PRAGOTI

 The Foreign Educational Institutions (Regulation of Entry and Operations) Bill has been tabled in the Parliament. The new bill allows for setting up of off-shore campuses for educational institutions, which would be given complete freedom to determine fee structure and admission criteria. The Bill draws from policy prescriptions that were enunciated in a Commerce Ministry consultation note in the first UPA government in 2005, and the rationale underlying the bill reflects the government’s continued subscription to the neoliberal ideology. The emphasis in the Bill pertains toward rampant commercialization of the higher education sector, a process which could have far reaching and unhealthy consequences for the sector. This note highlights the problems with the Bill and why it is needed to oppose its introduction in Parliament. 

Stated Objective:

The Government and the supporters of this bill have been arguing for this legislation on the following grounds:

1. There exists a large demand for higher educational institutions in the country and the Government does not have adequate resources to meet this growing demand. Allowing foreign education providers to come and operate in the country will expand the higher education sector and help increase access.
2. Allowing reputed and quality foreign universities and educational institutions will improve the overall quality of higher education in the country through increased competition.
3. Foreign educational providers have already started operating in the country through the foreign direct investment (100%) route since 2000. Bringing a legislation will help regulate their operations and also set minimum quality standards so that substandard educational providers do not come to India.
4. There are a large number of students who are going to foreign countries for higher education. Allowing the foreign educational institutions to come and operate here would help these students get the same education and degrees at home at a lower cost and also save valuable foreign exchange for the country. 

Salient Features:

1. This Bill requires all Foreign Education Institutions to seek permission from the government for offering educational services and awarding degrees/diplomas in India.
2. Unless the government notifies a Foreign Educational Institution (after it has ascertained that it fulfills all the necessary requirements) as a Foreign Education Provider (FEP) no such institution “shall admit students, levy or collect any fee from a student in the territory of India for any course of study leading to award of degree or diploma, by whatever name called”.
3. After an institution has been notified as a FEP the provisions of UGC Act, 1956 will apply to that institution as they apply to any other university in India.
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5. The initial corpus fund has been fixed at Rs Ten Crores in the draft bill.  A maximum seventy five percent of the income from the corpus fund can be used to development of its institution in India and the remaining twenty five percent shall be deposited in the corpus fund.
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7. No part of the surplus in revenue generated in India by such FEP, after meeting all expenditure in regard to is operations in India, shall be invested for any purpose other than for the growth and development of the educational institutions established by it in India. This effectively means that no repatriation of profits is allowed for the FEPs who would come to India.
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Objections to the Bill:

There are many reasons why this bill will not meet its stated goals. Rather opening up of higher education to FDI will damage the existing education system in the country by encouraging further commercialization.

Access:

The gross enrolment ratio in tertiary education continues to be very low in India. According to the Global Education Digest 2009 published by the UNESCO the Gross Enrolment Ratio in India was 12, half of the world average which is around 23 percent of the relevant age cohort. This is significantly low compared to developed countries like USA (82) and countries like Iran (31), Cuba (109) and China (23). The main reason for this low enrolment ratio in India is a lack of adequate number of higher educational institutions. Such a big gap can only be addressed by increasing government spending in this sector.

The majority of the population in our country is so poor that it can not afford to pay high amounts of fees for getting education. In India the capitation fees for engineering courses vary from Rs 1 lakh to 10 lakh, for MBBS from 20 lakhs to 40 lakhs, for dental courses Rs 5 to 12 lakhs and courses in arts and science from Rs 30000 to 50000. In fact, cost of education has kept out a large part of our population from the ambit of higher education. There have been demands to bring legislation for social control on private institutions. But the UPA Government has done nothing in this regard. The draft UGC (Admission and Fee Structure in Private Aided and Unaided Professional Educational Institutions) Regulations, 2007 was allowed to lapse by the Government. In states like Kerala where the state government brought legislations to bring such institutions under control the judiciary scrapped the legislation.

This bill does not provide for any regulation of fees to be charged by the FEPs. The FEPs will have complete freedom in determining the fee structure for courses offered in their offshore campuses. Inevitably high fee structures set by these FEIs would deter poorer sections of the Indian society from availing such education.

The question of social justice in education is extremely important in our country. Even after announcement of reservations for SC/ST and OBCs their implementation has been far from satisfactory in government institutions. A large number of students study in private professional institutions today. To take an example, according to the annual report of MHRD in 2008-09 there were 133 private and 138 government medical colleges in the country. To ensure equal opportunity for socially deprived sections in the field of education it is necessary that the ambit of reservations is extended outside government institutions as well. The UPA Government has shown a non-committal approach on this issue. The new HRD Minister has said that he plans to extend the time limit for implementing 27% OBC Reservations from 3 years to 6 years now. This will further legitimize the delay in implementation of reservations. Also there have been no steps by the Government to bring private institutions under the ambit of reservations.    The Draft bill allows the FEPs to avoid implementing the constitutionally mandated reservations for SC/ST and OBC students like the unaided private institutions. The proliferation of such institutions which do not have to implement reservations for the deprived sections of our society is going to create further inequity as far as education is concerned. Also if the FEPs are allowed exemption from implementing reservations it will be very difficult to force the domestic private providers to provide reservations in the future.

Quality and regulation of Foreign Educational Institutions

Foreign Educational Institutions have been operating in India since 2000 via the 100% FDI route. No such institution could offer degrees on its own. At present as per the UGC Act, the degree granting authority rests with the universities established under central and the state Acts. In a study carried out by Bhushan in 2004-05 (Bhushan, 2009), out of 131 institutions where the FEPs were involved, 107 were engaged in vocational courses, 19 technical courses and only five in general courses and they were located in the high income states. Almost all the FEPs entered into some form of partnership with the domestic education providers.

Also the foreign educational institutions operating in India have been involved in various fraudulent activities. According to one study conducted in 2008 of the 144 foreign educational providers advertising in newspapers, 44 were neither recognized nor accredited in their countries of origin. 110 foreign education providers are already operating in this country without government permission, violating all guidelines. The list of such institutions offering MBA Programmes can be formed here while the list of all such technical institutions can be found here. The All India Council for Technical Education (AICTE) is entitled to take/initiate action against all such institutions. However neither the AICTE nor the government has taken any such step till now. Many of these institutions continue to publish advertisements in prominent newspapers. This is because of the widespread corruption and placating of vested interests rather than absence or dearth of required laws to crack down against such elements.

Another argument which is being forwarded in defense of the bill is that it will help the government prevent substandard education providers from coming and setting up shop in the country. The reality is there are provisions in this bill which leave loopholes in the regulatory net.

Section 13 of the draft bill allows a foreign education institution, not being a FEP notified by the government under Section 4 to conduct certificate courses provided it furnishes information to the government about its activities. This in effect means that any foreign education provider can come and set up shop here without having to follow any of the regulations in the bill. Since most of the foreign educational institutions are likely to come in the professional education sector (Hospitality, Tourism Management, Hotel Management, Fire and Safety, Lift Technology etc. being some examples) it is likely that students will flock towards them even if they can not award degrees/diplomas.

The Draft Bill also allows the government to exempt the FEPs from all the regulations except one on repatriation of profits. Section 9 of the draft bill allows for this provision. The criterion which have been given for the government to give such exemptions are vaguely defined and depend on subjective factors like “reputation” and “international standing” of the institution. This is bound to be misused and will result in each FEP bargaining hard with the government to get more and more exemptions and also encourage malpractices.

On Saving Foreign Exchange

Another defense of the bill has come on the issue of saving foreign exchange for the country. Since the number of students going for higher studies outside India is the second highest in the world (153300) in 2007. Estimates have been made that allowing foreign educational institutions to come and operate in India will provide high quality education in the country itself at prices which would be much lower than what our students end up paying abroad. ASSOCHAM has made estimates that this has a potential of saving foreign exchange to the tune of $ 7.5 billion.

However any argument which argues that allowing foreign educational institutions will prevent Indian students from going aboard for higher studies has to be examined carefully.

One, even allowing foreign educational institutions is not going to lead to the best of the universities coming to set up campuses in India. Even if these institutions come in, the quality between the home campus and off shore campuses is rarely the same. This is a fact which can be verified through the experience of other countries that have opened up their higher education sector. One higher education expert (Philip Altbach) argues that branch campuses set up in offshore locations invariably lack in quality as compared to the original campuses of foreign education provider. Various noted academicians have also endorsed this view. Venkatraman Ramakrishnan, the winner of Nobel Prize in Chemistry last year has also supported this view when he said, “Whenever these outstation universities set up campuses, be it in Singapore or other places, they have not been able to reproduce the culture of the original place” (See The Hindu, March 30, 2010). He goes on to say that there are problems associated with maintaining similar quality standards in setting up off shore or branch campuses and that is why major universities like Cambridge had decided “not to go'' and the trend was confined to “less tier'' institutions. So it seems unlikely that best of the students would find any motivation to study in the second grade foreign educational institutions which come to India and not go abroad.

Secondly, even those students who go for professional courses to foreign countries do so for being able to get employment in those countries rather than just get quality education and come back.  According to studies published by the National Science Foundation, Science and engineering indicators 2008 in the US, 88% of Indian doctorate degree recipients (degrees awarded between 2002-2005) in the USA in Science and Engineering courses have been staying there for more than 5 years and planned to stay there only. Most of them were also likely to accept employment offers there. So three issues emerge in this regard:

1. Since it is unlikely that best of the foreign educational institutions/universities will come to India, best of the students would continue to go to the acclaimed foreign institutions.
2. In many cases going abroad to study is linked to the aspirations of getting employment and prospects of settling there. In that case taking education in foreign educational provider operating in India will not be a substitute for going abroad, since the latter will not offer employment prospects in foreign countries.
3. For many students from well-to-do backgrounds, going aboard to study is also a part of getting exposure and experience and has got other considerations apart from just a foreign degree. 

Taken together it seems unlikely that allowing foreign educational institutions will lead to a substantial decrease in the number of students going abroad for higher studies and a substantial majority of those who are already abroad might continue to opt for that route.

Flawed Rationale

Higher Education expert Saumen Chattopadhyay, in an article in the EPW contends that the underlying rationale for the bill draws from the “neoliberal ideology which seeks to consider higher education just like any other tradable “private good” which could be subject to the market forces albeit with regulation from a distance”. He says that the policy measures therefore envisage a “market like situation, a quasi-market, by giving sovereignty to the consumers, i.e., the students and the producers like the private providers, domestic and the foreign. It is believed that choice to the consumers would foster competition and therefore improve quality”. That this belief is flawed is evident in the fact that there can be no perfect competition in the education sector, thereby skewing access to higher education, especially considering no regulation on the fee structure. Invariably, the incentive for students from poorer sections to study in high fee institutions would be lacking. Also expecting commercialization to generate better quality is unwarranted, as considerations of “cost-cutting” by private institutions invariably result in low quality education – explaining the proliferation of certificate courses in this sector.

It is necessary that higher education should be treated more like a public good. Higher education, linked to the organic requirements of society, fosters social mobility and contributes toward social cohesion.

There remains no other go but for the Indian government to continue to increase public investment in higher education, whose share in overall Gross Domestic Product continues to remain very low (0.37% in 2009). Both in terms of publicly funded higher education being situated in "organic linkages" with the socio-economic needs of the country and a greater possibility of increase in quality of provision and access, such a move is far better situated and reasonable than what the Bill sets out to do. The lack of technical and knowledge expertise in the country can be made up through exchange programmes, bilateral knowledge sharing agreements etc. Relying upon a weak regulatory foreign educational institutions bill that would only encourage more "fly by night" operators is not the way out to address concerns in the higher education sector in the country. 

Conclusions

Overall, the Foreign Educational Institutions Bill is a flawed legislation which will have far reaching implications on the provision of education in our country. It will add to the increasing inequity - both social and economic in our higher education sector. Also this bill has nothing in it which will dissuade substandard foreign educational providers from operating in the country. Whatever benefits are being cited by the supporters of this bill are extremely unlikely, given the international experience with opening up higher education and restriction on repatriation of profits (which will discourage most of the players) by the FEPs. And even if they materialize they would only benefit a thin minority of our population.

Knowledge can only expand if it is free from all frontiers and geographical boundaries. It is important that our universities interact with the best of the universities in the world and exchange knowledge and ideas. But allowing foreign educational providers to come and set up shop in India is not a substitute for that mutual process. The solution to India’s problems in higher education does not lie in calling for FDI, but for the central government to substantively increase spending and try and rejuvenate our higher education system.

 Roshan Kishore is President, SFI, Delhi State Committee

 Srinivasan Ramani is part of the Pragoti Editorial Team