Is the RTE Act fair to private enterprise?

One of the most ambitious constitutional amendments (Article 21-A) and a major 2010 law intended to address inequity in early education — the Right of Children to Free and Compulsory Education (RTE) Act — are both again in the news.

Early in September, the Central Board of Secondary Education (CBSE) withdrew affiliation to six schools belonging to the National Public School Group for allegedly forging and producing fake certificates.

This was to punish the schools for fraudulently claiming minority status as a way to circumvent the “free and compulsory education of all children” provision of the RTE Act, and continuing to only enrol students who could pay hefty tuition fees, sometimes exceeding ₹1 lakh a year.

The de-affiliation decision would have forced innocent parents and children to rush to find admissions at alternate schools which have the same strong reputation that NPS had built for over 40 years.

Luckily for them, the Karnataka High Court issued a stay order providing a breather weeks before the mid-term exams.

The larger question is what prompted such an established education provider, one that has helped educate lakhs of children over the years to successful careers, to allegedly resort to such questionable behaviour all to dodge a law.

Is the RTE law really so overbearing? Can it withstand legal scrutiny?

The key constitutional principle behind RTE is the same that has tied the country in knots when discussing another contentious law — the Land Acquisition Act.

Both are based on the principle of Eminent Domain that has been around in various countries for nearly 400 years.

The Cornell University Law School defines Eminent Domain simply as “the power of the government to take private property and convert it into public use”, if — and this is an important if — “the government provides just compensation to the property owners”.

No one argues that the Indian government has a compelling public interest to ensure that the country’s children have access to elementary education from grades 1 through 10. But this compelling interest comes at a huge cost to society.

In most countries, governments actively participate in every aspect of childhood education: from setting standards to hiring teachers; to building, maintaining and running schools; to conducting exams and measuring performance of both children and teachers.

Little wonder then that elementary education is often one of the largest line items of government budgets, local, State and federal.

The Centre and States also spend money running a network of so-called government schools.

But these are inadequate both in quantity — there simply aren’t enough government schools to cater to all children — and quality, because many urban parents would not want their children to attend such schools.

For hundreds of years, therefore, India has operated an elementary school system that largely relies on for-profit private schools.

The government sets standards, conducts exams and awards certificates (CBSE), but the hard work of building, maintaining and running schools, recruiting teachers, educating children and nurturing relationships with parents has always fallen on these private enterprises.

And doing Adam Smith proud, the private schools do this heavy lifting motivated largely by profits.

What the RTE act did, in one swipe, was to force private profit-making schools to accept children regardless of the family’s ability to pay. The law stipulates that up to 25 per cent of a school’s strength can be filled by such students.

Constitutionally, this is a clear example of Eminent Domain because the power of government is being used to take private property (seats in a school) and convert it into public use.

The RTE Act cleverly does not specify what the “just compensation” ought to be. It simply vaguely states that “the sharing of financial and other responsibilities is between the Central and State Governments.”

Isn’t the taking of private property without just compensation unconstitutional? Not really. In the Indian context, shocking as it may seem, the right to private property is not a fundamental right at all (44th Amendment, 1978).

The aggrieved party can still petition courts to address grievances but absent a fundamental right to property, successful legal challenges against the government in Eminent Domain cases are rare.

Indeed, in an April 2012 case involving a private school that challenged minority reservation limits of the RTE, the Supreme Court, in a 2-1 decision, upheld the RTE’s constitutional validity by insisting that the law applies to many schools, including, “an unaided non-minority school not receiving any kind of aid or grants to meet its expenses from the appropriate Government or the local authority.”

In other words, the court held that private schools have no constitutional claim to just compensation when the force of law takes away their property.

This is akin to a court ruling that a restaurant owner must feed up to 25 per cent of his patrons and expect no compensation — simply because solving hunger is a compelling governmental need and a law was passed legalising eradication of hunger.

Something that is constitutional does not necessarily make it right. The government already has broad powers to tax, and extending these powers to immoral takings from private parties no matter how just the cause is does not seem fair.

The full Supreme Court must revisit the issue and provide clarity to a confused nation.

The writer is the managing director of Rao Advisors LLC

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