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› 2201, World Trade Centre, Level 22
Malleswaram (W), Bangalore-560055. India
) +91 (80) 6450 5050 /+91 (80) 5060 6060
7 +...
Page1
Confidential
Table of Contents
EXECUTIVE SUMMARY.......................................................................
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Confidential
POLICY ON THE GROWTH MODELS FOR HIGHER EDUCATION IN INDIA ................................................
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Executive Summary
Although India has the world’s largest student population, its policy and direction o...
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Confidential
Background
As per UNESCO Institute of Statistics (UIS), India is home to close to 18% of world’s studen...
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Confidential
Segment Profit Making
Allowed
Regulatory Body Fees Control Size (USD Mn.)
Higher Education Test
Prepara...
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Confidential
development in the current workforce that is coming out from the higher education and vocational
traini...
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Confidential
that school PPP program do impact employability and educational outcomes favorably, the experience is
r...
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Confidential
Time based execution and ongoing measurement
A dashboard approach for measuring the impact of the measu...
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Confidential
realities, Australia developed an approach in which the government would initially finance fees, with m...
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Confidential
In some countries, the private institutions are for-profit while in others their organization is typic...
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• Foreign institutions are granted university status.
• Eligibility for exemption from “national treat...
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education. Access fails much earlier when students fail to complete secondary education. If access is ...
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Direction on social infrastructure through Corporate Education Foundation
Clear policy on corporate so...
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Appendix 1: List of For Profit Private Sector Institutions Operating in Higher Education
in India
• 10...
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• International Academy for Creative Teaching
• iPerform
• Jamboree
• JetKing Infotrain
• KalraShukla ...
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Confidential
Bibliography
• GLOBAL EDUCATION DIGEST 2007: Comparing Education Statistics Across the World - UNESCO ...
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White paper on education reform for the union hrd ministry for inclusive development : Kapil Khandelwal, EquNev Capital, www.equnev.com

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Kapil Khandelwal
EquNev Capital
www.equnev.com

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White paper on education reform for the union hrd ministry for inclusive development : Kapil Khandelwal, EquNev Capital, www.equnev.com

  1. 1. › 2201, World Trade Centre, Level 22 Malleswaram (W), Bangalore-560055. India ) +91 (80) 6450 5050 /+91 (80) 5060 6060 7 +91 (80) 4150 5050 / * Contact@EquNev.com Reform in Higher Education Sector in India for Inclusive National Development Task Force – White Paper to Ministry of Human Resource Development Sunil Kumar Alagh and Kapil Khandelwal Jan 2010
  2. 2. Page1 Confidential Table of Contents EXECUTIVE SUMMARY......................................................................................................................................................3 ACTION PLANNING FOR PRIVATE SECTOR PARTICIPATION .................................................................................................................3 KEY HIGHLIGHTS FOR DISCUSSIONS..............................................................................................................................................3 BACKGROUND...................................................................................................................................................................4 APPROACH........................................................................................................................................................................4 PRIVATE SECTOR PARTICIPATION IN HIGHER EDUCATION ............................................................................................4 SKILL GAPS AND UNEMPLOYABILITY OF STUDENTS PASSING OUT OF HIGHER EDUCATION .....................................5 LACK OF SECTORIAL VOCATIONAL TRAINING STRATEGIES AND POLICIES ..................................................................6 AGENDA FOR HIGHER EDUCATION SECTOR FOR INCLUSIVE DEVELOPMENT.................................................................6 ACTION PLAN TO COVER THE CURRENT SKILL GAP AND EMPLOYABILITY...........................................................................................6 Set up Public-Private Partnerships .................................................................................................................................6 Setting up of a Education Foundation to aggregate corporate funding............................................................................7 Government, Private, Academicians collaborate on syllabus and curriculums – pragmatic and practical......................7 Get Industry to speak in Academic Sessions...................................................................................................................7 Industry Advisory Board Members to Drive Result Oriented Programs...........................................................................7 Time based execution and ongoing measurement...........................................................................................................8 Professors to do internship stints at companies.............................................................................................................8 Vocational School concept to be introduced in higher education schools........................................................................8 GROWTH MODELS IN HIGHER EDUCATION IN INDIA.........................................................................................................................8 Model One: Expansion of a public sector charging little or no tuition fees.....................................................................8 Model Two: Publicly financed fees repaid through the tax system once students graduate............................................8 Model Three: Increased cost sharing combined with higher levels of student aid..........................................................9 Model Four: Expansion of a private sector of institutions...............................................................................................9 GOVERNMENT FOCUS AND INTENT FOR HIGHER EDUCATION ..................................................................................... 10 PRO-STUDENT APPROACH TO FUNDING HIGHER EDUCATION IN INDIA ...................................................................... 11 LESSONS LEARNT FROM DEVELOPED COUNTRIES ..........................................................................................................................11 STRATEGIC APPROACH FOR INDIA..............................................................................................................................................11 KEY POLICY MEASURES FOR REFORMS IN HIGHER EDUCATION SECTOR FOR INCLUSIVE DEVELOPMENT ............... 12 SECTORIAL PLANNING FOR VOCATIONAL DEVELOPMENT................................................................................................................12 COVERING THE CURRENT SKILL GAP AND EMPLOYABILITY.............................................................................................................12
  3. 3. Page2 Confidential POLICY ON THE GROWTH MODELS FOR HIGHER EDUCATION IN INDIA ..............................................................................................12 INFORMATION COMMUNICATION AND TECHNOLOGY (ICT) MODELS IN HIGHER EDUCATION ................................................................12 TAX HOLIDAYS AND TAXATION RATES FOR PRIVATE SECTOR HIGHER EDUCATION SECTOR INVESTORS.................................................12 MODEL FOR HIGHER EDUCATION TUITION FEES DIFFERENTIAL STRUCTURE......................................................................................12 DIRECTION ON SOCIAL INFRASTRUCTURE THROUGH CORPORATE EDUCATION FOUNDATION ..................................................................13 CREATION OF NATIONAL BANK FOR HIGHER EDUCATION FINANCING................................................................................................13 APPENDIX 1: LIST OF FOR PROFIT PRIVATE SECTOR INSTITUTIONS OPERATING IN HIGHER EDUCATION IN INDIA 14 BIBLIOGRAPHY............................................................................................................................................................... 16
  4. 4. Page3 Confidential Executive Summary Although India has the world’s largest student population, its policy and direction on higher education sector is not clearly articulated towards inclusive development. Regulation, size of funding to this sector, both public and private is one of the key determinants of India’s ability to generate wealth (GDP). Moreover sectorial priorities and directions in sectors such as health sciences, retail, infrastructure if not clearly addressed could create future crisis in the economy and further impede economic growth. In terms of opportunity, the higher education sector for private sector participation would be close to USD 25 to 30 billion. In addition another USD 100 billion would be required for right skilling and upgrading the skills of the current unemployed people with higher education. A clear policy for private sector participation is required to encourage investments and balance out the social infrastructure development in education and meet inclusive country development. This paper has been drafted after extensive secondary research from various industry reports and discussions with key stakeholders in the higher education sector. Action planning for private sector participation Action plans and policies for encouraging private sector participation in this sector in two key development areas: 1. Investments in higher education with high vocational success without a profiteering motive; 2. Investment in right skilling and skill upgrading to increase employability of higher educated population Key highlights for discussions Several policies need to be articulated for enabling private sector participation in the higher education sector. These include: 1. Sectorial Planning for Vocational Development 2. Covering the Current Skill Gap and Employability 3. Policy on the Growth Models for Higher Education in India 4. Information Communication and Technology (ICT) Models in Higher Education 5. Tax Holidays and Taxation Rates for Private Sector Higher Education Sector Investors 6. Model for Higher Education Tuition Fees Differential Structure 7. Direction on social infrastructure through Corporate Education Foundation 8. Creation of National Bank for Higher Education Financing
  5. 5. Page4 Confidential Background As per UNESCO Institute of Statistics (UIS), India is home to close to 18% of world’s student population (5-25 years). This is slightly more than China’s 17%. The inequalities are even sharper within because children and young people do not have equal access to education. While number of action steps and policies measures have been taken up by the Government to address the quality of education in the K-12 schooling in the private sector, a number of studies have sought to identify a country’s characteristics which are associated with progress and economic goals by the institutions and regulation governing higher education. About 75 percent of high school graduates today go on to college, a far higher proportion than two decades ago. About 28 percent of college students are minorities. Women outnumber men on many campuses. These studies repeatedly stress the importance of ensuring a sufficient and stable source of funding for developing basic research and higher education sector. Hence it is clear that regulation, size of funding to this sector, both public and private (including individual students, households and organised groups) is one of the key determinants of India’s ability to generate wealth (GDP). However, the level of this investment across sectors is often difficult to identify and compare. The issue of private sector contributions raises important questions concerning the equity of education systems. Heavy reliance on private contributions is often an indication that some students may be denied access to higher education or specific educational services because their families are unable to pay for them. Policies that balance the cost of providing quality education with available resources is essential for inclusive growth and development in India on a scale which is very large. This objective of this paper is to discuss some of the issues and approaches to address some of the key issues relating to the private sector participation in the higher education sector in India for inclusive development. Approach This concept note has been prepared after conducting extensive secondary research. In addition, we meet and discussed with several sector experts, PE fund managers who have invested in the education sector, deans from higher education institutions, industry associations, etc. All the points of view have been analysed and synthesized to prepare this note. Private Sector Participation in Higher Education The table below provides a snapshot of the scope of private sector participation in higher education, the regulation governing them, nature of fees control and the potential size of the opportunity in India. It is fairly evident that the private sector participation in higher education sector is in the vocational type professional education, training and tutoring and in providing services where there is high industry demand for students leading to maximizing the profit motive behind these ventures. It is also anticipated that the confluence of technological, economic, and demographic forces that would in a very short time force the return of ever-larger numbers of working adults back to formal higher education in India for business studies (MBA) or Post graduate (Masters) or Doctorial Programmes. Hence it is estimated that the size of the higher education sector in India to be in the range of USD 25 to 30 billion dollars in the next 2-5 years. Private sector players (see Appendix 1) see such a huge opportunity to monetize where government and the formal education sector have failed to deliver, although a large number of universities under the University Grants Commissions (UGC) have been given a license to operate in India. This trend raises larger issues regarding the India’s modernization and growth agenda in higher education which is non inclusive.
  6. 6. Page5 Confidential Segment Profit Making Allowed Regulatory Body Fees Control Size (USD Mn.) Higher Education Test Preparation Yes Na No 1,664 Private Professional Colleges Yes Yes Partly regulated 7,054 IT-training-Retail Yes Na No 187 IT-Training-Corporate Yes Na No 38 E-Learning Corporate Yes Na No 14 E-Learning Retail Yes Na No 13 Tutoring Yes Na No 5,351 Services training Yes Na No 1,365 Teacher training Yes Na No 15 IT/BPO finishing school Yes Na No 27 Educational books Yes Yes No 2,965 Educational stationery Yes Na No 1,326 Academic Research Centers No Yes Yes 6,000 Source: Estimates from Industry, Industry bodies, PE assessments and Discussion with professionals in the education industry Skill Gaps and Unemployability of Students passing out of Higher Education As a larger proportion of students that are graduating out from mediocre higher education institutions, there is an increasing trend of skill gap as student Unemployability is a bigger crisis than unemployment. Some of the estimates include: • 53% of employed youth suffer some degree of skill deprivation while only 8% of youth are unemployed • 57% of India's youth suffer some degree of Unemployability • The 82.5 million unemployable youth fall in three skill repair buckets: 1. Last mile repair (< 0.5 yrs) 5.3 million 2. Interventional repair (0.5-1 yr) 21.9 million 3. Structural repair (1-2 yrs) 55.4 million • Repairing this skill deficit needs Rs 490,000 crore over two years. Current budgets cover 25% of this but only allocating more money won't solve the problem Some of the issues to be addressed is the expansion of research in the Universities. As there are completely disjoint set of applicants for colleges in Tier 1, Tier 2 and Tier 3. This dualism is also leading to non-inclusive
  7. 7. Page6 Confidential development in the current workforce that is coming out from the higher education and vocational training/finishing schools to meet the industry demand. Lack of sectorial vocational training strategies and policies We have no clear focus on sectors where there are gaps in the supply side. Lack of proper sectorial vocational and human resources development strategies and policies, would lead to emerging crisis in the some of the developmental and support sectors of the Indian economy. For example in the health sciences sector, India’s share of the global disease burden is around 20% for its share of the global population, however, the supply of trained clinical labour pool is less than half of the disease and healthcare burden in the economy. In some of the occupational groups such as lab technicians, India has only one percent of the globally trained supply of human resources! The table below outlines the clear gaps: Source: WHO Statistical Information Systems 2008, Disease burden is from WHO 2002 DALY estimates, World Bank While similar gaps can be provided for other sectors, such gaps in the investment in specific sectors such as health sciences sector vocational and human resources development would lead to supply side constraints and an imminent health crisis and further impact India’s ability to generate wealth (GDP). Agenda for Higher Education Sector for Inclusive Development Indian higher education sector has to address two key issues in the short and the long term. The first issue is for correcting the skills gaps of the current batches of students who are passing out to make them ready for industry. The second issue is creating adequate capacity in the higher education sector that is relevant for the industry and economic development. Action Plan to Cover the Current Skill Gap and Employability There has been an industry demand to help make changes and enable policies that can cover the skill gap and employability of the current batches of graduates and post-graduates passing out of our colleges and universities. These include: Set up Public-Private Partnerships There is some potential Public Private Partnership Models that may be explored. Internationally, PPP models have been used to address skill gaps, infrastructure needs and education provision. While evidence does support 8% 8% 9% 1% 20% 18% Doctors Nurses Healthworkers Lab Techs Disease Burden Population India's Share in the World
  8. 8. Page7 Confidential that school PPP program do impact employability and educational outcomes favorably, the experience is relatively new and recent. PPP Models for further consideration with a view to addressing the industry needs from graduates and post graduates. The model is where private and corporate sector players are allowed to set up specific institutes within the college or university to train and or coach the students for a particular vocation, so that they are job ready when they pass out. Setting up of a Education Foundation to aggregate corporate funding Keeping in line with the numerous CSR initiatives that have been initiated by Corporate houses in the education sector, we recommend that an Education Foundation is be set up for channeling the entire corporate sector CSR funding into objectives that complement and support government initiatives rather than in a limited and smaller universe. A Foundation could be set up by the local authorities and private sector, which is managed privately in terms of prioritizing the spending from the Fund across different initiatives in the higher education sector. The foundation can be set up to focus on assisting weaker sections of the society, unemployable graduates and post graduates and less privileged classes in supporting them to retain in higher education colleges. The Foundation will provide a sustainable model to support the government initiatives and programs at a wider level. It is also important that due credit is given to all members of the Foundation as often as possible. Some of initiatives that the Fund can promote include: • Providing financial assistance to meritorious students or supporting a mentoring program for meritorious students over the years • Providing colleges and universities one-off financial assistance on developing supporting infrastructure and industry outreach programs • Developing and implementing ICT driven infrastructure across the network • Supporting dialogues, college-industry secondments and exchange • Developing a volunteer network to assist in teacher training, mentoring or management skills to harness the skills from the corporate sector • Specific teacher training program in languages, presentation techniques and teaching aids Government, Private, Academicians collaborate on syllabus and curriculums – pragmatic and practical IT and BPO sector has been actively participating with engineering colleges on updating and implementing relevant topics to make the course meaningful to the student and the industry. This practice needs to be further broad-based to cover the full gamut of higher education in India. Get Industry to speak in Academic Sessions While the forward looking colleges and institutions in India have started this practice, it still needs to be accepted by the higher education sector as a whole. This faculty, student and industry interaction provides better understanding and appreciation of the industry requirements. Industry Advisory Board Members to Drive Result Oriented Programs While some of the leading management institutes in India have constituted Advisory boards representing leading members from industry and corporate sector, this needs to be broad-based and rolled out across the higher education sector. Moreover, this should also be part of the accreditation process of the instructions as governed by AICTE.
  9. 9. Page8 Confidential Time based execution and ongoing measurement A dashboard approach for measuring the impact of the measures taken and their result orientation to the industry needs to be jointly implemented by the government and industry bodies. This would ensure immediate measures for validating the industry demands and alignment with the academic institutions as suppliers. Professors to do internship stints at companies Policy for encouraging teachers to take sabbaticals into industry to get acquainted with the industry orientation and their future requirements for talent is well exposed. This should also ensure that secondments and career placements are opportunities are created for teachers to gain international experience over short to medium term. Vocational School concept to be introduced in higher education schools Investment and fiscal benefits should be provided for private sector participation in creating infrastructure for creating vocational schools in their campus. The students can then be directly absorbed into the employment by the private sector sponsors. Growth Models in Higher Education in India Over the past half century, more than a dozen countries around the world have employed varying strategies to move from elite systems of higher education to mass or universal ones, enrolling at least half of the traditional college population. Examining the strategies employed would help in assessing how these and other countries in the future may keep up with an increasing demand derived from the increasing economic returns through additional higher education and training. A review of the strategies employed suggests four models of growth would be key learning on the model that India would need to adopt. Model One: Expansion of a public sector charging little or no tuition fees. This is perhaps the most prevalent growth model for higher education over the past half century. Countries make a financial commitment of public funds sufficient to expand their public sectors of tertiary education without requiring large or even significant cost sharing in the form of higher fees from students and families. In this approach, tuition fees represent 10 percent or less of the resources used to pay for instructional and operational expenses (excluding research and other activities). In the 1950s and 1960s, the United States employed such a strategy to make a transition to a mass education system beyond the secondary level. This model included the development of a community college system as well as the creation and expansion of higher education public institutions. In the past quarter century, this strategy has been used by several Scandinavian countries including Norway, Sweden, and Finland. The critical component for successful implementation of this strategy is a country's willingness and ability to devote substantial levels of public resources (probably in excess of 1.5 percent of GDP) to allow for expansion without significant cost sharing. In reality, most countries, including India are not in a position to make such a commitment of public funding. Hence this growth strategy would not be relevant in the current context with respect to India. Model Two: Publicly financed fees repaid through the tax system once students graduate Australia established a new model for growth in the late 1980s when it introduced its Higher Education Contribution Scheme (HECS). This strategy recognized two realities. One was the financial reality that private resources were needed to supplement public resources to fuel the growth of higher education. The other was the political reality that many students and their families were unwilling to pay traditional fees. To deal with these
  10. 10. Page9 Confidential realities, Australia developed an approach in which the government would initially finance fees, with most of these students repaying the fees once they graduated as a percentage of their income through the tax system. England and Thailand introduced a similar system of publicly financed fees beginning in the academic year 2006. A key question with regard to publicly financed fees, like the model of public-sector expansion, is whether a country has enough resources to fund it. Under this approach, governments essentially are funding both sides of the tertiary financing equation, operational support of institutions and the payment of fees by students and families, until the stream of loan repayments is sufficient to provide significant private resources. Even a country as wealthy as Australia has found that it needed to reduce HECS subsidies by lowering the incomes that qualify for nonrepayment and raising the HECS fees to make the system sustainable. In addition, many Australian institutional officials would claim that public support of higher education has been reduced to make ends meet. This strategy can be explored in India as part of the growth strategy for higher education in the private sector. Model Three: Increased cost sharing combined with higher levels of student aid This model of growth is one in which more significant cost recovery through higher fees is introduced at a wide range of public institutions. This plan is usually combined with greater reliance on student aid to ensure that economically disadvantaged students are not discouraged from attending when higher fees are charged. Over the past quarter century, the United States, New Zealand, and Canada are examples of countries that successfully pursued this approach to expand resources to meet rapidly growing demand. Raising fees for all public-sector students is typically thought of as the basic policy response for greater cost sharing. In reality, countries raise fees in a number of different ways to increase the degree of cost sharing. Many Eastern European countries established a system of parallel fees in which students who do not qualify for the "free seats" based on grades and merit can enroll in the same courses of study by paying tuition fees that are set at or near the full cost of education. This plan is not recommended as it introduces or reinforces system inequities. However, other ways of raising fees selectively make a great deal of sense for spurring growth and introducing greater equity. These methods include dual fee systems in which students in state-funded fields pay low, subsidized fees, while students in high-demand fields such as business or law pay higher "market-based" fees equal or close to full costs. Australia is a prime example of a country that has moved to a dual fee structure in which HECS students pay (or repay) government-set fees, whereas all foreign students and a growing number of domestic students pay at much higher levels. Differential fees by level of study are another common strategy for increased cost sharing. Groups of students pay different levels of fees: lower fees for domestic undergraduates and higher fees for graduate students, international students, and in some instances adult learners. This model has been operational in India as part of the capitation fees charged under the quota seats. Model Four: Expansion of a private sector of institutions This model of growth expands enrollments in private institutions to take up the slack created from restrictions in the size and growth of the public sector of tertiary education. This has occurred in a number of countries around the world either as a matter of deliberate government strategies or simply as an industry developing in response to unmet demand. In the Middle East and some countries in Asia, the number of private-sector institutions and students has grown particularly in vocational programs, although private universities have been the primary source of growth in some countries such as Japan and Korea. Poland is an example of an Eastern European country that has become a mass higher education system largely through the growth of a private sector.
  11. 11. Page10 Confidential In some countries, the private institutions are for-profit while in others their organization is typically not-for- profit, with surpluses reinvested in the institution. What is common is that most enrollment growth occurs in the private sector while the number of students enrolling in public-sector institutions remains stable or grows very slowly as additional public funds are not made available. One way to encourage more enrollments in the private sector is to make students enrolling in these institutions eligible for the full range of student grants and loans. Another way to encourage private-sector growth is for governments to facilitate the approval of programs that meet minimal quality standards. The four models of growth described above demonstrate that there are different routes for countries to achieve the goal of mass or universal tertiary education. Government Focus and Intent for Higher Education Higher education is not, however, without its share of controversy, the courts giving often conflicting judgments: • In Unni Krishnan, J P vs. the State of Andhra Pradesh (1993), the Supreme Court banned the Capitation Fee Act, 1988. Instead, it allowed a number of “paid seats” to be established in consultation with concerned state governments. The idea was to make some families pay full costs toward the education not only of their own wards but also of some others, in the name of social justice. The state governments were also allowed to administer and regulate admissions into unaided and privately promoted institutions providing professional education. • In TMA Pai vs. State of Karnataka (October 2002), the Supreme Court reversed its position curtailing the independence of private educational institutions and permitted financially independent private and minority interests to establish higher education colleges of their choice. Although the court also warned against “commercialization” by private colleges, it was not clear what the practical impact of that warning might be. • In its most recent related judgment of 14 August 2003, the Supreme Court again took a tough stand against capitation fees and profiteering by the private professional colleges. It threatened to “de-recognize” private colleges found guilty of charging capitation fees in any form. Again, the impact remains unclear - there are reports of illegal payments to obtain placement in private professional colleges and of political involvement in setting up such colleges. The role of politicians in setting up educational institutions has been questioned in the media as the cause for “vested interests” and opacity of regulations in the sector. As education is a joint responsibility of the Central and State governments, some states have passed separate legislations on private higher education. Chhattisgarh passed a Private Universities Act in October 2002, and Uttaranchal accepted four private universities in 2002–03. There has been a proliferation of private medical and engineering colleges in the southern and western states of Andhra Pradesh, Tamil Nadu, Karnataka, Kerala, and Maharashtra. In 2001, Andhra Pradesh had 95 private self-financing engineering colleges and 303 medical colleges, compared with 11 public engineering colleges and 25 public medical colleges. In many states, there have been allegations that private universities lack adequate infrastructure and appropriate faculty, and some established colleges have raised fees sharply in conjunction with professional courses or foreign collaborations. Subsequent judicial intervention has failed to clarify matters. Entry of foreign educational institutions to India is covered by the Foreign Educational Institutions (Regulation of Entry and Operation, Maintenance of Quality and Prevention of Commercialization) Bill of 2007, which has stalled in parliament due to political opposition. Key proposals in the bill include:
  12. 12. Page11 Confidential • Foreign institutions are granted university status. • Eligibility for exemption from “national treatment” on enrolments, admissions and fees. • Restriction of surplus revenue usage within India. • Investment of at least 51% of total capital required for establishing an institution in India. Some 100,000 of India’s students leave each year to study abroad, at a cumulative cost of US$4bn. China has seen a surge in foreign educational institutions partnering with local institutions; its policies and objectives very much in line with India’s views that foreign universities should not eye India as a market, but should invest adequately to set up their own campuses. Pro-Student Approach to Funding Higher Education in India India needs to create a system that would improve access, competitiveness, quality and effectiveness of higher education system. Should tax payers subsidy be justified in efficiency growth, but there are also as we know very significant private beneficiaries of individual perseverance of higher education and therefore it is right that they should pay. There should be a well designed students loans with core characteristics. There are three main characteristics. • The Income contingent repayments which are calculated in terms of percentage of graduates subsequent earnings, because it increases efficiency to repay and reduces uncertainty. It can be justified in terms of equity, and promote access since it has built-in insurance against inability to pay. Hence it’s a genuine loan with least interest; • The loans provided should ideally be large enough to cover the entire tuition fee and if possible living costs as well; and • There is an issue of how much interest rate to be charged – it shouldn’t be Zero interest rate, it shouldn’t be the normal interest rate which the banks normally charge, but it should be something like government’s cost of long term borrowing range. Lessons learnt from developed countries • Fees relax the supply side constraints- it brings in more money to increase quantity and improve quality. On the other hand when you bring in more money you should not bring in without any restriction which was done in New Zealand. We need to control the way the fees are introduced. On the other hand the failure to liberalize is also a mistake because it harms quality, access and continues regressively. • Student’s support - Lessons about Loans. Its true that income contingent loans works and they do not harm access for example – e.g.( Australia, NZ, UK, Hungary). However, we should not provide any interest subsidies as they are expensive and fiscally not prudent as we have learnt from the mistakes made by Australia, NZ and UK. Strategic Approach for India Government should enable a variable fee structure where the fees vary across the universities. The variable fess structure has double benefit. This brings in more money for the university, and they also increase the strength, competition, and also improve the effectiveness of university in terms of quality. Paradoxically variable fees are fairer than the so called highly subsidized / free higher education. The problem with highly subsidizing higher education is that the tax of the poor people is paid for the middle class students to go up and become rich. A good loan scheme is implemented so that higher education becomes almost free to the students - (because it is the graduate students who make repayments). As has been voiced by various industry and reformists, an active measurement to promote access is put into place. Access cannot be promoted by simply subsidizing higher
  13. 13. Page12 Confidential education. Access fails much earlier when students fail to complete secondary education. If access is a concern then we have to take into account seriously and do things much earlier by improving quality of school education and providing access by adopting many other means at the higher education stage Key Policy Measures for Reforms in Higher Education Sector for Inclusive Development Sectorial Planning for Vocational Development A sector specific plan with clear industry partnership and participation into vocation development should be outlined. This could be on the lines of how IT industry has created for creating the talent pipeline by inducting students after K12. Learnings from the German vocational system can be leveraged to adapt this to Indian industry’s requirements. Covering the Current Skill Gap and Employability Various items proposed in the action plan in the previous section needs to be actioned out to ensure that repairing this skill deficit that requires substantial funding over two years is well supported by industry participation. This will ensure that private sector participation to cover for the balance needed over the government’s budget. Policy on the Growth Models for Higher Education in India Various successful growth models for higher education in the world exist. A clear policy on the growth model that is inclusive needs to be articulated in the Indian context. Information Communication and Technology (ICT) Models in Higher Education The next generation ICT models in higher education which is created by industry participants for mass mobilization of talent needs to be encouraged. Lessons and experiences from the IT services sector in India need to be replicated into other sectors. Tax Holidays and Taxation Rates for Private Sector Higher Education Sector Investors There is no issue for private sector participation through philanthropy. However, taxation policy needs to be articulated in other cases where generation of surpluses with profiteering as a motive to ensure entry barriers for private sector operators with a short-term profit orientation. Similarly higher and regressive tax regime for the first seven years needs to be introduced to check profiteering in education sector. After that, a model for differential tax structure can be introduced for withdrawal of profits. Model for Higher Education Tuition Fees Differential Structure Formula for differential fees structure to ensure that there is a justifiable basis for charging of fees/capitation/premium, etc. The determinants for differential fees could be as under:
  14. 14. Page13 Confidential Direction on social infrastructure through Corporate Education Foundation Clear policy on corporate social responsibility and social infrastructure funding by education foundations needs to be devised for an inclusive development of sectors that are not viable for investment by the private sector having a profit motive. This Education Foundation is be set up for channeling the entire corporate sector CSR funding into objectives that complement and support government initiatives rather than in a limited and smaller universe. Creation of National Bank for Higher Education Financing An apex banking institution or independent division in an existing bank under the guidance and regulation of Reserve Bank of India needs to be established that would provide specific products and services guidance and refinancing to bank for education sector loans. These loans should be treated a priority sector leading by the banks. Average Student Training Costs Advantage of Institute Location (Zoning) • GDP Per location • Location Institute Level • Reputation • Student Training • Science Research • Other Factors • National Rating University Recognition Determinants of Profitability and Tax Holidays/ Subsidies
  15. 15. Page14 Confidential Appendix 1: List of For Profit Private Sector Institutions Operating in Higher Education in India • 100percentile.com • Aakash Institute • Academy of Creative Teaching • Air Hostess Academy • Algorithms India • Aloha • Amity • Apple Kids • Aptech • Avalon • Aviva Educare • Bansal Classes • Brilliant Tutorials • Camlin • Career Forum • Career Launcher • Career Point • Chanakya IAS Academy • Chate Group • Classteacher.com • CMS Computers • Core Projects • Dilip Oak's Academy • Edstar • Educomp • English Centre • EuroKids • Everonn • Excel Soft Technologies • Extramarks.com • FIITJEE • Frankfinn • G.M.Pens International Pvt Ltd • Growing Stars • Hindustan Pencils • IBS • ICA • iDiscoveri • IL&FS Education & Technology Services • IMFS Global Consultants • IMS • Indian Institute of Planning & Management • Institute of Technology & Management
  16. 16. Page15 Confidential • International Academy for Creative Teaching • iPerform • Jamboree • JetKing Infotrain • KalraShukla Classes • Kangaroo Kids • KidZee • Kingfisher Training Academy • Koenig • Komark • Labour India Publications • Macmillan India • Madhavi Desai Consulting • Mahesh Tutorials • Mbdalchemy.com • Navneet Publications • NIIT • Professional Tutorials • Rau's Study Circle • Rotomac Pens Pvt Ltd • S Chand • Shemrock Agency • Sinhal Classes • SIP Academy • Smart Brain • SQL Star • Sriram IAS • Studyloft.com • Studyplaces.com • SukhSagor Institute • Sundaram Multi Pap • Technology School • The Teacher Foundation • TIME • Tutorvista • UC Mas • Vajiram & Ravi • Veta • Vidyasagar Classes
  17. 17. Page16 Confidential Bibliography • GLOBAL EDUCATION DIGEST 2007: Comparing Education Statistics Across the World - UNESCO Institute of Statistics (UIS) • Working Paper from the Centre for Socio-economic & Environmental Studies • Higher Education Tuition Standard Model Analysis • Dataquest Reports • Department of Education • Media Reports • NGO Studies • World Bank Studies and Reports • Discussion with professionals in the education industry • AICTE • Medical Council of India • National Knowledge Commission • NASSCOM, CII, FICCI Reports • German Vocational Education Experts Presentation • UK Prime Minister’s Top Management Program Team interactions • Chambers of Commerce Representations and Presentations • Equity Research Reports • Supreme Court judgment information system, www.prsindia.org • Dental Council of India, • Rajya Sabha parliamentary questions • Bloomberg Reports • Ministry of Finance Reports • Directorate General of Employment & Training Reports • Journal of International Higher Education

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