The
cabinet has reportedly passed a version of the Foreign
Educational Institutions (Regulation of Entry and Operations)
Bill, and this modified version of a draft bill is to
be soon tabled in Parliament. The debate has, however,
already begun, with protagonists and opponents expressing
a range of views on the subject. One view is that it
favours foreign players against domestic ones, both
public and private, which seems unfounded when the draft
bill is read as it is. While debate is normally a process
of bringing clarity to an issue, there is a real danger
that this would not be true of the ongoing debate on
the subject of expanding higher education, improving
it and rendering it inclusive.
The case for permitting freer entry for private domestic
institutions and foreign private and public institutions
is that higher educational facilities are woefully short
in India. For example, the proportion of the population
in the 18-24 age group accessing higher education is
about half the 15 per cent average elsewhere in Asia.
Part of this is because of a shortage of higher educational
facilities. Moreover, it is argued, even where such
facilities are available, quality is uneven. An important
reason is the low level of resource allocation for higher
education. Public spending-central and state-on higher
education has indeed been low, amounting to less than
half a per cent of GDP over the last two decades, even
though the government itself targets a spending rate
of 1.5 per cent of GDP. If, besides private sector participation,
public spending and enrolment are low, the emphasis
must clearly be on increasing these with more allocations
to education. This is likely to be extremely effective
since India has the requisite institutional framework.
But there is no reason to believe, especially given
past experience, that just allowing private entry, whether
domestic or foreign, and the resources associated with
it would indeed ensure quality.
It is true that if foreign institutions are to be allowed
at all, to provide education of any kind in the country,
it is better that they operate within an appropriate
framework of regulation. If not, unscrupulous operators
can use the ''foreign'' tag to exploit poorly informed
students who do not have the scores to enter a good
national educational institution or the finances to
travel abroad to acquire a good education. In an environment
where good higher educational facilities are in short
supply, such operators could get away with charging
high fees for courses backed by inadequately qualified
faculty, inferior infrastructure and substandard equipment.
This has in recent years been a reality in India because
of a mismatch between the law on foreign investment
in educational provision and the law with regard to
the functioning of ''recognised'' educational institutions.
The foreign investment law in this country does allow
foreign educational providers to enter India under the
automatic route in the educational services area. It
therefore allows for commercial provision of educational
services by foreigners and the repatriation of surpluses
or ''profits'' earned through such activity.
However, if an educational service provider chooses
to establish an institution that is termed a university
and is recognised as such by the University Grants Commission
(UGC), or if it awards a degree or diploma that is recognised
by a range of institutions such as the All India Council
on Technical Education (AICTE) or the Medical Council
of India, then it would be subject to regulation just
as any other Indian institution engaging in similar
practices. It also cannot operate on a ''for-profit''
basis. Surpluses can be generated based on fees charged,
but those surpluses have to be ploughed back into the
institution.
This distinction in the regulatory framework applying
to institutions seeking recognition of their degrees
and those that do not, did result in the proliferation
of courses that are not recognised by government, and
in institutions that were, therefore, not subject to
regulation under laws governing the higher education
system. Most of these institutions were in the private
sector, with a majority being domestic private institutions
and a few foreign. Some were good, many extremely bad.
These institutions were not all avowedly ''for-profit''
entities, but there were many that made large surpluses
legally and otherwise, and distributed them in various
ways to their promoters.
In some ways, what the Foreign Educational Institutions
Bill does is that it seeks to bring certain of those
foreign institutions within a separate, clearly defined
regulatory framework, requiring institutions providing
diplomas and degrees to register under a designated
authority, making them subject to regulation and seeking,
under such regulation, to ensure that the promoting
institution has a proper pedigree, brings in adequate
resources, employs quality faculty, offers adequate
facilities, and reinvests all surpluses in the institution,
which cannot function for profit. However, even though
these are not considered for-profit institutions, the
government is not seeking to regulate the fees they
charge the students they take in, set parameters for
compensation for faculty, or impose demands such as
reservation of seats for disadvantaged sections as it
does in its own institutions.
There are three questions which arise in this context.
One is whether the implementation of the Bill amounts
to skewing further the inequality in access to higher
education and tilting the playing field against public
institutions. Clearly, the Bill does not allow for the
application of laws with regard to affirmative action
in the form of reservation of admissions to private
institutions, domestic or foreign. But if the infrastructure
for higher education is inadequate, this is true not
just for those who fall in what is termed the ''general
category'', but for those in the reserved categories
as well, who need adequate numbers of seats to be reserved
for them. So if private, including foreign institutions,
are seen as entities that would help close the demand-supply
gap in higher education, they would need to service
students in the categories eligible for affirmative
action as well.
Since the aim of promoting private education, including
that offered by foreign providers, is to make up for
the shortfall in public education, the demand that reserved
category students be admitted to these institutions
with support from the state is bound to rise. That is,
while the state is not going to regulate fees, it may
be forced to demand some reservation by covering the
fees charged by these institutions for those it wants
to assure the access they are deprived of because of
the social discrimination they face. The obvious question
that would then arise is whether it may not be better
to use these funds to expand quality public education
at lower cost per student. Hence, clarity on the government’s
use of these institutions for closing the demand-supply
gap would be useful. If the direction of policy in other
areas is indicative, the public-private partnership
mantra would be used to justify supporting private provision
by funding access to the disadvantaged with no regulation
of costs or prices. In fact, the likelihood is that
the implicit control would be on the ''subsidy'' offered
to needy students, who then may have to make do with
entry into poorer quality institutions.
A second question that arises is whether the better
among foreign educational providers are likely to choose
not to come into the country if stringent regulations
are imposed on them. With budgetary cuts for education
in developed countries and with demographic changes
affecting the size of the domestic college-going population
in these countries, universities may like to go abroad
if they can earn surpluses to support domestic operations.
But if regulation includes the ''not-for-profit'' condition,
which prevents them from extracting surpluses and transferring
them abroad, they may see no reason to be in India.
Perhaps for this reason, the Act has clauses which subvert
its very intent. For example, it provides for the constitution
of an Advisory Board that can exempt any foreign provider
of all requirements imposed by the Act except the requirement
of being a ''not-for-profit'' body. It also exempts institutions
conducting any ''certificate course'' and awarding any
qualification other than a degree or diploma from most
of the provisions of the Act, making them subject only
to certain reporting requirements. This amounts to saying
that if a foreign provider enters the country, reports
its presence, and advertises and runs only such ''certificate
courses'' (as opposed to courses offering degrees and
recognised diplomas), it would have all the rights that
many of the so-called ''fly-by-night'' operators exploit
today. Once that possibility is recognised the only
conclusion that can be drawn, based on the experience
hitherto, is that this Act in itself is unlikely to
either bring high quality education into the country,
or keep poor quality education out. What motivates it
is, therefore, unclear.
This raises the third question as to whether this bill
is just the thin end of the wedge. If foreign providers
do not come in requisite measure would the government
use that ''failure'' to dilute the law even further and
provide for profit and its repatriation by foreign operators
in this sector? Some time back, the Commerce Ministry
had put out a consultation paper clearly aimed at building
support for an Indian offer on education in the negotiations
under the General Agreement on Trade in Services (GATS).
The paper, while inviting opinions on a host of issues,
was clearly inclined to offering foreign educational
providers significant concessions that would facilitate
their participation in Indian education. In its view:
''Given that India’s public spending, GER (gross enrolment
ratio) levels and private sector participation are low,
even when compared to developing countries, there appears
to be a case for improving the effectiveness of public
spending and increasing the participation of private
players, both domestic and foreign.'' GATS is a trading
agreement and therefore applies to those engaged in
trade in services for profit. Providing such concession
would force a fundamental transformation of the face
of higher education in the country.
Put all of this together and both the motivation and
the likely outcome of this bill remain unclear. If the
intent is to attract new, more and better foreign investment
in higher education to close the demand-supply gap,
then the specific framework being chosen is likely to
subvert its intent. If the idea is to regulate only
those who have been coming and would come, then a separate
law just for foreign operators as opposed to all non-state
players is inexplicable. This suggests that the process
underway is one of creating a window for foreign players
and then changing the rules of the game in ways that
persuade them to exploit the opportunity. This may explain
the fear that the field would be skewed against domestic
private players.
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