Narayana Murthy on why education must be freed

In a world where knowledge is power and human capital supreme, technically India should be among the top ten nations in the world. We have one of the largest pools of skilled manpower and we are populous.

But as the blue revolution sweeps the globe, the gap between India and the developed world is widening rather than narrowing. The key lies in transforming our higher education system.

Infosys Technologies chairman and chief mentor N R Naranaya Murthy proposes four tangible solutions.

The quality of technical and management education is becoming critical in today's world. The last two decades have been influenced by globalisation, and the effect of globalisation is reflected in liberalisation of trade and capital markets.

Our future will be impacted by forces unleashed by the Internet, the mapping of the human genome, the convergence of technologies, and the deregulation of industries. Thus, the 21st century will be primarily shaped by intellectual capital.

India has one of the largest higher education systems in the world. The country has 237 recognised universities, 46 deemed universities, more than 10,600 colleges and employs more than 330,000 teachers.

Despite the phenomenal growth, total enrolment in higher education forms only about 6 per cent of the relevant population (17 to 23 year olds).

There needs to be an increase in the intake in higher educational institutions. Therefore, capacities in the Indian Institutes of Technology, the Regional Engineering Colleges, B-schools and other colleges must be tripled along with improvements in infrastructure.

1. Liberalise education

The role of government needs to be minimised. Higher education must function as an industry in a free-market environment with suitable regulatory mechanisms. Licensing must be removed in education along the lines of the trade liberalisation of the 1990s.

Educational institutions must be allowed to function as corporations making their own decisions. Full autonomy needs to be granted to all institutions of higher learning.

2. Private funding

Many prestigious American institutions such as MIT and Stanford are funded almost entirely by private money. Our government is facing an era of lack of funds.

It is therefore, essential that there is widespread infusion of private money into our higher education system.

Market-driven fees will enable universities to provide competitive salaries and scholarships. This will enable them to compete for high quality faculty and students. Colleges must be provided with the latest teaching tools, computers and Internet connectivity.

3. Performance pay

Meritocracy must be introduced among faculty by implementation of pay-for-performance systems. There should be bi-annual student surveys of faculty members. All benefits to faculty members including compensation and promotion must be based on feedback secured from students.

4. Students loans

Subsidies should exist only in basic education and not in higher education. Parents below a certain income level can be given vouchers by the government.

These vouchers can then be used for payment to schools and educational institutions. An Educational Development Finance Corporation can be set up to fund higher education through a National Student Loan Program.

If India is to achieve $45 billion in software service exports and $10 billion in IT-enabled service exports by the year 2008, it will require a resource pool of almost 1.3 million professionals.

What will happen then is that the chunk of students who graduate out of institutions will flow into IT, while the laggards will be left to general industries. It is essential to have high quality people in general industries as well since they are the ones who provide the basic infrastructure within which IT exists.

(This contribution is based on the 4th Ravi Matthai Memorial Lecture organised by the Academy of Human Resources Development and delivered by Murthy recently in Bangalore).

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