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Fund students, not institutions

Higher education system suffers from over-centralised control, low investment.

T.V. Mohandas Pai  Bangalore | 26th Sep 2015

ndia is today a $2.25T economy aspiring to be a $10T economy, based on innovation and knowledge. Both innovation and knowledge need a top class, vibrant higher education (HE) system. We have a very large HE system today: over 800 universities, 47,000+ colleges, 3 crore students and a gross enrolment rate (GER) in the age group of 18-24 of 23%. The FICCI HE Vision Report says that by 2030, India would have the largest HE system in the world with 7 crore students and a GER of 50%.

Yet only two Indian universities figure among the top 200 universities in the world in the QS Global rankings, even though we make up 17% of the world population. Smaller city states, with a much recent history of HE, do better than us. We suffer from indifferent quality, over centralised control, lack of adequate research and low investment. Our regulators are used to issuing circulars on each and every aspect of HE, stifling innovation and diversity, and government is used to depriving them the autonomy they need to flourish and succeed. It would not be inaccurate to state that our universities had better quality and more autonomy in 1947 than they have today.

We need to reform our HE system, much as we liberalised our economy in 1991 and subsequently. We cannot hope to grow and become a developed country with a poorly functioning HE system. Our students deserve better. Their future is getting marred by poor quality HE, depriving them of the inputs they need to succeed. Droves of our best and brightest — 300,000 of them at the last count — are deserting our HE to study in the world's best universities, spending over $10b a year and mostly staying overseas to build their careers. The best of our faculty too emigrate overseas for research and to innovate. Unless we reform our HE, our future as a globally respected power would be irretrievably marred.

Reform has to start with giving full autonomy to our universities, academic, administrative and financial, managed by their own governing councils, much as the Indian Institute of Science is managed today. Universities, by their very nature, are free thinking institutions, universal in their reach and independent in their governance. We should allow the top 200 universities — central, state, deemed or private — to manage themselves without being subject to government, UGC or AICTE regulations. Nowhere have universities succeeded based on centralised controls by a regulator. The very concept of a university is based on full freedom, which is lacking today. These universities will make their own future, compete for the best students, set their own course and succeed or fail on their own. They will be incentivised by extra public funding if they fare well. Government's role will be to provide funding for students of poor means, for research and for infrastructure without discrimination.

Entry into the top 200 will be on performance, based on independent ranking, as in other parts of the world. It will be an open system. Regulations for the other universities too need to be reduced and if they are accredited above a certain quality level, have full freedom to operate. Our stifling controls have themselves perpetuated poor quality. Government is unable to improve poor performing public universities and tries to control them more, further worsening the situation. Bad private institutions indulge in regulatory capture, corrupt practices and flourish as they have expertise in managing regulators and government in an over-centralised, over-controlled environment, reminiscent of pre-liberalised, licence-quota-raj India. As a result, the good public and private HE institutions suffer and operate with great frustration — bound and chained.

Research is essential for quality to flourish. Universities have two main functions — the creation of knowledge through research and the dissemination of knowledge through teaching. Our universities are teaching universities, with poor research, barring a few. Research needs large funding, mainly through public sources. We need a "National Science, Technology and Humanities Research Foundation", funded by government, as an independent entity to fund research on a competitive basis. This will be an autonomous entity, managed by an eminent board, which will make research grants on a competitive basis. This will allow our best universities to get funding for research in areas of their choice. It will also drive innovation in areas considered important for our future.

Funding is the most important aspect of HE. Throughout the world, public funding plays a very large part of the universities' budgets, as societies believe that their future depends on how they educate their students. Public funding in India, both at the union and state levels has to increase. But the direction of funding needs to change. Today, public funding is by block grants to universities, making them dependent on government, and because of this depriving them of the much needed freedom. It also fosters indifferent quality as there is no accountability for the funding and salaries are assured because the faculty are considered government servants in public institutions. This needs to change.

We need to fund students, and not institutions. Today, because so many of our students come from families of poor means they are forced to study in poor quality institutions as they lack the means to pay fees. We need a "National Scholarship Foundation" which will give freeships, scholarships, guarantee student loans, etc., based on parental income, so that any student who aspires for HE can do so with an institution of her choice. When you are poor, you have no choice, which further impoverishes the person. As a society based on individual freedom and individual choice, we need to empower our students financially to make their choices. Of course the state will carry out its constitutional mandate of providing fully for the reserved sections, but will do so through this means rather than through block grants to institutions.

So many of us admit our children to the best institutions and demand quality because we can afford to pay the fees. By empowering students of poor means we will create a level playing field and enhance demand for good institutions, incentivising quality. Poor institutions will decline unless they are able to attract students and thus there will be competition for students, which will further improve quality. Yes, we have many publicly funded institutions, which charge low fees and are of good quality, but they are too few in number, and for a large scale transformation student empowerment is the key.

For a good system to work well, we need transparency, an open system, quality standards and institutions that can certify quality. We need autonomous institutions which can accredit universities and rank them. But such institutions, funded by public budgets, should be fully autonomous. Today, we have accreditation institutions, but they are tied to government and regulators, depriving them of the freedom to operate. Recently, the Supreme Court had to intervene to ensure that accreditation institutions give their decisions without interference from the UGC. We need to open this field to the private sector, as done in the case of credit rating agencies, so that there is adequate capacity, multiple agencies and greater transparency and vigil. In many countries, universities themselves have come together to create autonomous institutions for this purpose. We also need to open up to the best global accreditation and rankings agencies, so that our universities expose themselves to best global practices.

Today, we live in a global world and our universities need to be global. They must have the freedom to have international students, international faculty and a curriculum benchmarked with best global standards. They must have the freedom to collaborate and have student and faculty exchange programmes of their choice. Knowledge is global and cannot be constrained. Our universities should have the full freedom to set up campuses overseas, give their own degrees if local regulators allow it, and decide their own future. India pioneered the world's first global universities in Takshashila and Nalanda, thousands of years ago because we believed in a free society and a society where knowledge has no bounds. Today, sadly, our universities need government approval for such tie-ups and relationships, depriving them of their freedom. Soon, government may even insist on prior approval for us to think.

In India, it is very obvious that lack of quality in HE is directly the result of government controls, a control-oriented regulator, bad regulations and lack of public funding for research. Mistrust permeates the HE system. If our government cannot even trust the top 200 universities to educate our students, then indeed we are a failed state and a failed society. We moan and groan every year when global rankings reveal the poor quality of our universities, but fail to reform and government ensures more controls instead of giving more freedom.

The time has come to set our universities free, for they are the very foundation of our civilisation and our future is in peril if we fail to do so.

T.V. Mohandas Pai is Chairman, Aarin Capital Partners.

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