Hyderabad: Profit is a word which causes great discomfort in India’s political economy. Partly, it could be because profit is confused with profiteering, which involves bending of laws and an element of illegality. Partly, it is assumed that if something is being made or served for profit, it will be unaffordable for the majority.
That would explain why an otherwise very progressive National Education Policy stays away from recommending the entry of “for profit” institutions in the realm of education.
Of course, there are elements of serious reform in the new National Education Policy. Importantly, it proposes to separate the operation and regulation functions of government educational institutions. It is a poor practice for the entity which delivers education services to also regulate it.
Significantly, the Policy also signals an end to arbitrary license-permit raj era type of norms and classifications (like deemed university for example) which impeded the entry, growth and development of quality institutions of higher learning.
Independent regulation and ending the license-permit raj are indeed modernizing reforms. Just as shifting focus from inputs to outcomes and from rote to learning are a radical change.
Granting permission to “for profit” institutions could be added more easily to this list than the Government may like to believe.
The fact is that despite little policy change over the last three decades, India’s school education is already highly privatized -- by choice and partly out of compulsion.
In urban areas the percentage of students going to private school is over 50 percent and in rural areas it is over 20 percent.
Government schools have failed to deliver largely because of rampant teacher absenteeism and a lack of focus on learning outcomes.
But, according to the ASER report, while learning outcomes in private schools are superior to government schools, they are nowhere near 100 percent.
As per its 2018 report, while only 23 percent of Government-school children could solve a basic division problem, the percentage for private school-educated children was 40 percent.
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In reality, most of these private schools are of limited means, nowhere near the standards that are associated with elite schools in big cities. Still, they are better than government schools.
In such a scenario, permitting “for-profit” schools could change the game. It would allow genuine entrepreneurs to innovate new business models which could bring much higher quality at affordable prices.
Remember, poor parents already pay fee for not-for-profit private schools so there is demand and a market at the lower end of the income pyramid.
Of course, because there is demand at the top end of the pyramid, there will emerge some schools which will cater to the elite at exorbitant prices but those should not overshadow what will happen overall.
After all, highly profitable private companies supply fast moving consumer goods to the bottom of the pyramid at very reasonable prices while also providing expensive goods for the top end. In education, the government can lend a helping hand, by directly transferring cash/vouchers to parents instead of spending it on dysfunctional government schools.
The remarkable story of telecom and more recently, data shows that the private sector can provide goods and services at a high quality and affordable prices while making profit. If the long history of pre-1991 India proves anything, it is that the government as a sole provider of goods and services does poorly both in terms of quality and affordability – just think of telecom, aviation and other monopolies pre-1991.
And in a genuinely competitive market with independent regulation, the probability of profiteering is greatly reduced. Ironically, the presence of various fly-by-night operators in the not-for-profit space makes profiteering without scrutiny more likely. The same logic applies to higher education as well.
In the end, the Government must use its limited resources judiciously and care about outcomes, not means. That requires a clear focus on financing students (not schools and universities) while letting the for profit private sector do the provisioning. That would be truly new education for New India.
(Dhiraj Nayyar is the Chief Economist at Vedanta Resources Limited. Views expressed above are the author’s own. Etv Bharat neither endorses nor is responsible for the same.)
