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Education for Profit

The Mid-Term Appraisal of the Eleventh Plan calls for exploration of the possibility of converting existing private institutions into public partnerships. The government believes that strict regulation and enforcement will ensure that the private sector contributes significantly to equitable education. However, the government's record until now in terms of both its willingness and ability to do so has been poor.


Education for Profit the non-profit trust requirement and allow schools to be p rofit-making”.
Twist in the Road
Jandhyala B G Tilak This marks a significant change in the atti-

The Mid-Term Appraisal of the Eleventh Plan calls for exploration of the possibility of converting existing private institutions into public partnerships. The government believes that strict regulation and enforcement will ensure that the private sector contributes significantly to equitable education. However, the government's record until now in terms of both its willingness and ability to do so has been poor.

he government seems to be determined to aggressively pursue p olicies of rapid and total profit-seeking privatisation at all levels of education in the country. This is despite its recognition of various unfair practices in private institutions, which necessitated, inter alia, measures like the introduction of the legislative bill for checking unfair practices in higher education in the Parliament recently.

The Mid Year Review 2010-11, tabled r ecently in the Parliament advances strong arguments in favour of large-scale privatisation of even elementary education. The Right to Free and Compulsory Education Act 2009, widely known as the Right to Education Act (RTE), became operational from 1 April 2010. Under it every child has the right to free and compulsory education until (s)he completes upper primary education, i e, eight years of schooling. One would assume that this means the complete public funding of elementary education. But it is not so.

Noting that the RTE requires huge resources, the Mid-Term Appraisal of the Eleventh Plan has argued that

private resources should be leveraged to i mprove infrastructure and quality. Reforms agenda should include easing of entry b arriers and revisiting norms, including land requirement of institutions. Necessary legislation measures to facilitate private parti cipation must be initiated and viable models of PPP in education need to be worked out as early as possible.

The Mid-Year Review has gone a little further. Reiterating that “Government resources may themselves be insufficient and need to be supplemented”, it argues that profit-seeking private schools have to be allowed to be set up. After all, many private corporate houses are eager, accor ding to the review, to set up private schools for the profits the schools promise. The government’s stated position until r ecently has been that schools can be run only as non-profit trusts. However, since it a ppears that private schools are actually making huge profits at present, the government feels that “it is, therefore, advisable to discontinue with tude and consequent policy of the government. With the 25% clause in the RTE, private schools are required to provide 25% of the admissions to children belonging to economically weaker strata of the society, whose costs will be reimbursed by the government – the so-called selffinancing or unaided profit-making p rivate schools will be subsidised by the State to the extent of about 25% of their costs. These schools therefore will no longer be “unaided”. They are indirectly subsidised even otherwise through concessional land, income and other tax concessions. The new moves might mean that private schools will be able to make profit at p ublic expense. It is further stated in the review that this, viz, the deletion of the clause r elating to the non-profit trust requirement and allowing for making of profit, “would encourage competition, be transparent and inclusive, and at the same time ensure the much-needed supplementary capital in this field”. All this – the leveraging of private resources, private participation, public-private participation, and then allowing profitseeking private institutions in elementary education – marks a drastic change in the so-far stated policy of the government and goes against the very spirit of the RTE.

Distorting the Directive Principles

This is also in contrast to rich international experience regarding this issue – historical and contemporary. No country has been successful in providing universal elementary education by encouraging the profit-seeking private sector. Most countries do not allow profit-making elementary schools at all. Even where profit-seeking higher educational institutions do exist, elementary schools are mostly state-funded and run by the government. The 86th amendment to the Constitution and the consequent RTE 2009 were necessary as the government did not seem to be sincere about the Directive Principles enshrined in the Constitution in 1950. In the past, the government had distorted the meaning of the Directive Principle relating to “free” education, while implementing it. Today, even

Jandhyala B G Tilak ( is with the National University of Educational Planning and Administration, New Delhi.

february 26, 2011 vol xlvi no 9

Economic & Political Weekly


before imple menting the RTE, we have already started distorting its letter and spirit.

With respect to secondary education, as already mentioned 2,500 secondary schools will be set up under the “innovative mode” of public-private partnership wherein the State will fund profit-making private enterprise in the education sector. It may be noted that the number of private unaided secondary schools have increased from 15% in 1993-94 to 35% in 2006-07. The new moves would further increase this proportion, pushing the public institutions into a minority.

In the case of higher education, we already find strong financial support from the government to profit-making private institutions. The University Grants Commission (UGC) in its 472nd meeting decided to p rovide grants to the so-called private self-financing universities – the deemed and state private universities. Private institutions of higher education are indirectly but heavily subsidised in the form of land at concessional and even throwaway prices, tax concessions, and tax exemptions for all kinds of monetary resources that flow in. They are also directly subsidised through provision of public funds for research, for attending/organising confe rences, seminars, development grants u nder various schemes of the UGC, and other bodies such as the Indian Council of Social Science Research (ICSSR), the Council of Scientific and Industrial Research (CSIR), Department of Science and Technology, etc, and the union and state governments. A couple of states also provide huge grants to the private institutions under the scheme of fee reimbursement for students of the weaker sections. Now as per the d ecision of the UGC, these institutions will be a ccor ded 12(B) status and will have access to other grants, probably salary and even maintenance grants.

Not Accountable

It is important to note that these institutions are different from government-aided private institutions, generally known as “privateaided” institutions, which have been on the scene for the last several decades. The private-aided institutions are heavily supported by the State. Though they are privately managed, they follow (or are expected to follow) all the rules and regulations – including those relating to student fees, admissions,

Economic & Political Weekly

february 26, 2011

scholarships, faculty recruitment, and faculty salaries and the syllabi, applicable to the government institutions. They are subject to government control. As a result, but for the management, they are nearly equivalent to government institutions.

But the so-called self-financing or u naided institutions have their own rules and regulations and are least regulated by and least accountable to the government. It is widely felt that these institutions, though de jure are described as charitable or not profit-seeking institutions, are de facto profit-making institutions. These insti tutions have contributed to the commercialisation of education and now the UGC decides to fund them!

It was also announced recently that the corporate sector – companies formed u nder Section 25 of the Companies Act – will be allowed to set up colleges and offer All India Council for Technical Education (AICTE)-approved courses. It is hoped that the move will not only attract big c orporate houses to invest in the education sector but would also attract foreign direct investment.

The direction of the government’s thinking on these lines is clear when it i ndicated in the Mid-Year Review that e ducation would be further privatised. It a rgues for “a viable financing model” with a mix of public and private participation. It notes that there is ample scope for raising the fees and that repayable grants (or loans) can be instituted for the weaker sections in higher education. No promise of any liberal public funding is made. The Mid-Term Appraisal of the Eleventh Plan actually gives more insights into the government’s thinking, when it says, “The possibility of converting existing private institutions into public partnerships needs to be explored”. This can mean public funding of private institutions. The a ppraisal further states that “the existing requirement of private institutions in e ducation as ‘not for profit’ must be dealt with pragmatically”. So officially “profits” are to enter educational institutions. It is important to note that in the US, where for-profit institutions of higher education exist, increasingly more and more colleges and institutions of higher education are taking the path from “for-profit” to “nonprofit”, as per the recent news reports in the Chronicle of Higher Education (e g,

see http://chronicle. com/article/AnotherCollege-Takes-the-Path/126007/?sid=at & utm_source=at&utm_medium=en).

The government seems to believe that “if strictly regulated and enforced”, the private sector would make significant c ontribution to rapid equitable growth in education. While this in itself is a questionable assumption, the government’s ability and willingness to “strictly regulate” and enforce adherence to the rules and regulations by private schools need to be contrasted with experience, which is rather dismal and clear from the innumerable court cases involving these schools. For example, it is being stated more often that it is difficult to get private schools to adhere to the provisions of the RTE Act r elating to admissions, fees, quota for econo mically weaker sections, etc.

Every year we witness the drama that ensues during admissions at various levels of education. Initially, the government pretends to fight the irregularities and finally gives in to the pressures from the private schools.


December 11, 2010

Dissecting the Ayodhya Judgment – Anupam Gupta Secularism and the Indian Judiciary – P A Sebastian Idols in Law – Gautam Patel Issues of Faith – Kumkum Roy Was There a Temple under the Babri Masjid?

Reading the Archaeological ‘Evidence’ – Supriya Varma, Jaya Menon

For copies write to: Circulation Manager,

Economic and Political Weekly,

320-321, A to Z Industrial Estate, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013. email:

vol xlvi no 9

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