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Higher Education in India: From Socialism to Capitalism - Education law

Written by: C.Premsai - Bangalore Institute of Legal Studies, Bangalore
Constitutional Lawyers in India
Legal Service
  • 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 answer.

    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.

    The 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 Constitution, 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 decreased.

    Categorization of Private Educational Institutions in India

    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 a private 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 expenditure.

    (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.

    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.

    (b) Dr. 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.

    (c) 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.

    (d) 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 education.

    V. Caselaws
    (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 the 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 citizens.

    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 observed that ‘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 enterprise.

    The positive aspects of Privatisation of Higher Education

    There are a number of positive aspects of privatization of higher education:
    # 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 educational system.

     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 Karnataka 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 these Universities.
    # 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 educational system.

    1. Black’s Law Dictionary, 6th Edition, West Publishing Company, 1990.
    2. P. Ramanatha Aiyer: Advanced Law Lexicon, 3rd Edition, Wadhwa and Company Nagpur, 2006.
    3. Justice R.P Sethi: Supreme Court on Words and Phrases, Ashoka Law House, 2004.
    4. Acharya Dr. Durga Das Basu: Shorter Constitution of India, 12th Edition, Wadhwa and Company Nagpur.
    5. Lawson & Bentley: Cases in Constitutional Law, 6th Edition, Clarendon Oxford Press, 1979.
    6. Devesh Kapur and Pratap Bhanu Mehta: Indian Higher Education Reform: From Half baked Socialism to Half Baked Capitalism.
    7. A report on ‘A Policy Framework for Reforms in Education’ by the Prime Minister's Council on Trade and Industry.
    8. UGC funding of institutions of higher education (Punnayya Committee Report). New Delhi: UGC, 1993.
    9. Dr. Swaminathan Panel Report, 1992.
    10. Prime Minister’s Council on Trade and Industry: A Policy Framework for Reforms in Education (Birla Ambani Report).
    11. Prof. (Dr.) Madhava Menon: A paper on Private Higher Education- Opportunities and Challenges.
    12. All India Reporter.
    13. Supreme Court Cases.

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