Please! Let the education market grow

The recent Ficci conference and the Knowledge Commission have put higher education in the spotlight. Although the country has gained a reputation for centres of academic excellence (like the five Indian Institutes of Technology and the Indian Institute of Science), the harsh truth is that much of the system is in a shambles.

The system is geared to minimalism (poor salaries for faculty, little or no facilities for students), and the implicit assumption that demand will be more than supply (which is why there has been such little incentive to change). But it should be clear that this phase of the story is over.

Change has already over-run the system because the demand for professional education has been met in recent years only because of private initiative, not state provisioning. What has changed also is the globalisation of the labour market. A serious intellectual, with the ability to do international quality research, now has a global market, whereas India has stuck to irrationally low salary levels, so the best scholars have fled overseas or to private research jobs in India.

A simple litmus test will resonate with the readers: How many top economists are now to be found working at an Indian university?

Then, the annual student intake at the five IITs is a pittance. For every student who gains admission, at least 10 of equivalent quality and potential are turned away. The misery that these frustrated students and their families face is acute. The rich have found a solution for themselves by sending their children abroad.

When it comes to public policy, socialist policies are advocated, but when it comes to the children of the elite, capitalist education abroad is best. An estimated 400,000 Indian students are outside the country, spending at least Rs 10 lakh (Rs 1 million) each per year (making for a total of Rs 40,000 crore -- Rs 400 billion -- annually, or about $9 billion).

In other words, socialist policies in higher education are not reducing inequality. They are creating a new caste system, where the rich are able to escape to top universities worldwide, while much of the rest of India has to make do with below-par college education locally. It need not be this way.

The formula for building top-quality universities in India is very much within reach. The decisive issue is to shift salary levels up to the point where it is possible to attract the best minds to Indian academe. This would mean not more than a ceiling of Rs 1 lakh (Rs 100,000) per month, compared to a third of that today. A university that has 1,000 faculty members can therefore be run at a cost of no more than Rs 200 crore (Rs 2 billion) per year.

If 30,000 students pay 20 per cent of the cost (as the deputy chairman of the Planning Commission has desired), each student will have to pay annual fees of no more than Rs 15,000 per year. Since only 6 per cent of Indians go to university, and all university students are therefore by definition part of the elite, this sum should not be considered excessive -- especially if scholarships can be given to the needy.

And if many of the students who now go abroad because of the lack of attractive options at home, are then persuaded to stay with the Indian system, the country as a whole benefits. What this will require, however, is that many more private universities are allowed to function, and the education market allowed to develop along rational lines.

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