The Centre’s reported move to shift education from the ‘not-for-profit’ to the ‘for-profit’ sector, and to allow foreign universities to set up shop in India, is a welcome and significant reform measure. By doing away with the pretence that all educational institutions are run as charitable institutions, the move will pave the way for the entry of serious investors, domestic and foreign, into India’s woefully under-funded higher education sector. Further, allowing foreign universities in India (and allowing them to repatriate their profits), will not only ensure committed and long-term inflows, but will also bring world-class knowledge, curricula and pedagogical practices within the reach of more students. Although India’s higher education system is one of the largest in the world, with more than 600 universities and over 35,000 colleges, it reaches less than a fifth of the addressable population. The low allocation for higher education — under 1 per cent of GDP — means that government-run institutions, accessible even to poorer sections of the population, simply do not have the capacity to meet the demand. The bulk of the capacity addition has come due to private investment, but at a cost which is beyond the reach of most Indians, particularly in the technical and medical fields. As a result, the gross enrolment ratio (GER) in higher education is still under 24 per cent, well below the developed nations’ average of 58 per cent. In contrast, China, which in the year 2000 had a GER of 8 per cent (compared to India’s 10) is today at 27 per cent.

Quality is another issue altogether. There is no Indian university among the top 200 (ranked by academic performance) in the world. Employability is another key concern. A CII survey found that just a third of graduates were considered employable. More than half of all Indian companies restrict their hiring to just the top 20 colleges in the country. A UGC survey found 88 of 130 deemed universities reviewed to be below par. As many as two-thirds of colleges — government-run and private — do not meet the minimum norms in terms of faculty and infrastructure. This has meant that Indians spend a staggering $7 billion (over Rs ₹44,200 crore) a year funding higher studies abroad.

Allowing foreign competition is only the first step in remedying this catastrophic state of affairs. There are multiple regulators at the State and Central levels, and a plethora of professional councils. These need to be replaced with a single entity, with a clear separation of regulatory and funding roles. Several important reform Bills, including those for setting up a unified regulator, for mandatory and transparent disclosures of costs and fees by private players, and to make accreditation by independent agencies mandatory, are all either pending passage in Parliament, or have lapsed. The government would do well to pursue these on priority. Without quality education and skills, India’s demographic dividend will remain unrealised.

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