Foreign direct investment in education? Don’t do it

India's Commerce Minister Kamal Nath has real gumption. After having very nearly struck a remarkably bad bargain for the developing countries at the World Trade Organisation — which collapsed because of the rich countries’ greed — he has emerged as the foremost official champion of neoliberal globalisation, with the exception of Montek Singh Ahluwalia. He’s being considered for appointment as Foreign Minister, no less.

Nath has run a successful crusade for special economic zones, discussed in this column two weeks ago. These will result in a massive land grab and huge losses for the exchequer. He now demands that India’s higher education be thrown open to foreign direct investment. His Ministry has urged this in a "consultation paper".

Strangely, the plea for effecting such a major change in the prime source of India’s most skilled and intellectual power is exogenous, or driven by external circumstances, rather than a consideration of how the country should improve its universities, develop human resources, and emerge as a global leader in the world of ideas. The argument is inspired by a narrow view of India’s participation in WTO talks on Agreement on Trade in Services. India should never have agreed to negotiate GATS and accept a re-definition of drinking water and knowledge as mere "services".

The commerce ministry’s argument consists of four propositions, two of them unexceptionable and two obnoxious. The paper concedes that education is a public good crucial to human capital creation, itself a key to progress.

The second proposition is that India has not invested adequately in higher education. Only 11 per cent of those in the relevant age group (17 to 23) are enrolled in universities —a proportion that’s low, not just in relation to the developed countries (50 to 80 per cent), but even the Philippines (31 per cent) or Malaysia (29).

Now come the two bad propositions. The paper holds that higher education in India largely benefits the elite and hence is a private good. Indeed, "private funding... is not only more efficient, but also more equitable."

Very few in India’s unequal and hierarchical society have the luxury of going into tertiary education. Indeed, only one-third of those who enter school complete secondary education.

But this mandates improving access through more subsidies, scholarships, and courses that combine learning and earning, etc. India needs greater public funding of higher education.

The second argument is worse: FDI is all that’s needed to improve matters. Hence India should follow the Dominican Republic, Brazil and Singapore. This ignores the content of education. Higher education is about generating knowledge, encouraging critical thinking and imparting skills relevant to social needs.

Education is a highly nation-specific activity, determined by national cultures and priorities. The Euro has economically integrated 16 countries, including Germany, France and Italy. But their education systems are as varied as their languages.

India has a poorly managed higher education system, with 348 universities, 17,625 colleges and 10.5 million students. There’s very little quality control, especially over the 63 unaided universities, 7,650 private colleges and 150 foreign education institutions (FEIs). India’s universities have doubled in number since 1990-91, and enrolment has more than doubled — at the expense of quality, increased rigidity in course design, poor absorption of knowledge, and lack of access to laboratory facilities and journals. Indian universities are in a mess. Their average graduate compares poorly with her/his counterpart in most countries, including many developing ones. This calls for reform, administrative changes, more funding, quality improvement, etc.

A study of 131 FEIs says the only two of them run full-time courses in India; the rest offer twinning programmes to attract students to the host country. "Twinning" is a cheap option. A part of the programme is undertaken in the host country and the rest at the foreign destination. This is an open invitation to fly-by-night operators.

The Ministry of Human Resource Development appointed a committee under eminent scientist CNR Rao to go into the issue. It wisely suggested that FEIs should only be allowed under regulation, for a limited period, on payment of a substantial security deposit, etc. Nath and Ahluwalia want to drop all these cautionary principles. Their plea would violate the spirit of all the consultations held since January 2005 with the states. It also goes against the principle of non-discriminatory treatment. It’ll encourage profiteering in education. The Commerce Ministry’s proposal will turn India into a passive recipient of services.

No university of excellence like Harvard, Cambridge or Oxford or Princeton is likely to set up shop in India. The entry of ‘B’ and ‘C’-grade universities will increase the existing resource drain caused by the 140,000 Indians who annually go abroad to study. The drain is the equivalent of what it would take to set up, say, 10 JNUs or 15 to 20 IITs.

If India is ever to emerge as a knowledge superpower, it cannot dispense with self-reliance in higher education. Self-reliance doesn’t mean autarky: India must encourage interaction and collaboration with good foreign universities. But that has nothing to do with hawking its students as grist to the FEIs’ degree mills.

Copyright 2006 Khaleej Times