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Tackling the Crisis in Higher Education

Arvind Panagariya

A striking feature of the U.S. higher education system is its ability to sustain excellent public universities.  Not only do these universities impart decent education in most states, many of them figure prominently in the national rankings.  The University of California-Berkeley, University of California-Los Angeles, University of Michigan, University of Wisconsin-Madison and University of Minnesota are all public institutions. 

There are three complementary reasons why public universities have flourished in the United States while their counterparts in the rest of the world including Great Britain and continental Europe have declined.  First, the United States has an excellent collection of private universities.  The top U.S. universities such as Harvard, Princeton, Yale, Stanford, MIT and Chicago are all private.  These universities themselves compete against each other for top rankings and set the standards to which public universities must aspire to achieve distinction.

Second, like private universities, public universities in the United States have full autonomy.  There is no body even remotely resembling the University Grants Commission (UGC) in India that controls public (or private) universities from afar.  Consequently, public universities are not hamstrung in their ability to compete against their rivals whether private or other public universities. 

Finally, public universities have considerable flexibility in setting fees.  In view of the subsidy from the state government, the fees are not as high as those charged by private universities but they are substantial.  In-state students pay anywhere between 30 to 50 percent of the total fees charged by private universities while out-of-state students may pay as much as 75 percent.  The fees ensure that the universities have the resources necessary to attract first-rate scholars for appointments to their staff as also establish labs and other infrastructure.

The Indian higher education system faces a deep crisis today along both the quantity and quality dimension.  Thus, even with only 6 percent of the youth in the 18-24 years age group enrolled in higher education institutions (compared with 10 per cent in Malaysia, 19 per cent in Thailand and 28 per cent in the Philippines), the Indian colleges and universities suffer from unconscionably high student-teacher ratios.  Simultaneously, with population more than doubled and secondary school education considerably expanded since 1960s but the number of institutions of excellence failing to rise correspondingly, many super-bright students find themselves without a spot in a decent college.  I have personally seen my bright nieces and nephews denied entry into the institutions that would have been an easy walk for students of similar caliber in my days.

While there are no quick fixes, three steps paralleling the three features of the U.S. system noted above would help alleviate the crisis.  First, entry of private universities, so common around the world including Bangladesh and China, must be introduced.  The government has no resources to expand higher education at a pace consistent with demand.  Nor is it in a position to create many IIT and IIM like institutions with public resources.  Only private universities that can charge hefty fees and attract private sponsors from abroad and home will be able to afford salaries necessary to retain top-class scholars and teachers and create facilities required to promote excellence in research.

There is a clear recognition of this need at the official level as evidenced by the Private Universities (Establishment and Regulation) Bill, 1995 and the recommendations of the Core Group of six members appointed by the HRD Ministry in 1999.  Additionally, the issue has been widely discussed in various forums with the Education Committee of FICCI offering excellent ideas within the Indian context.  The sad reality, however, is that there has been little action and the 1995 bill has been “pending” in the Rajya Sabha.

The second necessary step is to loosen the stranglehold of UGC and give greater autonomy to universities.  In this respect, India’s own experience has been consistent with that of the rest of the world: IITs and IIMs, by far the highest-quality institutions in India, have been outside the UGC ambit.  The Education Committee of FICCI has rightly suggested giving greater play to unitary (rather than affiliating) universities.  Like IITs and IIMs, such institutions will be better able to maintain uniform and high quality standards. 

But I would go farther.  After more than fifty years of Independence, we should be willing to confer greater responsibility on the universities in general so that they can make informed decisions on courses, curricula, degrees, research centers, and types of academic appointments based on local needs and competitive pressures from peer institutions.  It is likely that the initial impact of autonomy on a wide scale would be adverse but it is time to begin laying down the groundwork for a modern education system, which requires increasing decentralization and local responsibility.

Finally, it is essential to state the obvious:  we need to gradually raise the tuition fees from their existing negligible levels.  Unlike primary and secondary education, benefits of higher education accrue largely to those who receive it.  While provisions for loans and scholarships for the talented among the poor must be made, there is little justification for burdening the taxpayer with the expenses that lead to private gains for those lucky enough to find a spot in college.  According to the Justice Punnayya Committee, appointed by UGC in 1992 to advice on how to fund higher education, tuition fees accounted for 15 to 20 percent of university expenditures in the early 1950s.  Today, they account for less than 3 percent.  This is ironic since with rising incomes, the contribution should have risen rather than decline.

The three reforms I have advocated—private entry, greater autonomy and increased tuition fees—are mutually reinforcing.  Private entry will help establish the legitimacy of both autonomy and increased tuition fees in public institutions.  Likewise, autonomy will allow public institutions to compete more effectively against private entrants and take advantage of flexibility in raising fees.

Economic Times, October 23, 2002