Wednesday, October 21, 2009

Need to bring private capital to finance higher education in India

The following article written by me was published in the Financial Express newspaper national edition dated 19 October 2009. Online copy can be found at I can discount one thing from the list of things to accomplish in this lifetime. Alright, now the article,

Education sector, like any other in India, invariably stares at the same horizon – one billion people and counting! When exploiting economies of scale is one side of the coin, the myriad challenges faced in reaching the masses becomes the other daunting side of the same coin. Before attempting to answer the question posed, let us define the boundaries of the playground. For the sake of this analysis, any kind of formal education undertaken after 12 years of schooling has been considered as ‘higher education’. The ever rising applicants/intake ratio in all the top notch institutions of India has indicated the clear inability of the government to provide quality higher education. Can the time tested solution called privatization be applied to education sector? Probably yes, but only in certain pockets.

If we look at our government’s spending pattern towards education, lion’s share is allocated to the top institutions offering professional courses such as engineering and management, majority being government institutions. Other disciplines such as arts and sciences receive very little funding from the government that they can even be termed neglected. But it is a fact that no country can survive with engineers and managers alone, whatever their levels of competence be. A developing country like India needs scientists, lawyers, farmers, artists and philosophers in same numbers as engineers and managers. It is time for the government to seriously concentrate upon hitherto neglected disciplines and lend them a helping hand.

In order to do that, the government simply cannot redistribute the allocation of funds because it will stall the development of the top institutions which can be detrimental to the nation building process. So there is a clear need for generation of extra funds and this is where the private sector can pitch in. But the problem is private sector is interested only in commercially viable ventures. In other words, private sector will be interested in financing tech schools and business schools only. This is evident from the sheer growth of private engineering and management colleges in India. Here 2 ways of bringing in private capital exist – setting up private colleges, bringing alternate revenue stream for government colleges by way of consultancy and training programs. The government should strongly encourage the latter and undertake a regulatory role for the former. This would both decrease the stress on the government and ensure availability of quality education.

The government should consider the extra funding thus generated as savings and reinvest these savings in building a strong arts and science base because at this moment it is these courses that need utmost attention. There is a need for extra funding in these sectors whereas the funding can be generated only through professional courses sector. Thus there is a need for bringing private capital to finance higher education but what is more important is an intelligent redistribution of funds. If the redistribution is not proper, the chasm between professional and non-professional courses will continue to grow which is not a good sign for tomorrow’s India.

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