Higher Education must lead the march back to the fundamentals of
human relationships, to the old discovery that is ever new, that
man does not live by bread alone. - John A. Hannah
Education has always been and continues to be one of the most
important needs of mankind. It helps man indoctrinate values and
apply the technical know-how in real life situations. Of late,
there has been an increasing trend towards privatisation of higher
education in India. The Government of India cannot absolve itself
from the responsibility of providing higher education to its
citizens. The Government is thus obliged to not only strive
towards providing access to higher education to all its citizens
but must also try and improve the quality of higher education in
India. In order to cater to these needs, a large investment is
required. But in India lack of adequate funds continues to be a
major hurdle. In the given context, there is a pressing need for
the Private Sector to pitch in and that at the risk of
privatization and monopolization of higher education by the
Private Sector. There are several schools of thought in this
regard and the term ‘privatisation’
raises several issues. Would
it be feasible to have a Public- Private partnership as far higher
education is concerned? Would the disadvantages of Privatisation
outweigh its advantages? Would Privatisation in India lead to
monopolization of Higher Education by the Private Sector? These
are some of the compelling questions that this paper attempts to
II. Definition of ‘Education’ and the need for the Privatization
of Higher Education in India
The term ‘Education’
has been clearly defined as ....the process of
developing and training the powers and capabilities of human
beings. In its broadest sense the word comprehends not merely the
instruction received at school, or college but the whole course of
training moral, intellectual and physical; is not limited to the
ordinary instruction of the child in the pursuits of literature.
It also comprehends a proper attention to the moral and religious
sentiments of the child
. Education used to be charity or philanthropy in the good old
times. Gradually it became an 'occupation'.
Some of the Judicial Dicta go on to hold it as an 'industry'.
Whether the right to receive education is a fundamental right or
not has been debated for quite some time. But it is settled that
establishing and administering of an educational institution for
imparting knowledge to the students is an occupation, protected by
Article 19(1)(g) and additionally by Article 26(a), if there is no
element of profit generation. As of now, imparting education has
come to be a means of livelihood for some professionals and a
mission in life for some altruists.
Prime Minister’s Council on Trade and Industry, in a recent
Report , has observed that education is universally recognised as
an important investment in building human capital, which is a
driver for technical innovation and economic growth. Providing
Education to one and all has been the constant endeavour and one
of the primary duties of the Government. To be fair, it is indeed
impractical to expect the Government, in one of the most populous
countries in the world, to solely shoulder the responsibility of
providing education to its citizens. India has one of the
largest systems of higher education
in the world and according to Department of Secondary and Higher
Education, Government of India there are about 338 Universities as
on 31/3/2005. With a vast majority of the student population
having access to higher education, the situation is quite
satisfying in the developed countries. Yet the percentage of
student population studying at Universities in India is dismal
when compared to some of the other developing countries.
Providing free and compulsory primary education has been one of
the primary duties of the Government as enunciated in the
and to do justice to this end, the Government has frequently
increased the amount invested in primary education. This has had
an adverse impact on investment in higher education. The
Government has been concentrating more on primary education than
on higher education. Universities have always tried to persuade
the Government to release more funds but the Government has in
plain terms declared that funding for higher education must also
come from other sources.
Due to various constraints, the Government cannot take up the
responsibility to provide higher education all by itself and a
part of the responsibility has to be delegated to the private
sector, subject to certain conditions in order to prevent
commercialisation. The private sector making its foray into higher
education is not new to India. A large number of Educational
institutions have been set up in India without the financial
assistance of the Government. The Privatisation of higher
education would reduce the amount spent on higher education by the
Government. During the 1990's with the gradual privatisation of
higher education, the budgetary allocation for higher education
III. Categorization of Private Educational Institutions in
Private Educational Institutions in India could be classified into
the following categories:
(a) Aided Colleges
Aided Colleges are privately managed but are funded by the
Government. Section 3(b) of the Private Professional Educational
Institutions (Regulation of Admission and Fixation of Fee) Bill,
2005 defines an ‘Aided Institution’ as
professional educational institution, receiving recurring
financial aid or assistance in whole or in part from the Central
Government or the State Government or from any body, under the
control of Central or State Government disbursing grants-in-aid or
financial assistance and shall include a minority institution.
There are a large number of colleges which are ‘aided colleges’
and receive a substantial amount of aid from the Government in
order to bear the operating costs. The Private Colleges that
receive aid do not help in bringing down the expenditure of the
Government in higher education. The Government would continue to
spend as much in higher education without a reduction in the
(b) Unaided Colleges
Unaided Colleges are privately managed and raise their own funds.
The Hon’ble Supreme Court has held that ‘the right to admit
students being an essential facet of the right to administer
educational institutions of their choice, as contemplated in
Article 30 of the Constitution, the State Government or the
University may not be entitled to interfere with that right, so
long as the admission to the unaided educational institutions is
on a transparent basis and the merit is adequately taken care of.
The right to administer, not being absolute, there could be
regulatory measures for ensuring educational standards and
maintaining excellence thereof, and it is more so in the matter of
admissions to professional institutions’. This was observed by the
Hon’ble Supreme Court in
T.M.A.Pai Foundation and others v. State
of Karnataka and others.
IV. Committes that were appointed to study the impact of
Privatisation of Education in India
(a) The Punnayya Committee 1992-93
The Punnayya Committee that was set up by the University Grants
Commission made valuable recommendations on the need for the
Universities to identify various other means of revenue
generation. The Committee has recommended that as a general rule,
Universities should generate 15% of its annual maintenance
expenditure through internally generated resources and this should
go up to at least 25% at the end of ten years. The Committee also
recommended that students receiving higher education should also
bear a reasonable proportion of the cost of higher education.
Swaminathan Panel 1992
The Dr. Swaminathan Panel which was set up by the All India
Council for Technical Education also made important observations
on the mobilisation of additional resources for technical
education in India. The Panel has put forth the idea of collecting
educational cess from industries and other organisations.
The Birla Ambani Report 2000
The Prime Minister’s Council on Trade and Industry appointed a
Committee headed by Mr. Mukesh Ambani and Mr. Kumarmangalam Birla
to suggest reforms in the Educational sector. The Committee, which
submitted its report in the year 2001, highlighted the important
role of the State in the development of Education. Some of the
suggestions in the report include:
(i) The Government should confine itself to Primary Education and
the higher education should be provided by the Private sector.
(ii) Passage of the Private University Bill.
(iii) Enforcement of the user-pay principle in higher education.
(iv) Loans and Grants to the economically and socially weaker
sections of society.
The Report suggested that the Government must concentrate more on
Primary Education and less on Secondary and Higher education. It
also recommended the passing of the Private Universities Act. The
Birla- Ambani Report further recommended that the Government must
encourage business houses to establish Educational Institutions.
Committee on ‘Financing of Technical and Higher Education’ of the
Central Advisory Board of Education
The Central Board of Education Committee recognised the limitation
of non-government funding and the role state financing of higher
education plays in promoting growth. The Committee also insisted
on the allocation of 1% of the National Income for higher
(a) The P.A. Inamdar case
The decision of the Hon’ble Supreme Court in P.A. Inamdar and
others v. State of Maharashtra and others
has created ripples in the Educational sector. It has been held by
Hon’ble Supreme Court
that Professional colleges would now enjoy full autonomy in
admitting students. It has also been stated that in the absence of
a State or a Central legislation regarding admissions and fee in
professional colleges, the Legislative Committee which regulates
admission, procedure, fee structure, etc. shall continue to exist.
(b) The Unnikrishnan case
The Hon’ble Supreme Court in
Unni Krishnan v. State of Andhra
Pradesh laid down a formula to bring about a partnership between
the Public Sector and the Private Sector to work together for the
development of higher education. The Government has since
developed mechanisms to prevent commercialization and at the same
time rope in the Private Sector to provide higher education to its
VI. The 93rd Amendment of the Constitution
With privatisation of higher education, the number of Private
colleges is increasing at an unimaginable rate. The Hon’ble
Supreme Court in
P.A. Inamdar and ors v. State of Maharashtra and
others has observed that the State cannot impose its reservation
policy on minority and non-minority unaided private colleges which
would also include professional colleges. This led to the
amendment of Article 15 of the Constitution which prohibits
discrimination on grounds of religion, race, caste, sex or place
of birth, and a new clause (5) was inserted. The Amendment sought
to bring private colleges under the purview of the Government
policies on the fee structure and reservation.
Establishing and running an educational institution is a
Fundamental Right of Occupation guaranteed under Section 19(1)(g)
of the Constitution. According to Article 19(6) of the
Constitution, the State can make regulations and impose reasonable
restrictions in public interest. The Hon’ble Supreme Court has
‘Education accepted as a useful activity, whether for charity or
for profit, is an occupation. Nevertheless, it does not cease to
be a service to the society. And even though an occupation, it
cannot be equated to a trade or a business’.
It is the duty of the State to provide educational facilities. The
shortfall in the efforts of the State may be met by private
VII. The positive aspects of Privatisation of Higher Education
There are a number of positive aspects of privatization of higher
# The increasing demand for better quality higher education in
India can be met only by Private Institutions complementing the
Universities established by the State. The proportion of students
opting for higher education in India is increasing at a rapid rate
and the only feasible way out is the privatization of the
The Government, with the Constitutional obligation to
provide free and compulsory Primary Education, has increased the
investment in Primary Education, as a result of which, the
investment in higher education has proportionately decreased. In
order to meet the growing needs of the student population for
higher education in the country, it is an imperative for the
Government to privatize higher education.
In case of Private Universities, there would be minimal or
practically no political intervention. This would be beneficial
for the Universities in terms of being independent. The Hon’ble
Supreme Court held that ‘in professional institutions, as they are
unaided, there will be full autonomy in their administration, but
the principle of merit cannot be sacrificed, as excellence in
education is in national interest’. The Universities would try and
implement new techniques, which would have otherwise been
impossible without the permission of the State.
# Private Colleges that are affiliated to the Universities are
independent as far administration is concerned. In case of
Colleges established by the State, there may be unethical
practices. There are innumerable cases which involve unethical
practices in Government Colleges in India and many of them in the
recent past. Private Colleges affiliated to Universities would run
the risk of being stripped of their affiliation if they are caught
engaging in such unethical practices by the relevant authorities.
VIII. The drawbacks of Privatisation of Higher Education
The following are some of the drawbacks of Privatisation of Higher
Education in India
If the Private Institutions are given too much independence, it
would invariably lead to monopolization of higher education. This
would lead to a plethora of problems such as a high fee structure,
capitation fee, exploitation of professors, etc. A recent case in
which there was a hike in fees in colleges in some parts of India,
there was a major uproar and the Government had to give in to the
pressure. The Hon’ble Supreme Court in
Mohini Jain v. State of
has held that “the
Right to Education is a Fundamental Right under Article 21 of the
Constitution, which cannot be denied to a citizen by charging
higher fee known as capitation fee”.
# With the advent of privatization, there has been an enormous
growth in the number of Private professional colleges. This rapid
growth has no doubt contributed to a quantitative increase in the
number of colleges providing higher education but this has been at
the cost of quality, as the Government does not exercise
sufficient control over ‘unaided colleges’.
# Most Private colleges although adhering to standard admission
procedures like conducting entrance tests, interviews, etc. tend
to admit students by charging an exorbitant amount as capitation
fee. Merit invariably takes a backseat and those with the ability
to shell out more money often tend to get admitted, without
fulfilling the admission requirements.
# The State has been supporting the higher education sector by
means of providing funds, establishing colleges, etc. since
independence. The question that arises is- what is the need to so
rapidly change the policy, when for such a long time the State
funding has carried on without any impediment?
# With privatization, there is the risk of commercialization of
education. Although a competitive atmosphere would be created,
some colleges would concentrate on profit making rather than on
improving the standard of education.
# Colleges which are privately owned and administered would
exploit the teachers, professors, etc. by paying them amounts
which are not in consonance with the amount specified by various
regulating agencies of the State which regulate higher education,
like the University Grants Commission, etc. This may lead to a
slackening in the efforts of the aggrieved and may ultimately
result in a fall in the standard of education.
# There have been a couple of cases in the recent past wherein
colleges which received aid from the Government employed illegal
and unethical practices, due to which the Government was forced to
take over those colleges. The purpose for which those colleges
were started seems to be profit making and not to ease the burden
of the Government or improve the quality of higher education.
# Foreign Institutions which have been allowed to enter into
franchise with their counterparts in India have begun offering
degrees, etc. These Foreign Universities may or may not be
recognized in their parent countries due to which there is no
control or restriction on the standard of education provided by
# A large number of students continue to go abroad for higher
education. Only a very small percentage of the student population
opts for higher education in India. This may be due to several
factors which inter alia include the high fee payable, the
capitation fee, the standard of higher education which is not as
good as it ought to be, etc.
# With the advent of privatisation, there seems to be an emphasis
on correspondence mode of education. This may not be conducive for
a sound understanding of subjects.
It is rather obvious that there is a definite trend towards
privatisation of higher education in India. The Government in
order to fulfil its obligation of providing free and compulsory
Primary Education is investing more and more for the development
of the Primary Education. A direct outcome of this has been the
decrease in the investment in higher education by the Government.
Private enterprises could be encouraged to start professional
institutions but it must be ensured that the entry of private
enterprises into the scene does not lead to commercialisation. The
entry of Private enterprises would ease the burden of the State in
providing higher education to its citizens. Regulatory arrangement
must be put in place before the private sector is allowed to enter
the educational sector. The State at the same time cannot absolve
itself from the obligation of providing education to its citizens,
a majority of whom cannot afford education in private professional
institutions. There has been a lot of criticism against
privatisation. Citizens have expressed their concerns over the
exorbitant fee that would charged by private professional
institutions due to which citizens from the weaker sections of
society may be deprived of access to higher education. Another
cause for concern is the possible commercialisation.
There are others who believe that privatisation is inevitable.
Those advocating privatisation contend that the co-existence of
the Public and Private Sectors would be beneficial. They believe
that with the entry of the Private Sector in the field of
education, the quality of education is bound to get better.
Mr. Montek Singh Ahluwalia, Deputy Chairman of the Planning
Commission, while addressing a gathering at an Education Summit organised by FICCI, has pointed out the need to increase the
public expenditure on higher education. Mr. Ahluwalia has opined
that an improvement in the standards of higher education could be
achieved only through a balanced relationship between the Public
and the Private Sectors . Although there are a couple of drawbacks
with respect to privatisation of higher education, it is sure to
bring in competitiveness and on the whole revamp the present
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