday, December 26, 2012

Indian Education, Foreign Investment and The Search for Change

Finally, the debate everyone wanted to have, has kicked off: Deloitte, a consultancy, has started this round with a new report, India's Higher Education Sector: Opportunities Unlimited, Growth Aplenty, recently, and called for increased foreign investment in the sector. This reflects a shift of emphasis from 2010, when Grant Thornton, another consultancy, was talking about opportunities in Indian Education (Education in India: Securing the Demographic Dividend) and highlighted vocational training, backed by increased government spending on skills training, as the growth sector. Grant Thornton report was then predicting a 25% CAGR in the vocational training sector, reaching US $3.6 billion in 2012, which is most likely to be surpassed. Given the high school drop out rates in India, vocational training surely deserves the attention and can potentially

Discernibly, the government's focus is shifting, perhaps as the urban middle classes, squeezed by inflation, goaded by 24x7 news and frustrated with lack of employment and enterprise opportunities, are revolting, fragmenting India's politics but most importantly taking the streets more often than they used to. To avoid an Indian Spring, if only it is not too late, it is important for Government Ministers to get serious about urban capacity, urban problems and urban aspirations. The poverty needs to be eradicated, Indian agriculture must improve and we must build the infrastructure to help India's numerous villages, but it is no longer a choice between urban or the rural development: Despite vast improvements in literacy and rural income under its watch, this trade-off thinking has been the greatest folly of the current government, one, admittedly, it is desperately trying to correct now. Higher Education, the catalyst of middle class life, must therefore figure high on the government's agenda.

However, it is not just a quantitative change, more colleges and universities, backed by foreign investors, that will solve India's problems. In fact, one could argue that India needs less colleges, not more. The average size of India's colleges is just 500 students, and counting out a few large, mostly state-sponsored institutions, there are numerous, relatively new, education institutions with a few hundred students each. Indeed, such low numbers seriously hamper the ability of these institutions to invest in infrastructure or academic capabilities. Funnily, one reason why the institutions remain small is because India's regulatory agencies dictate how many 'seats' a college can have. There is very little discussion whether this regulatory framework is fit for purpose, which, clearly, it isn't: one clear indication is that one regulatory body, All India Council of Technical Education (AICTE), attempts to publish a list of institutions which it 'does not approve', a list that is longer than the list of approved colleges, contains some of India's more commercially successful colleges. Some of its approved colleges have now 'applied for' de-listing, privately citing the sheer impossibility of attaining economic viability within the regulatory framework.

Slowly but surely, India may be reaching an inflection point: Demography is destiny, and India's young is showing up on the street, impatient with the failure of its political class to move the country forward. There may be a broader debate about the idea of India to be resolved between Hindu nationalists and the idea-of-India camp, but the urgent issue on the table is the opportunity, to lead a productive life and to have access to middle class lifestyle, for the millions of Indians in their twenties and thirties. The grand debates are not irrelevant, and indeed they would shape the nature and the viability of Indian prosperity, but India is at a stage where all traditional polity, all parties, must change of mindset,  align with the street aspiration and must deliver.

This change of mindset will not automatically accompany investment, private or public. The rising nature of Indian middle classes is completely missed by its policymakers, in government, business or outside: The private investment in education so far have ranged from money laundering, profiteering or simply recycling political patronage. The moment for the 'Private' solution, wherein the state steps back and let the market decide, may have passed: In fact, it may be downright dangerous for the state to step back now and depend on investment, foreign or otherwise, to create educational capacity. This is because investment is usually blind, and for all the claims of smartness, private investors tend to be enormously naive and capable of oiling the greasy palm. The foreign investment is likely to create more institutions at the already crowded top end of the spectrum, and create more opportunities for the socially endowed who already have all the options in the world. The key challenges of middle India, which is both a metaphorical and geographical concept, are likely to be passed over by the private investors.

Indeed, the government does not necessarily have to step back with private or foreign investment, but this has been the orthodoxy so far, and indeed, such thinking underpins the reports from consultancies: However, for India, the government must try to reform itself and the way it thinks about Higher Education, but should remain firmly involved. For a start, there could be nationwide initiative on Higher Education: This could range from, at one extreme, a constitutional amendment to put the responsibility on the Union list rather than Joint list (a political impossibility, but this may facilitate coherent decision making) to a technocratic solution of creating a National Commission on Higher Education with executive powers, which may have Central, State and Industry participation, which should work autonomously, be free from political influence (something that may require a constitutional amendment in any case). The National Commission solution is more feasible, if there is political will, which is the problem in India but one would hope that the spectre of a Bastille moment will spur some political activity soon. The organizations such as AICTE should be disbanded and its functions should be integrated into the national, unified body, which may handle accreditation, quality assurance and funding function all within itself. And, indeed, creation of such a body should be accompanied by the government committing a significant allocation of its budgeted expenditure on Higher Education (2% anyone?). [There is a discussion that Indian companies must allocate 2% of their revenue or profits, the debate between the two is still on, to Corporate Social Responsibility fund, which is a form of stealth tax the government wants to impose]

Private and Foreign investment, once such a commitment is made and an overarching framework is established, may be greatly beneficial, but not without an unified strategy and at the cost of a retreating public commitment. However, one must commend the consultancies for creating a ripple: It is time, hopefully, to have a meaningful conversation about how India must move forward. 

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