NN37, May 2006
Special Theme on Education and Training out of Poverty? A Status Report
ECONOMIC REFORMS AND FINANCING HIGHER EDUCATION IN INDIA: THE QUESTION OF ACCESS AND EQUITY
By P. Geetha Rani, V.B.Annigeri, NIEPA, New Delhi
?Higher education shall be equally accessible to all on the basis of merit?Article 26.1, Universal Declaration of Human Rights
As part of globalisation, the economic reform packages were introduced in India in the beginning of 1991, which comprised of stabilization and structural adjustment policies. With the structural adjustment policies, a fiscal squeeze is experienced in all social sector investments in India. This has trickled down to public expenditure on education in general, and higher education in particular. This, in turn, has resulted in the need for experimentation with several alternatives such as a hike in student fees, introduction of student loans operated by commercial banks and privatization in higher education. In this context, the present summary attempts to examine economic reforms and financing higher education with the focus on access and equity. Equity comprises of two elements i.e. access and financial support to a number of disadvantaged groups. With this perspective, public resources for higher education from the point of view of equal access is attempted in the present piece by examining the pattern of (i) student fees, (ii) student support system, and (iii) student loan programmes.
The argument clearly brings out that Government of India encourages augmentation of resources by higher education institutions covering a larger portion of cost of higher education. Few financial innovations such as full cost recovery/?user pays? principle even in public higher education institutions through self-financing courses and seats in tune with liberalisation policies were introduced. With economic reforms and other pressures of the government, higher education has been listed as non-merit good. But, private investment alone in higher education would be socially sub-optimal, because the private individuals and households do not come forth to invest in non-market oriented courses in higher education and on research and development. Expenditure on education as a social investment and the complementary nature of public and household expenditure on education has been ignored. Increased role of the market jeopardises the participation of meritorious students from economically disadvantageous groups, women and minorities. Steep increase in fees might compel some rich students to opt for studies in abroad. Further, it is important to notice that self-financing courses are short term in nature and heavy reliance on them will have repercussions on the equity, balance and quality of the higher education system in the long run. This will also lead to lack of teachers and researchers in pure and basic disciplines in the near future as is being experienced in United Kingdom. The role of the state and public support to higher education and research remains essential for the enormous externalities associated with these investments and to ensure its educational, social and institutional missions.
A comprehensive student support system must be in place when fees are raised. Indeed, students are hard pressed from both the supply as well as demand sides. On the supply side, there are severe pressures for hike in fees in higher education. On the demand side, student welfare activities in terms of number of scholarships have declined drastically. Further, the resources allocated to scholarships at the macro level and individually to the few existing schemes have also declined. Further, the new student loan programme introduced in 2001, is administered by the commercial banks instead of the earlier education loan scholarship programme administered by the Government of India. The new bank operated student loan programme is insensitive to the needs of the weaker sections. Hence, an alternative loan programme must be evolved and flexible enough to suit their requirements. Considering the high cost of administration of such a loan programme than actual recovery of loans from poor students, it is argued that instead of providing student loans to poor students, it could as well be freeships/scholarships to the means-tested poor students. It is to be noted that the existing few scholarship schemes should continue, with the enhanced resource allocation. Indeed, in the analysis, it can be found that fees have been raised substantially and a student loan scheme is in place, which is insensitive to the needs of weaker sections. The changing financing strategy under economic reforms ignores to strengthen the student support system for weaker sections.