June 24, 2018

This is an archived blog post from The Acorn on Medium.

Dilip Thakore has asked me to respond to the question Are low tuition fees destroying Indian public higher education.”

Let’s take a step back.

1. Why should the government fund higher education? The general answer to this that there are positive externalities to higher education, and that the optimum level of higher education in society is higher than what the market can provide on the basis of private incentives. In India, there is also the issue of the constitutional mandate for social revolution. Government intervention in higher education is seen as one important way to achieve an equitable and egalitarian society.

2. However, this presumes that:
Firstly, the market for higher education is free, 
Secondly, the public funding of higher education is connected to the level of positive externalities from that education. Different types of higher education have different levels of positive externalities — medical colleges vs IIT vs MBA schools.
Thirdly, public funding does not always mean the government runs universities and colleges itself.

3. In India today, none of the three presumptions are true:
For one, higher education is highly regulated; regulations are rigid, inflexible and ambiguous; it is very hard to enter and exit the market for higher education. Add to it the dogmatic belief that education cannot be run for profit”.
Two, funding is inconsistent with positive externalities — far more is spent on elite institutes than on workhorse institutions. As I have argued elsewhere, there are perhaps more students in Bangalore University than all IITs put together. Yet, the government focuses more on IITs, IIMs and AIIMS than on our universities. And three, Public higher education is hard to distinguish from a government bureaucracy. Not only does government run higher education itself, it also treats institutions as government departments.

4. These are some of the fundamental reasons why our public higher education is in crisis and spiralling downwards. Low tuition fees are merely a manifestation of the underlying model. 
The fundamental problems are:
1. Overregulation of the education market
2. Misdirected public funding
3. Bureaucratisation of the university system

5. Now political economies — vested interests — have emerged to preserve and perpetuate this perverse state of affairs. Everyone whats his or her own fair share, and often more than the fair share, of the spoils of this decaying system. Very few want to reform it.

6. What this means is that there is a flight to private higher education — in India and to foreign countries — by those who can afford it. India loses $10 billion a year to foreign universities; and probably as many as 2.5 million jobs that might have been created here.

7. This is regressive as poorer people get sub-optimal higher education through the public system. The current system is anti-poor.

8. Any plan to reform public higher education must have three elements:
1. Liberalise higher education; from seat caps to other restrictions. Instead of accredited vs not-accredited” create three or four tiers of standards (e.g. C, B, A and Premier) that institutions can comply.
2. Focus the funding on non-elite public universities
3. Make public universities independent — the vice-chancellor must be as independent of the government of the day as is a high court judge.

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