FICCI Higher Education Summit 2012

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The Twin Trend in Private Higher Education: Expansion & Excellence

By 2025, India will have 25 percent of the world’s total workforce, says Shobha Mishra Ghosh, Senior Director, FICCI

The emergence of India as a knowledgebased, service-driven economy has brought human capital development in the country to the centre stage of socio-economic development  planning. Apart from focusing on universalisation of elementary education, the Eleventh Plan saw nine-fold increase in the public spending on higher education which fueled significant inclusive expansion in the public higher education sector. Simultaneously, the demand for quality skilled workforce and an environment for impending policy and regulatory change encouraged greater private sector participation.

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The Indian higher education today boasts of being the second largest higher education system in the world with 659 universities, 46,430 colleges and 25.9 million students. It goes without saying that private sector has been a predominant contributor to this major upsurge of higher education institutions in the country. The private sector now accounts for 64 percent of the total number of institutions and 59 percent of the enrolment in the country as compared to 43 and 33 percent respectively about a decade ago

While India has shown impressive  growth in adding the number of higher education institutions and student enrolments, the demand-supply mismatch would persist in higher  education, given the young population base that our country is bestowed with. India, at present, is recognised as one of the younger nations in the world with over 50 percent of the population in the age group of 18-30 years. It is estimated that by about 2025, India will have 25 percent of the world’s total workforce.

In the last two decades, we have seen significant growth of private sector institutions/universities which have been responsible for addressing the employability needs of our youth. Leading private universities like BITS Pilani, Manipal University, Thapar University, NMIMS University, Symbiosis International University, VIT, etc. have significantly contributed towards this end. In the last decade, one has seen private universities like Amity University, Galgotia University, Lovely Professional University, SRM University, opening up campuses in multiple locations and have helped in massification of higher education.

Although, the country has seen six times increase in the number of universities and twelve times increase in student enrolment in the last four decades, there still is a crying need for developing appropriate skilled manpower, generate indigenous knowledge and develop research capabilities with focused outcomes to retain global competitive ness of Indian businesses. India’s higher education concerns are far broader and have to address enhancing of access, providing relevant and quality, inculcating entrepreneurship, encouraging applied research and also focusing on hard core fundamental research. Hence, India needs layers of higher education institutions doing these tasks in a clubbed approach or as an independent entity. These would need an enabling regulatory framework that will attract substantial investment both from the government and the private sector. Some key  recommendations by FICCI are:

• Private sector now has limited mode of entry with only the State Private University route in few states leading to a skewed growth. Further, the not-for-profit mode restricts the source of revenue creating high dependence of self-financing institutions on student fees. Hence,

• Higher Education should be accorded Infrastructure status to attract private investment

• Allow all types of institutions to be established as Section 25 companies and permission to convert the existing trusts and societies (Currently only technical institutions are only allowed to be set up through this route).

• One of the barriers to generating endowments in an institution is that the trusts that run educational setups can receive the benefit only if they are acknowledged as a Section 25 organisation as per the Income Tax Act or under the Charities Commissioner. This matter needs to be looked into by the government and simplified.

• There are at least 20 to 30 Indian entrepreneurs who can singlehandedly create world-class universities. Expediting the passing of the pending Innovation Universities Bill could help in attracting such credible investments by the Indian industry in the higher education space.

• The past experience has proved that the so called ‘not-for-profit models’ of trusts and societies are opaque and have led to unfair practices. The success story of ‘for-profit’ higher education in countries like USA, Japan and Malaysia provides us with interesting lessons. The need for expansion of higher education in India and dependence on the private sector to meet this necessitates an extensive public debate on the issue to evolve a transparent Indian model to attract investments from the private sector.

• For attracting private sector contributions, government should encourage private institutions to induct independent professional and private philanthropists in the managing boards of the higher educational institutions. This will surely improve the governance of these institutions and also pave the way for attracting donations from the corporate world.

• Further, the Indian companies have been asking for a 100 percent exemption on endowment tax to contribute towards better research in the higher educational sector. Though the government’s last year’s announcement of increasing the weighted deduction from 175 to 200 percent on payments made to national laboratories, universities and institutes of technology for scientific research is a good move forward, however there is a need to seriously look at raising the 50 percent tax exemption to 100 percent on endowments made to educational institutions.

• Distance education is an alternate mode for higher education delivery with reduced investment. But conflicting regulations create an ambiguous environment for private players. It is important to create a harmonised view on the nature of programmes, and do away with arbitrary restrictions on deemed and state private universities.

• Setting up of education hubs can also bring down the overall infrastructure cost by developing common facilities like hostels, staff housing, libraries, auditoriums, research centers etc.
In spite of the impressive expansion of Indian higher education sector, there has been no significant improvement in terms of quality of higher education delivery and research in the country. In order to harness the full demographic dividend, India needs an education system that can deliver quality in terms of skilled and industry -ready workforce, without diluting focus on world-class research and innovation. The Twelfth Plan focus in higher education is to strengthen the quality in the existing universities and institutions. Hence, the Planning Commission-FICCI-Ernst & Young Report examined the levers of quality in higher education that can be implemented by the private sector institutions without waiting for the impending
reforms to be passed by the Parliament. They are:

• Merit-based student financing: This should ensure admissions to meritorious students independent of financial background

• Internationalisation of education: This would entail aligning different aspects of education (curriculum, faculty, etc) to international standards

• Enabling a research environment: This would involve creating adequate means of research funding and practical application of research

• High quality faculty: The need of the hour is to create a conducive environment and provide incentives to attract and retain high quality faculty

• Improved technology for education delivery: Leveraging technology for enhancing the teachinglearning experience will ensure better outcomes

• Employability: Making educationindustry relevant and practical would be the right way to ensure a highly employable talent pool

Industry-academia engagement is critical for effective and efficient implementation of the above identified levers. Government should expedite the establishment of Council for Industry
and Higher Education Collaboration, as a not-for-profit, independent nodal agency proposed by Planning Commission to facilitate industry-institute engagements

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