An exit policy for Higher Education Institutions
On November 12, 2021, the Government of Andhra Pradesh developed a remarkable policy. It deserves a longish quote. “The Government issued a policy for facilitating the surrender of willing private aided educational institutions in the category of Degree Colleges, Schools, Junior Colleges and Polytechnics respectively. As per the policy, the willing Private Aided Educational Institutions can surrender the entire institution along with the assets and the existing staff voluntarily, which will make the institutions as Government Educational Institutions without any liabilities and financial burden on the exchequer OR surrender the aid voluntarily in the form of surrendering all the duly sanctioned aided posts along with the aided staff, but not the assets, which will make the institutions as Private Unaided Educational Institutions.” I will skip the various options since that’s not what I wish to flag. What’s the background? It is the following.
“In these changed circumstances, the Private Aided Educational Institutions in the State seem to have lost their relevance and vitality as most of them are lagging behind the Government and Private Unaided Educational Institutions in terms of performance and quality resources. Thus, the Government felt that the present policy of extending grant-in-aid to Private Educational Institutions needs a detailed review and course corrections.”
I find this policy remarkable not because of what it does but because of an extrapolation of the argument. This business of aided versus unaided is, of course, a needless and dysfunctional silo. Aided colleges receive grants from the government. This means salaries of teachers and principals are paid by the government, and the government has a role in running these colleges. As a corollary, courses are subsidised, and salaries government-determined. Private unaided colleges have no such restrictions. They have much greater autonomy in deciding fees and salaries. To complicate matters, the same college may have aided and self-financed courses, with autonomy greater for the latter and restricted for the former. Let’s extend the argument to universities.
Those who run public universities invariably complain that, with the advent of private universities, it is impossible to attract faculty since they are weaned off by private universities which offer higher salaries. (Public research institutions also voice similar complaints.) As a basic principle of economics, salaries must be linked to productivity, however measured. In many spheres, and certainly in teaching, productivity is individual-specific. There should be no notion of average productivity for a group. In an ideal situation, every teacher’s salary ought to be different. That extreme is often impossible to implement. Hence, there is some notion of scales. However, within that range, there must be sufficient differentiation. Otherwise, there will be no distinction between chaff and grain, irrespective of productivity. We have this problem with all government-determined salaries, not just for teachers in higher education institutions. There will be little variation between teachers other than what is linked to designations. In contrast, variation is much greater in private ones, leading to complaints about the exploitation of entry-level faculty.
Private higher education institutions (HEIs) haven’t always covered themselves with glory. There have been several shady ones, even some that are fake. This is linked to regulation, or its lack, and the form that regulation takes. Accreditation and grading indirectly reflect regulatory requirements, and question marks have been publicly raised about both NBA (National Board of Accreditation) and NAAC (National Assessment and Accreditation Council). These are still in the process of evolution. For instance, as a prospective student/parent, what would I like to know? What are the qualifications of the faculty, their publishing and citation records? What is placement like? What does the HEI earn revenue from, and where does it spend (almost like a company’s balance sheet)? Global rankings of HEIs have better metrics. In many ways, as in other sectors, competition is the best check on quality.
As a result of the National Education Policy (NEP) and competition that occurs because of other policy changes, some HEIs will close down and some teachers will lose their jobs, even without AI (Artificial Intelligence) being brought into it. Note also that despite India becoming the most populous country in the world, the population growth rate is slowing down and the absolute number of young is declining. Because of that reason, too, some HEIs will perforce close down. To handle that competition, we need to allow the management and administration of public HEIs to become more flexible, freeing them from the government’s apron strings. This includes fees and salaries, and the cause of poorer students is best served through targeted individual scholarships, not through low across-the-board fees. But if I ask for government resources, the government has the right to control. Stated differently, sooner rather than later (2030 is not that far away), public HEIs must look for alternative funding sources. As of today, and I am not being deliberately negative, few can do so.
I started this column with the Andhra Pradesh government’s policy on private aided institutions. Stated simply, they have the options of surrendering aid to become unaided, or surrendering the institution (along with assets and staff) to become public (government) institutions. Stripped to its essentials, this is an exit policy for private aided colleges in AP, and perhaps other states will follow suit.
By extrapolating the argument, we need an exit policy for all HEIs, public and private. Some of them are already unviable, and others will become so. When I say all HEIs, I don’t mean private ones alone. Under one of the options, the AP policy effectively nationalises a private aided college. But the point is that public HEIs will also become unviable. If nothing else, they possess valuable real estate, resources locked up and unproductive. Somewhere down the line, voluntary attrition through retirement apart, we need to think of a Voluntary Retirement Scheme (VRS) for faculty in public HEIs. This isn’t in the public discourse yet—perish the thought.
Higher education and education are perceived to be special. Thus, we will not talk about the exit for HEIs and schools. But the problem won’t go away. We probably have around 10 million school teachers and almost 2 million in all HEIs. Given India’s population size, 12 million is not a large number. However, this is a vocal and typically urban segment. There will be uproar if we mention exit for educational institutions or teachers. Brush it under the carpet.
Bibek Debroy
Chairman, Economic Advisory Council to the PM