FORMAL modern education in India gained ground only in the 19th and the early part of the last century, mainly through non-governmental effort. It is, therefore, not surprising that private institutions comprised a considerable part of the sector at the turn of independence, more so in higher education. The non-governmental providers of higher education (mostly in the form of charitable trusts and societies) were arguably impelled by a variety of motives, but principally these were non-pecuniary in nature.

The expansion of education became one of the important objectives of independent India. Though a state subject till 1976 when education was moved over to the concurrent list, the Centre has throughout held the responsibility for coordination and determination of standards in institutions for higher education or research and scientific and technical institutions. The University Grants Commission, created through an Act of Parliament in 1956, has been the apex institution for regulation of standards and linking these to the financing of institutions.

Higher education could have been expanded through directly establishing government financed and managed institutions. But the regulation of standards and working conditions, and provision of basic infrastructure in finance-strapped private institutions also became a challenge, requiring state governments to step in with financial support and regulation of this sector. Till the emergence of private self-financed (unaided) institutions providing professional/technical education in the 1980s, the principal types of institutions in higher education were either publicly financed and managed, or privately managed but drawing governmental financial support (private aided).

The central and state governments did take on greater responsibility for financing higher education. But the resource flow for higher education was not adequate, barely able to keep step with the expansion of the sector which took place as a result of the growing demand for education. It has been estimated by us that per capita expenditure on higher education in India was by far the lowest among the BRIC countries (Brazil, Russia, India and China) and further declined in the post-liberalization period. Higher education was seen by people as a stepping stone to a brighter future and there was considerable pressure on governments to expand access while keeping the costs of education low. This had inevitable consequences for the provision of physical and educational infrastructure as the bulk of grants were absorbed in salaries.

The growth of the economy in the 1980s further fuelled the demand for professional and technical manpower. The public system had neither the wherewithal nor the ideological commitment to meet the expanding needs; in the wake of liberalization, higher education was seen a non-merit good, not worthy of public expenditure. The private sector quickly moved in to fill this gap resulting in a sprouting of professional and technical institutions all over the country.

 

The pace at which enrolment in private (self-financed) education has grown in India is very impressive, although the data often cited, based on permitted intake figures, appears somewhat exaggerated at the national level. This is because private unaided education partially substituted for the growth of private aided education in the recent period. During 1995-96 to 2004-05, total enrolment in diploma/certificate education grew at an annual rate of 18.4%, whereas enrolment in graduate and above education grew at an annual rate of 8.5%. But enrolment in private unaided institutions grew at rates of 34.6% and 20.5% respectively. By 2004-05, students enrolled in private unaided engineering colleges comprised 40.5% of the total, whereas this percentage was 26.5 in the case of government colleges and 29.7 in the case of private aided colleges. For medicine, students enrolled in private unaided colleges were 28.2% of the total, compared to 37.6% in government institutions and 29.2% in private-aided institutions. More than 60% of the intake in private unaided engineering colleges was in the five southern states.¹

Knowledge about this sector is scanty. What were the sources of investment? Who were the investors? What about costs and quality? In fact, answers to some of these questions are vital to understanding the role of regulation vis a vis this sector. In the western and southern states, particularly Maharashtra, Andhra Pradesh and Tamil Nadu, which saw early growth of this sector, most investors were political entrepreneurs wielding both direct and indirect influence on education policy in their respective states. Many others were purely business entrepreneurs, with no prior experience in the education sector, setting up academic institutions on a ‘business model’ aimed at generating quick returns in what was perceived as a low risk and high return venture.

Apart from the solely domestic private sector, foreign universities too are offering degrees directly or through franchises/collaborations with Indian providers. Our main concern here, however, is with regulation of domestic providers, although there is some overlap between the two sets.

 

The need for regulation of the education sector arises in order to ensure that the growth of the sector is able to fulfil the requirements of national objectives. The regulatory framework cannot be understood in isolation of these goals. These objectives apply ipso facto to the system as a whole and the behaviour of all providers – public, private; domestic and foreign – would at least need to be collectively consistent with the achievement of these goals. The major objectives of higher education are to promote national development through achievement of higher participation, equity and quality.²

A brief description of the regulatory apparatus of the central and state governments would perhaps be in order. Universities in India are of different types, viz. multi-faculty, unitary or affiliating, professional/technical, and open. The power to create and recognize these higher educational institutions in India has been principally with the central and state legislatures.

 

However, the apex councils too have powers to either recommend or grant recognition to certain types of institutions. The UGC through a clause in the UGC Act [Section 3(f)], can recommend to the Union government that an institution which was not multi-faculty, multi-tier but excelled in some areas, be recognized as a ‘Deemed University’. This clause has been used to give recognition to institutions (including private ones) only since 1986. Though used sparingly in the initial years, the pace has accelerated in the more recent period. Fortunately after recent judicial observations, the UGC has tried to clarify the norms for granting deemed university status, as well as specify conditions for their functioning.

It should be noticed that all degree-giving institutions in all streams must be part and parcel of a university system and only the UGC has the powers to recognise the degrees. But apart from the UGC, the power to recognise institutions and courses providing technical and professional education and meeting minimum standards also vests in the several statutory councils which regulate the entry of such institutions. The most important among these are the All India Council of Technical Education (AICTE) and the Medical Council of India (MCI).

Similarly the power to coordinate, determine and maintain minimum standards in institutions for higher education or research and technical institutions rests squarely with the UGC. Again, however, the statutory councils also have the power to regulate standards, admissions etc. in the fields under their purview.

To give an idea of the respective domains of Centre, state, UGC, etc. in creating/recognising universities and institutions, till April 2008, there were 231 state and 23 private universities established by state legislatures, 25 central universities, 7 IITs and 6 IIMs created by central legislation and 110 deemed (34 government and 76 private universities). The several thousand professional and technical private colleges recognized by the statutory councils too have to be part of a university structure if they run degree-giving courses. These figures exclude the private universities recognized by state governments under the Private University Acts passed after 2005.

 

Further, most public universities, both central and state, also have the powers derived from their legislation to recognise and affiliate colleges within their territorial jurisdiction, after a due process of whetting. This power has been liberally used in the recent period to grant affiliation to private unaided colleges providing both general and professional/technical education.³ While technical and professional colleges/courses have still to be approved by the councils, in the case of colleges providing general education, recognition by universities does not require approval either by state government or UGC. And while universities in theory have important built-in mechanisms for upholding and improving standards, often, both for internal and external reasons, they routinely fail in this regard.

 

The regulatory apparatus in existence since the 1950s has failed miserably to deal with the massive growth of the private sector. As pointed out, although a few states created private universities through state acts, till recently, the only other route through which a private university could be created was if it acquired a deemed university status under the UGC Act. As for professional and technical education, the expansion in the number of private institutions seeking recognition is huge and a worrying fact is that colleges that gained recognition often did not have the minimum wherewithal in terms of infrastructure and faculty.

Although the regulatory structure has responded to the rapid changes in higher education, an analysis of the changes in the regulatory structure shows that it is mostly reactive rather than pro-active. There is a complete void in state policy in relation to the yardsticks that should govern the growth of private (for-profit) higher education, resulting in a privatization by default rather than being intentionally fostered by the state. The net outcome is that higher education appears overwhelmed by the growth of a highly commercially oriented sector, which often does not meet any minimum standards, offers education of very variable standards, and indulges in several malpractices in matters related to admission policy and fees.

As Anandakrishnan (2006) has pointed out, no doubt there is also a high quality private sector, in his estimate constituting about a quarter of the new institutions, that follows conducive administrative and academic practices. But this does not hold for a majority of institutions.⁴

 

Since the major stakeholders (central government and the statutory organizations) abstained from either enunciating a clear policy or stepping in with appropriate regulatory measures, it was left to the other stakeholders (students and their guardians) to take their grievances regarding rampant malpractices of the private institutions to the state governments and/or the courts. Although several states passed legislation to regulate specific aspects of the functioning of the private institutions, especially in the matter of capitation fee and admission, the Centre, the UGC, and other apex bodies, designed to play a ‘coordinating role’ did not take any concrete steps to do so. So in a manner now familiar to us in other major spheres, the courts stepped in to define the parameters of regulation of private higher education.

The first two major judicial pronouncements in this respect came in the 1992 and 1993 (Mohini Jain vs. State of Karnataka and Others; and J.P. Unnikrishnan and Others vs. the State of Andhra Pradesh). The latter judgment held that the ‘Commercialisation of education was not permissible…’ In the judgment, the court held that capitation fee was illegal and issued detailed guidelines and a scheme regarding admission criteria in professional unaided colleges, ceiling on fees, process of regulation, and suggested a mechanism for regulation. The court also suggested that the UGC and the statutory bodies should come up with appropriate regulations regarding ceiling on fees and admissions.

 

As a consequence, the statutory bodies and the government introduced certain changes. The AICTE introduced regulations and also set up the National Board for Accreditation in 1994 to assess the standards of quality and to make recommendations regarding recognition and de-recognition of institutions from the view point of standards. The central government introduced ‘The Private Universities (Establishment and Regulation) Bill, 1995’, in the Rajya Sabha, (which was withdrawn later in 2007).

The Unnikrishnan judgment which had suggested a detailed regulatory scheme was subsequently questioned in a landmark case (T.M.A. Pai and Others versus State of Karnataka and Others, 2002) in which the 11 judge bench was presided over by the Chief Justice. This judgment accepted the role of private institutions in meeting the demand for higher education and elaborated on the scope of autonomy and regulation of private unaided institutions. Yet while overruling the specific scheme proposed in the Unnikrishnan case (which could have led to detailed micro-management by regulatory bodies), the court upheld the general principles by which the regulatory bodies could lay down criteria for maintaining standards and admitting students.

 

The court again upheld that private educational institutions could not indulge in profiteering and that ‘…the government can provide regulations that will ensure excellence while forbidding the charging of capitation fees and profiteering by the institution… There can, however, be reasonable revenue surplus which may be generated by the educational institution for the purpose of development of education and expansion of the institution.’ Some of the issues dealt by the above judgment have been further clarified by a five judge bench in a subsequent judgment (Islamic Academy of Education and Another vs. State of Karnataka and Others, 2003). These recent judgments are important, because they define the scope of autonomy of private institutions as well as the parameters for their regulation.

Following these judgments, there has been some modicum of orderly regulation of private professional colleges. Several states have set up state level technical and medical universities to which the private colleges are affiliated, and which are responsible for curriculum setting, centralized admission tests, and examinations. The State Councils for Higher Education have also taken up various elements relating to the orderly growth of this sector.

Further, the Government of India passed the UGC Establishment of Standards in Private Universities Regulations, 2003, which laid down separate important parameters, the main ones being that the private universities would be created by separate acts, be unitary universities ordinarily operating within the boundaries of the state and that they would be subject to the regulations of the UGC and the statutory bodies regarding norms and minimum standards. These regulations have subsequently been upheld by the courts, although some provisions need to be brought into conformity with later judgments. It may be noted that many of these regulations were also put into place in response to the Chhattisgarh legislation for private universities, discussed below.

 

The state governments, which have a concurrent responsibility for promoting higher education had, in this period, moved in a big way to recognize private universities. Chhattisgarh was the first to come up with the Chhattisgarh Private Sector University Act in 2002, under which almost at one stroke, the state gave recognition to 102 private universities, many of which could not possibly have fulfilled any minimum eligibility criteria. Several of the recognized private universities used their recognition in Chhattisgarh to start all types of courses and establish off-campus centres all over the country, most of which lacked minimal facilities. This act was challenged in the Supreme Court by Professor Yashpal in a public interest litigation and was struck down by the court in 2005.

But since 2006, apart from an amended act which has now been passed in Chhattisgarh, a number of states – Rajasthan, UP, Uttaranchal, Madhya Pradesh, Andhra Pradesh, among others – have now passed legislation for the establishment and regulation of private universities and a large number of them have subsequently been established. While these acts do not appear to be fully consistent with the UGC regulations (which, for example, require each private university to be created through a separate act), they have professedly taken account of some of the infirmities in the Chhattisgarh law and in particular, recognized the role of the UGC and the statutory bodies in regulating and maintaining standards in the private universities. Nevertheless, the regulation of minimum standards in private self-financed colleges and universities by the UGC has so far proved a chimera, possibly because the body lacks the teeth to enforce regulation on unaided bodies.

 

The view that the higher education system in India is over-regulated is certainly correct in relation to publicly funded institutions, government as well as private-aided. It would, however, be completely erroneous to argue that such is the case as far as the genre of private (unaided) institutions is concerned, or that existing regulations have hampered the growth of this sector. India’s private self-financed sector is currently among the largest in the world and has grown at a phenomenal rate in the last two decades. A large part of this sector is motivated purely by commercial considerations. It is in reality a ‘for profit’ sector, although judicial pronouncements have disallowed the existence of such a sector.

As pointed out earlier, even as the growth of public institutions was increasingly hampered by fiscal constraints, liberalization provided a further rationale for lowering the fiscal priority accorded to higher education while encouraging the growth of the private self-financed commercially oriented private sector. Overall, thus, the supply-demand imbalance, a result of high economic growth, was partly met by the private sector, at least for those students who could afford to pay for private education.

We have shown that the central government and the statutory organizations did not pro-actively promote the orderly growth of the private sector. In the absence of a concerted policy focus, the regulatory structure often colluded with the private providers, compromising quality. Though under societal pressure a few state governments did take some measures, but the main elements of the regulatory framework that have come into place are a result of judicial orders.

 

We have also shown that the UGC and the statutory bodies are, either partly or fully, responsible for four major dimensions of higher education (in their respective spheres): recognition of institutions and courses; maintenance of minimum standards and improvement in quality; developing norms of funding and providing funds; and regulation of other aspects of the higher education institutions such as admission and fees.⁵ They share these responsibilities in different ways with the central and state governments. In general, in most parts of the world as well, the state and statutory organizations have combined to deliver these functions. However, in India there is no doubt that the statutory organizations have done a poor job in almost all these major dimensions. Their writ runs principally over the directly funded institutions and they have hardly any teeth to regulate the proliferating private institutions.

But it needs to be recognized that their effectiveness is also affected by the external policy and fiscal environment, both of which have favoured a liberal and unregulated growth of the private sector in higher education. The government has, in our view, failed to spell out the respective roles of the public and private sector in higher education and lay down the basic regulatory framework in an era of rapid privatization.

Despite these facts, an impression has been created that the growth of the private sector has been seriously constrained by national policy and the regulatory framework. One expected the National Knowledge Commission (NKC) to have examined the emerging contours of higher education in its entirety, and thus to focus on the implications of the rapid privatization of higher education. However, its report focuses only on some aspects of the performance of public sector institutions without looking at issues arising out of unregulated privatization.

 

Without a holistic appraisal of the higher education system, the NKC has mooted a reorganization of the statutory regulatory framework and has recommended the setting up of an Independent Regulatory Authority for Higher Education (IRAHE) which would be at an arms length relationship with stakeholders and by implication help to create a level playing field for the private sector. It proposes that the IRAHE be the sole regulatory body to give permission to new institutions and license accreditation organizations.

This recommendation does not take into account either the external political economy environment which is promoting commercially oriented privatization, or the complexity of creating a proper regulatory environment in a federal set-up where the Centre and the states share powers and exercise them through the various institutions created by them. It might be recalled that the Centre’s attempt to pass legislation on private universities was vigorously opposed by states on the ground that this was a violation of entry 32 of the state list which gives the states the right to legislate on establishment and regulation of private universities. Finally the Centre gave up this attempt in 2007.

 

Undoubtedly, there are major lacunae in the existing framework such that the existing apex institutions, which have the power to set standards and maintain quality, are not able to do so effectively.

As shown earlier, the apex bodies can recognize institutions providing technical and professional education, and the UGC can recommend the creation of ‘deemed’ universities. Reasons ranging from lack of clear criteria to insufficient institutional capacity to malfeasance have led to the creation of sub-standard institutions. Capacity constraints of these bodies are clearly among the important reasons for this. The Hindustan Times (31 May 2008) reports that the AICTE is currently inspecting two to three professional colleges a day, which is likely to lead to giving recognition to sub-standard colleges.

For every institution providing higher education it is necessary to: (a) lay down the minimum standards necessary for it to be recognized as an educational entity; (b) examine at regular periods whether every institution and course adheres to minimum laid down standards; and (c) provide, if possible, a quality based grading of courses/institutions.

The first two functions need to be mandatorily performed by national regulatory authorities whose role has been amply recognized by the courts, whereas the third, we believe, can be undertaken by any set of independent bodies. Given the implementation constraints at the national level, we would argue that the implementation of the two functions should be decentralized/delegated to the state level, with the national level organizations involved only in undertaking these functions for national level institutions, and in evolving general guidelines and coordination functions. At the same time, the regulatory institutions should have the powers to enforce minimum standards in all institutions, public or private, aided or unaided.

To the extent that the national level apex organizations also provide funds and require an assessment of various institutions, departments and courses for taking funding decisions, it may be better to avoid duplication and to rely, to the extent possible, on the various assessment bodies at the national and state levels.

 

Further, there is also an urgent need to coordinate the functioning of the national level apex bodies themselves. This could be done by forming a national higher education council at the national level or by asking the UGC to undertake such a function. Such a council could also address the various policy lacunae and identify gaps in the regulatory framework in order to provide for the orderly growth of higher education, consistent with national goals.

Above all, it needs to be recognized that the regulatory framework failed to evolve and yield satisfactory results, not because of any binding structural constraint but because the government failed to recognize the respective roles of the public and private sector in the evolving context. Although there is now some attempt to clarify the direction of expansion of this sector, sadly it is still mired in substantial confusion.

 

* The views expressed in this paper are the author’s own and not of the institution where he is currently employed.

Footnotes:

1. These and earlier figures have been directly estimated from the National Sample Survey 52nd and 61st Round data.

2. A description of the objectives, framework and emerging issues relating to regulation can be found in: (i) Report of the Seminar on ‘Internationalisation of Higher Education – Issues and Concerns’, on Domestic Regulation, NIEPA 2004; (ii) Background Paper to the Two Day Conference of Ministers of State Governments of Higher and Technical Education, NIEPA, 10-11 January 2005; and (iii) Report of the National Seminar on Privatization and Commercialisation of Higher Education, NIEPA, 2006.

3. The number of private unaided colleges is not known. In January 2007, there were an estimated 18,064 colleges of which 14,400 offered general education and 3,664 offered professional/technical education (whose standards are expected to be monitored by the Councils, irrespective of whether they are public or private). Out of the colleges offering general education, the UGC currently finds that only about 42% out of a total of about 14,000 fulfil minimum criteria under its Section 2(f)/12(B) to be considered eligible for financial assistance. Most of the remaining are presumably private colleges which either do not fulfil these minimum criteria or do not want to come forward for assistance. (Report of the UGC 11th Five Year Plan, 2007-2012, UGC, Delhi).

4. M. Anandakrishnan, ‘Privatisation of Higher Education – Opportunities and Anomalies’. Paper presented at a seminar on ‘Privatisation and Commercialisation of Higher Education’, organised by the National Institute of Educational Planning and Administration, May 2006.

5. As stated earlier, among these, the UGC has the main coordinating role and is principally responsible for recognition of courses and institutions in the university system, which alone can provide degrees.