Debate I Privatising Higher Education Is Just Smart Economics

Instead of fearing private players in higher education, they need to be given a chance to enhance learning outcomes.

5 min read

The Quint debates whether privatisation of higher education institutes can improve the quality of education and increase employability quotient. This is the counterview. You can read the view by Swaptik Chowdhury here.

Debating private vs public funding in Higher Education (HE) is simply a mindless debate. More than 60 percent of higher education in India is already privately funded and this proportion will only increase with time. We have to wake up to the fact that there is no way we can afford to educate the numbers of Indians that need high-quality HE purely with government funding.


Low Budget for Education

India spends a very low proportion of its GDP on education. At around 4 percent of GDP, India’s expenditure on education lags behind that of comparable economies, which typically spend at least 6 percent of their GDP on education.

Of this allocation, relatively less is spent on HE. China spent nearly $565 billion on education in 2016, more than 60 percent of which was government spending. By contrast, the Government of India spent a mere Rs 28,840 crore (approximately USD 4.5 billion on HE) in 2016.

Also, when it comes to public spending in India, even for primary education – which gets a much larger share of the funds – only enrolment as a metric has seen an uptick. Most other educational outcomes have actually worsened. ASER reports year after year show that learning outcomes for school children in government schools is well behind stated benchmarks.

In higher education, things are worse. The enrolment ratio even today is just 24 percent for the 18-23 age group. This includes distance education students. In most advanced countries, the ratio is close to the 50 percent mark.

Also Read: Worried About Education Expenses? GST Will Make You Worry More


Privatisation for good quality education

  • At around 4 percent of GDP, India’s expenditure on education is way behind other countries.
  • Privately-funded philanthropic higher education institutions in India face daunting red tape at all levels.
  • Government is considering the ‘10+10’ policy which will liberate ten public and private educational institutions from regulatory control.
  • Allowing private sector in higher education is smart economics; India loses $10 billion a year spent on education by students going abroad.

Need Both Public and Private Funding

Never before in the history of the human race have we been confronted with the scale of the challenge in India today – educating large numbers of our citizens with the paltry state resources at our disposal.

The ONLY way we can meet India’s exploding demand for quality HE is through private funding. So, let us stop debating and get on with it. We need both public AND private.

We need to get over the stereotype and fear that all private education is bad. Most importantly, let us be clear that we are advocating for not-for-profit, pure philanthropic private funding for high-quality HE.

Around the world, this is a solved problem. Instead of reinventing the wheel, the discussion we should really be having is how to make it work in India as well. Right now, high-quality privately-funded, philanthropic HE institutions face daunting roadblocks.


Clutches of Control

There are essentially two fears when it comes to private education: First, that private HE is expensive and that “investors” will fleece students. This sentiment guides our regulation. The second important concern is that private education is by definition poor quality.

Let’s begin by understanding the current regulatory framework: it begins with creating huge barriers to entry. We can fool ourselves into believing that this ensures quality; that it keeps fly-by-night operators away. Unfortunately, that isn’t true. The licence raaj is very much alive and kicking in the education sector. In fact, the regulation has created a vicious cycle. Genuine philanthropic players are scared to enter and commercial profiteers – in the garb of non-profits – who can “work” the system make hay.

Worse, post-entry, our quality-ensuring regulation is merely on paper. Corruption and poor compliance are rampant at all levels. In practice, there is under or almost no regulation.


‘10+10’ Policy Under Consideration

At best, HE regulation controls inputs and quantities: how much land, how many teachers, how many computers, how many years of education and so on.

Instead, it should track output (outcomes) and quality. Are the graduates employable? Do the students feel they are getting a good education? Are they learning?

We need to focus on increasing the quality of accreditation and compliance. We need to reward outcomes in return for greater operating freedom.

The current government gets this – that is why the “10+10” policy to free up ten public and private institutions from restrictive regulatory control is under serious consideration. This is not a new idea: China’s C9 League and Russia’s Project 5-100 ( are similar, and are making waves in HE globally.


Philanthropic Private Spending

While it is important for the government to monitor key development metrics such as enrolment ratios, let’s understand that private educators can provide quality. And, they have the deep pockets needed to build high-quality HE institutions.

Business leaders such as Azim Premji, Shiv Nadar, Mukesh Ambani and Anil Agarwal want to invest about $1 billion each in their university projects. Their motivation is to build legacies through enduring HE institutions that outlive them. They don’t need to make money from siphoning off surpluses from their non-profit universities. We need to tap this purely philanthropic private funding if we are to ramp up spend on HE.

For about $100 million, it is today possible to build a financially self-sustaining high-quality HE institution in India.

Each billion dollars spent by our wealthy business leaders could help set up 10 such institutions. Private philanthropists have the funds and willingness to invest, if we trust them.

But, we are paranoid that private providers will fleece unsuspecting students. Indeed, currently, many are. So, we restrict and control their fee levels. In several states, there are very restrictive and controlling fee regulations that keep fees under check – read: low – less than one lakh per year for everyone regardless of quality.

We are attacking the important issues of access and affordability from the wrong end; we should encourage good quality which can be justified by the fees, and then make it affordable to everyone who is deserving.

Also Read: The Republic’s Rigged Education System and How to Set It Right


Smart National Economics

High quality is expensive. Let students and parents decide how much they are willing to pay based on outcomes and reputation.

By forcing low fees, we are forcing institution builders who want to provide high-quality HE to subsidise everyone’s education – why? Let the people who can afford to pay, pay.

Let’s subsidise the ones who cannot afford it. Let the government and philanthropists provide scholarships. In fact, we should force private institutions to provide need-blind admissions and full-need financial aid instead of restricting them to unrealistic low fees.

Setting up high-quality HE institutions is smart national economics, too. They can stem the increasing outflow of Indian students who go abroad for HE. The numbers are staggering. Nearly half a million Indians go abroad for higher education. Let’s assume that each student spends $20,000 per year on this education. That is $10 billion a year outsourced and hollowed out of India. Every year.

To keep this spending at home, we need world-class universities here. And we need to trust people who want to build them. Ultimately, it is about distinguishing the genuine private philanthropists from the fly-by-night operators, who need to be weeded out – and this can be done.


(Pramath Raj Sinha has been associated with the founding of some India’s leading private, philanthropic HE institutions such as the Indian School of Business, Young India Fellowship, Ashoka University and the Vedica Scholars Programme for Women. Shreyasi Singh is a columnist, author and leads Careers and External Engagement at Vedica Scholars Programme for Women. This is an opinion piece and the views expressed above are the authors own. The Quint neither endorses nor is responsible for the same.)

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