The Finance Minister on 1st February 2020 announced a budgetary allocation of Indian Rupees (INR) 99,311 crores for the education sector and INR 3000 crores for skill development under the theme of ‘Aspirational India’, out of which INR 39,466 crores were allocated to the Department of Higher Education. Stakeholders had high expectations of re-modelling of the education sector, especially higher education in the budget.

Year on year, union budgets are presented with only a handful of big declarations and a clear signal that reforms in the education sector are not a priority for the Centre. However, Nirmala Sitharaman, the Finance Minister, made a few announcements out of which two are particularly noteworthy.

The first is that the education sector would now be opened up to enable External Commercial Borrowings (ECBs) and Foreign Direct Investment (FDI) to ensure higher quality education through a greater inflow of finance to bring about much-needed enhancement in the academic offerings of Higher Educational Institutions (HEIs) taking the form of training of teacher, greater innovation and better infrastructure like high-tech labs for students. The need for innovation and research in HEIs is a fairly long-standing concern and the Centre has already permitted a 100% FDI in the education sector to realie this.

FDI in Education

Despite opening up the sector in 2002, the response from foreign investor has been tepid. In India, an HEI must be a trust, society or a not-for-profit entity and therefore the investment made should be through this non-profit entity. This requirement has become a major bottleneck for drawing much-needed investments into the sector. The entities being of a non-profit nature would also not be able to dispense any yields on the investment, rendering it non-lucrative.

Under these circumstances allowing external commercial borrowings although a welcome move, will do little to attract private players to the sector unless entry barrier and rigid regulatory controls are eased. Although there hasn’t been a formal statement regarding the nitty-gritty of this development there are plans to ease the flow of funds as well as permit foreign investors to take some of their earnings in India back home instead of reinvesting it back in their Indian operations. This can act as a major incentive for foreign investor to invest in the higher education sector in India which is latent with opportunities, not only for fund infusion but also for fruitful collaboration with foreign universities. Further, ECBs are an easy and popular source of funding for corporates, and private investor in the education sector can quickly adapt to this line of borrowing to meet the sector’s monetary needs. Special consideration must be given to ensure there are minimal barrier to borrowing from external sources to ensure this avenue is easily open for investor.

Not-for-Profit
Through the decades, and changing governments at the Centre, policymakers have been resolute on educational institutions being set up with a non-profit motive as education for all intents and purposes is viewed as a public good. Most policies of the HRD Ministry are based on the National Policy of Education (1986) which has a socialist vision and expectedly profit-making entities in the higher education sector are frowned upon. This view is still thriving and further reinforced by the draft National Education Policy (NEP, 2019) which uses the words ’Non-for-profit’ recurrently in the 484-page document. However, a lot of the challenges that HEIs in India face today such as severe shortage of faculty, poor infrastructure, sub-par remuneration of teacher, archaic curricula, lack of research and innovation are all issues that can be tackled with a serious inflow of funding from the private sector. Therefore there is an urgent need to revise protectionist policies keeping in sight the fact that private players play a critical role in meeting the educational demands of the aspirational youth of India. As such, the sector should have been gradually liberalized, yesterday. How much of an impact, ECBs will create in this near static sector is a waiting game.

The second announcement worthy of mention is the proposal on starting a full-fledged online degree programme for the deprived section of the society. Under the proposed announcement, only institutions who are ranked within the top 100 in the National Institutional Ranking Framework (NIRF) will be allowed to offer the courses. Although there hasn’t been a clear outline of this policy yet, there are many challenges one can expect to face. India has only recently seen a revolution in e-learning and widespread use of Massive Open Online Courses (MOOCs) to facilitate education on a supplementary level has just started to permeate to inaccessible regions and recipients.

To successfully launch a full-fledged online degree programme would require substantial infrastructure in place, governing regulations to bring e-learning into the mainstream and an iron-clad pathway to achieve this and reach the truly needy in a sincere way. One of the main issues with any online education programme is the leakages that occur in the process of dissemination in terms of-retention of the quality of education, the lack of personal exchange and peer interaction that is necessary to shape an individual and the limitations in the evaluation process. The government can do well by taking lessons from the implementation of the SWAYAM (Study Webs of Active Learning for Young Aspiring Minds) Programme and improve on it to ensure that the quality of education derived from an online programme does not suffer dilution.

Allocation Decline

As the gross enrolment ratio (GER) of the higher education sector is a mere 26.3% compared to China’s GER of 48%, our closest peer in the Higher Education Sector, a progressive policy like e-learning can do wonders  for increasing the GER to achieve desirable figures and more importantly, make learning more accessible and inclusive. However, the budgetary allocation for National Mission in Education through ICT (Information Communication and Technology) was reduced to INR 85 crores in this budget from the revised estimates of INR 132 crores in the previous budget. The funds allocated to setting up virtual classrooms and massive open online courses (MOOCs) saw a decrease to INR 75 crores from the revised estimates of INR130 crores of the previous budget. The Technical Education Quality Improvement Programme (TEQIP), a flagship Programme to facilitate online learning, now successfully running in its third phase saw a drop in allocation to INR 650 crores from the RE of INR 1100 crores in 2019-20.

Surprisingly, the reduction in the allocation for these schemes is inconsistent with the progressive stance displayed by the Finance Minister towards online learning in her budget speech. The government should gradually increase the provision for e-learning schemes to facilitate a smooth transition into a new era of educational consumption.

Additionally, to improve employability the Finance Minister announced that about 150 higher educational institutions will start apprenticeship embedded degree/diploma courses by March 2021 and a programme whereby urban local bodies across the country would provide internship opportunities to fresh engineer for a period up to one year. The allocation for ‘Programme for Apprenticeship Training’ remained unchanged at INR 175 crores in this budget. Another welcome move, the focus of this development should be on the value added by the work engagement to the future employability of the students and a mechanism to match the skillset of the student with appropriate work that will justly benefit her/him. There should also be a provision of a suitable stipend for the interns to incentivize them.

The Finance Minister shared her vision for India as a favoured destination for higher education for residents and foreigner alike. Under its “Study in India” programme, Ind-SAT is proposed to be held in Asian and African countries and shall be used for benchmarking foreign candidates who receive scholarships for studying in Indian higher education centres. The allocation for this did not see a variation from the budget estimates (BE) of INR 65 crores in 2019-20 budget.

The revised estimate for 2019-20 under this head almost halved to INR 32 crores. It is an ambitious step toward globalizing our educational institutions and readying them for accommodating foreign youth but such a move requires vamping up our curricula and teaching pedagogies to international standards. The low allocation of funds to the higher education sector and the lack of innovation in the use of the resources at hand have done much to dis-incentivize students and the teacher to undertake important research work beneficial to revitalize the academic and industrial sector.  To increase the intake of students from abroad a main focus area can be on increasing and improving the research output of Indian HEIs. The National Research Foundation proposed by the NEP, 2019 would be a welcome step in this direction.

Despite a progressive increase in the budgetary allocation to the higher education sector, there are many challenges that need to be tackled. While the size of the sector is significant, the quality of students that it churns out each year is sub-optimal. This is a mounting concern due to rising unemployment and the affliction of brain drain that drives out our own to find opportunities beyond our borders.  Another area of worry is the tight grip regulatory bodies have on HEIs in India, giving them little leg room to innovate and ideate on their own unique vision and goals. There should be one regulatory authority as proposed by the NEP, 2019 to regulate HEIs in the country and maintain industry standards while giving enough autonomy to institutions to design their own curriculum, remunerate their teachers and design their learning models based on contemporary requirements and keeping in mind the employability ambitions of the students. The high regulatory control also stifles institutions and imparts a lack of competitive spirit among institutional leaders.

Allow Private Players

For the past decade, there has been very little evolution in the education sector until the draft of National Education Policy 2019 compiled by a 9 member team directed by the former ISRO Chairman Dr K. Kasturirangan was released by the Modi government on 31st May 2019. The policy draft received a whopping 2 lakh responses in the form of suggestions from the general public, highlighting the optimism of the stakeholders toward reform in education.  Despite the ever-shifting nature of the global education scene and a complete transformation of demands in the global marketplace, an overhaul of the Indian education system, particularly the higher education sector hasn’t still been accomplished. The time has come not only to leave protectionist and inhibitive policies behind but to seriously consider revamping the entire sector and to unshackle our HEIs. This means letting genuine private players enter the market and set up world-class institutions and rewarding more autonomy and accountability to the institutions. The key to India’s economic success will lie in the honing of its future generation of human resources and tapping into the bounties offered by the demographic dividend before this window closes. We have both, financial and human resources to do this. All we need are the necessary reforms and a vision for our youth.

This article was published in Pallikkutam magazine on March 17, 2020. Click here to read

Views expressed by the author are personal and need not reflect or represent the views of Centre for Public Policy Research.

Akanksha Borawake
Akanksha Borawake
Akanksha Borawake is Research Associate at CPPR. She is a postgraduate in Economics from Gokhale Institute of Politics and Economics and has worked on research projects like ‘Voting patterns of people’ and ‘Environmental awareness among citizens of Pune.’ Her broad areas of interest are Gender Studies, Education, Agriculture, Environmental Sustainability and Macroeconomics.

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