Gujarat National Law University
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Director(Vice-Chancellor) Speeches & Important Messages

"Director Patel emphasises the role of foreign and private universities in increasing the high standards of education and research at the Udaipur Meet of the West Zone Vice-Chancellors", "Non-State Challenges to Higher Education: Foreign and Private Universities,West-Zone Vice-Chancellors’ Conference, Udaipur, Rajasthan", Friday, 29 July 2011.

1.0. Introduction:
In India, the right to education at elementary level is a fundamental right. After Mohini Jain v. State of Karnataka, all level of education were declared as fundamental right of Indian citizen which was later on altered by the judgement of Unnikrishnan v. State of Andhra Pradesh, and it was declared that up to 14 years of age every individual in India will get free and compulsory education.
Article 21 was amended accordingly after introducing Article 21(A) in it. For higher education, the court said it is not possible financially on the part of the Govt. to bear the entire burden of higher education of the community.
In two judgements of the Supreme Court, apparently conflicting, the issue of ‘Capitation Fee Colleges’ was also sorted out. In 1992, the Supreme Court practically banned high fees charging private colleges stating that capitation fee is ‘‘potentially unreasonably unfair and unjust’’. But in 1993, it reversed its judgement under the name of self-financing colleges. Thereafter, elaborate mechanisms were developed by the Government that helped in proliferation of self-financing capitation fee colleges in the country.
Two important judgements which enhanced the scope of liberty of Private Unaided Educational Institute are given bellow. The Ratio of T. M. A. Pai Foundation v. State of Karnataka, deciding by an 11-judge bench of the Supreme Court in 2002:[1]
The scope of governmental regulation in unaided educational institutions was curtailed. The court held that the state cannot interfere if the admission was on merit and a reasonable fee was being charged. However, minority educational institutions receiving aid from the state would have to admit a reasonable number of students from non-minority groups.
The case has changed the legal landscape for higher education. Unaided Professional Educational institutions became more autonomous. Educational institutions started their own entrance examinations. Based on this, the Supreme Court in the Inamdar case held that reservation is private institutions is unconstitutional. Parliament passed a Constitutional amendment to overcome this. The validity of this amendment is yet to be decided upon.
The Ratio of P. A. Inamdar & others v. State of Maharashtra has further curtailed the govt. control over the private educational institution.
The Supreme Court's judgment of the seven-member Bench comprising Chief Justice R.C. Lahoti and Justices Y.K. Sabharwal, D.M. Dharmadhikari, Arun Kumar, G.P. Mathur, Tarun Chatterjee and P.K. Balasubramanian, in P.A. Inamdar and Others v. State of Maharashtra and Others on August 12,2005, held unanimously that private unaided educational institutes are allowed to charge a particular sum which is reviewable by a committee appointed by govt., as these institutions are exercising their fundamental right of freedom of trade and occupation. The Court held that enforcing the reservation policy of the State on seats in unaided professional institutions constitutes a serious encroachment on the right and autonomy of these institutions. The Bench held that merely because the State's resources in providing professional education are limited, it cannot force private educational institutions, which intend to provide better professional education, to make admissions on the basis of its reservation policy to less meritorious candidates. In order to maintain the standard of education the govt are asked to set again a committee supervise the process of admission. Thus the govt. control is there up to the extent of establishment of a committee in this regard[2].
2.0. How Privatization has impacted the Higher Education in India?
The 1990s saw major developments and turn of events in higher education in India. In 1997, the Government of India in its proposals for subsidies accorded higher education the status of a ‘non-merit good’ for the first time while elementary education remained ‘merit-good’. The Ministry of Finance reclassified higher education into ‘‘merit 2 good’’, which need not be subsidized by the State at the same level as merit good[3].
Thereafter, elaborate mechanisms were developed by the Government that helped in proliferation of self-financing capitation fee colleges in the country. A Private University Bill was introduced in the Rajya Sabha (Upper House) of the Parliament in August 1995 with a view to providing for the establishment of self-financing universities. The bill has not been passed so far. The bill provides for a private university permanent endowment of Rs.30 crores and full scholarship to 30 per cent of the students. This was kept because in earlier cases many private colleges had to be bailed out by the Government. The Prime Minister’s Council on Trade & Industry also constituted a Two Member Committee on Higher Education, of two leading industrialists of India – Mr. Kumarmangalam Birla and Mr. Mukesh Ambani. This Committee in its report strongly suggested that the Government should leave higher education to the private sector largely and confine itself to elementary and secondary education. Further, it wanted the principle of ‘user-pays’ and loans and grants to be provided to the economically backward. It projected that by 2015 we will need to double the number of colleges in India, which will require an investment of Rs. 11,000 crores.
The trend in India is clear. We need to improve our Tertiary Education System but public funds are in short supply. Under the Millennium Development Goals India is committed to providing universal primary education. This is a gigantic task which requires huge resources. It would, therefore, not be possible for government to go for a substantial increase in budgetary funds for higher education. Private Sector funding is available and FDI in education is also possible. We need to consider these options very seriously and study international experiences and models to draw learning for the Indian case. In addition we need to develop a system of student loan financing as well as fiscal tax exemption/credits in case of loans. In Singapore, China and the Gulf where private institution have been allowed, the higher education sector is flourishing.
While the Private Universities Bill has not been passed, a few private institutions of higher education have been given virtual university status by being recognised as ‘Deemed Universities’. A few universities like Guru Gobind Singh Indraprastha University in Delhi have been created consisting of only affiliated private self financing colleges. A few private institutions like International Business Schools and Indian Institute of Information Technology are allowed to operate virtually as Universities.
All stakeholders in the institutions of higher education have since long been demanding that a comprehensive enabling legislation should be enacted by the central government in order to bring private general and professional higher educational institutions under social control. This should include regulation of fees and charges levied from students, admissions of students, reservations, course contents, examination, service conditions of the teaching and other employees, and infrastructural facilities.
It is to be noted that the draft of the Private Professional Educational Institutions (Regulation of Admission and Fixation of Fee) Bill 2005, which was put on the website by the Ministry of Human Resource Development (MHRD), was very weak and did not promise to fulfil the objective of social control. The University Grants Commission (UGC) too had come out with a draft regulation in 2007 regarding the “Admission and Fee Structure in Private Aided and Unaided Professional Educational Institutions.” Both these documents were allowed to lapse. The All India Council of Technical Education (AICTE) also notified several regulations about technical institutions, including the one in February 2010. The issue of social control still remained.
3.0. The Private Professional Education Institution (Regulation of Admission & Fixation of Fee) Bill 2005.
The Bill applies to deemed universities and private aided or unaided professional educational institutions affiliated to a university. Further, it defines a ‘Foreign Education Provider’ as a university or an Institution duly accredited and established under a foreign law and notified as an institution deemed to be a university by Central Government. No foreign institution, which is not a Foreign Education provider can admit or charge fee for a professional course.
The Bill controls the Admission structure of both aided and unaided professional educational institutions dividing the total enrolment into the Management Category & General Category. Out of the total enrolment, it fixes percentage quota in each case for aided and unaided institutions. For Deemed Universities it prescribes a Common Entrance Test on an All India basis for a fair and transparent selection process. Foreign Education Providers will need to seek a status of a Deemed University before they can start operating in India and no foreign institution which is not categorized as a Foreign Education Provider can operate in India.
A new step has been taken by introducing the “Prohibition of Unfair Practices in Technical Educational Institutions, Medical Educational Institutions and Universities Bill 2010,” to stop the unfair trade practice in the field of technical higher education.
Thus, it is clear from the above discussion that long back by the prudent judiciary of India the Higher education has been made a commodity which policy was later on adopted by the legislators. India is slowly shifting from a thoroughly welfare economy to a purely liberalised economy and education is also not untouched by all-pervasive impact of globalisation and this is why the judiciary as well as policy makers are giving their stamp on it. To conclude in the words of Justice R.C Lahoti in P.A Inamdar Case…” Education used to be charity or philanthropy in good old times. Gradually it became an 'occupation'. Some of the judicial dicta go on to hold it as an 'industry'. Whether, 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) .....” [4]
4.0. Foreign Educational Institute in Indian Higher Educational Arena:
Over the last decade, Indian higher education has witnessed three primary trends—growth of private institutions, increasing demand for professional education and widening regional disparity. These three trends will become stronger with the introduction of the Bill and more foreign universities with profit/revenue motives are expected to establish campuses in India.
5.0. Motives of foreign universities:
Building universities of excellence is a time-taking and incremental process. Once an institution has achieved a certain level of reputation, maintaining it at that level is quite a challenge. Thus, even the best universities are in constant quest to access indicators of prestige like knowledge, research and talent. This access directly translates into competitiveness for rankings, which strongly emphasise on internationalisation and research output. For example, Harvard and Yale are in the prestige-enhancing group and have categorically said that they will not offer degree programmes in India and hence their approach is to engage with knowledge creation and dissemination through non-degree partnerships and programmes.
At the other extreme, there are universities that seek profit/revenue and see India as a market with huge growth potential. Especially for public universities, this opportunity comes at a time when they are facing severe budget cuts from government and are hard-pressed to seek additional sources of revenue. Technically, not-for-profit public universities are not seeking profit; instead they are becoming “self-sufficient” by adding new sources of revenue. Likewise, many for-profit institutions, especially from the US, are keen to enter India; however, Indian regulatory requirements prohibit them to profit from education and hence they have to work-around the requirements. For example, Singapore’s Raffles Education Corporation partnered with Educomp to establish a for-profit entity and offer education programmes for the masses, which are not recognised by local authorities.
The primary purpose of the Bill is “to regulate entry and operation of foreign educational institutions imparting or intending to impart higher education” leading to award of educational qualifications. Given the context and motives of foreign universities, more degree-offering programmes are expected to come from institutions seeking to enter India with the motive of profit/revenue as compared to prestige. The prestige-seeking universities will limit themselves to non-degree relationships and offerings only. The Bill will also add to the growth of private institutions, professional education and widening regional disparity.
>6.0. Growth of private institutions:
Public university system in many countries, including the US, is in crisis and faces serious budget cuts. Hence, they are not ready to invest money in partnerships. Indian public universities also lack resources and entrepreneurial zeal, and are stymied by bureaucracy to engage with foreign partners. Thus, private institutions in India or corporate partners are more likely to engage in partnerships with the foreign public universities. For example, Indiana University and Georgia State University are US public universities that have partnered with private Indian institutions, OP Jindal University and National Management School, Chennai, respectively.
7.0. Rise in professional education:
Indian engineering and management institutions have doubled to about 2,000 and 3,000 institutions from 2005-06 to 2009-10. This rapid growth represents the demand for professional, job-oriented degrees. As these programmes have a relatively higher employability, institutions also have a better pricing power in this segment as compared to arts, science and commerce courses. This means that foreign institutions are likely to offer more programmes in engineering and management as compared to liberal arts and sciences. For example, recent partnership between Strathclyde University and SKIL Education, Carnegie Mellon University and Shiv Nadar Foundation, and Virginia Tech and MARG are all for professional programmes in engineering or management.
8.0. Widening regional disparity:
Foreign universities would concentrate on metro cities and states that have high demand, pricing power, accessibility and employment opportunities for students. This means that they are not going to start campus in regions that actually require quality institutions. However, foreign universities will be most appealing to students from tier-2 cities like Nagpur or Indore where students, especially females, aspire to go abroad but may not match up to the financial, social or academic requirements. However, foreign universities in India would not attract academically brilliant or financially well-off who would continue to go abroad in search of best international education, experience and exposure.
Foreign universities are eager to engage with Indian higher education despite the challenges. In the immediate term, foreign universities will be cautious and partner with private institutions, offer popular professional programmes and situate themselves in major cities. This means that it will take a long time before its impact is felt by the masses and the larger landscape of Indian higher education. However, foreign universities will certainly create new expectations of quality and professionalism, which will bode well for the sector and students.
9.0. Concluding remarks:
9.1. There is a need for introspection whether our university system is so bad that it cannot cater to the needs, interests and concerns of modern India.
9.2. Private educational institutions shall be promoted with a strict monitoring and regulatory system. As foreign universities are yet to turn in big way in India, and the systematic surveys are yet to be carried out by the MHRD and the UGC, the widely held perception that the foreign institutions will fail in alleviating or preventing the fundamental problems of equity and access deserves cautious credit.
9.3. The concept of corporate social responsibility, which exists for corporate sectors, must be made compulsory for the foreign institutions to ensure their responsibility towards wider masses, especially those who are having inability to access the system.
9.4. Foreign institutions shall be allowed on a gradual and incremental basis and the licences/permission for them shall be restricted for limited tenure only to see the impact on the education system.
9.5. All care must be taken by the legislature and executive, in drafting the laws, to ensure that the Indian institutions do not become satellite zones for the foreign institutions and there must be level playing field for Indian institutions to operate in the foreign jurisdictions from which these institutions are emanating.
Bimal N. Patel,
[1] Opening up higher education – T.M.A. Pai Foundation case 2002,
[2] V. Venkatesan, “Turning the clock back”, 22 Frontline 18, 27 August -09 September 2005.
[3] Sanat Kaul, Higher Education in India: Seizing the Opportunity , Indian Council for Research on International Economic Relations, Paper No. 179, May 2006.
[4] P.A. Inamdar & Ors v. State of Maharashtra & Ors.