Name: kimudu kurma Chandra Roll no: Na10b059

Higher Education system in India Topic: Financing & Infrastructure in Higher Education Financing Higher Education:
The bulk of public expenditure on higher education (in some instances 95 %) in India is in the form of revenue expenditure and is barely enough to meet the faculty wage bill. There is little scope left for any capital expenditure. On the other hand, the private institutions that stepped into the vacuum created by the withdrawal of state in providing professional education do charge significant fees from the students. While the state is silent on regulating the private institutions in terms of how they are financed and the quality of education, it didnt give public institutions the same flexibility to raise resources. As a consequence, there is serious erosion in the quality of infrastructure in the state-funded public institutions. On the other hand, the private institutions that stepped into the vacuum created by the withdrawal of state in providing professional education do charge significant fees from the students. While the state is silent on regulating the private institutions in terms of how they are financed and the quality of education it didnt give public institutions the same flexibility to raise resources. As a consequence, there is serious erosion in the quality of infrastructure in the statefunded public institutions. Much of the private investment in higher education went into the setting up of colleges offering professional courses such as engineering, medicine, law and management. In spite of the fact that approximately 65 % of enrollment in higher education is in institutions offering courses in arts, sciences or humanities, there is practically no new private investment in these critical areas.

There are three central facts of higher education which need to be internalized in order to find a solution to the problems of financing in higher education. First, there is enormous hunger for good quality higher education. Many talented youngsters from middle and wealthy classes are migrating abroad for good education. Even middling universities in the US, Britain, Australia and Germany are providing better educational opportunities than our own state universities. This unmet demand for education and the consequent migration and alienation of the elites of our society have extremely debilitating consequences to wealth creation, leadership development and social harmony in India. Second, the state cannot really deploy significant additional resources to improve the quality of higher education, or create new institutions in the required measure. Our combined fiscal deficit stands stubbornly at about 10% GDP. Public expenditure on school education alone needs to be enhanced by at least 1.5% to 2% of GDP. In addition, healthcare public expenditure, which stands now at an appalling 0.9% of GDP, needs to be at least doubled. The social security measures now on the anvil the employment guarantee program, unorganized sector security, nutrition and child care program cost another 1 to 1.5% GDP. Creation of adequate infrastructure to meet the challenges of a modern economy requires vast additional allocations, even after taking into account the private investments which will be attracted into these sectors. Even by a conservative estimate, the state needs to allocate additionally at least 4% of GDP for school education, public health, social security and basic infrastructure. Considering that our total tax base at union and state levels put together is of the order of 15% of GDP, there simply is no realistic possibility of significant additional allocations for higher education. We have to encourage private sector both non-profit and for-profit to invest large amounts in higher education. Third, Indian students and their parents are willing to pay substantial sums for quality education. Right now, nearly 85-90% of all engineering education and close to 50% of medical education are in private sector. Apart from higher fees in the range of Rs 30,000-50,000 per annum for engineering, and Rs 2 lakhs per annum for medicine, many parents are paying vast, unaccounted capitation fees for admission to private colleges. Reputed institutions command nearly Rs 6

lakh capitation fee for preferred branches of engineering, and close to Rs 25 lakh to 30 lakhs for medicine. On top of these astronomical sums, about Rs 5000 crores is spent abroad by Indians for higher education. India is in a position to attract bright youngsters from Asia, Africa and Latin America offering quality educational services. Instead, Indian youngsters are now studying abroad in ever larger numbers, and subsidizing education in the rich, host countries. Even China, despite its language barrier, has now started professional colleges only to cater to Indian students. Low cost, poor quality education is promoting neither equity nor self-reliance. It simply is leading to mediocrity, migration, and flight of capital. We therefore need to evolve sensible and viable financing mechanisms to meet the demand for quality education, through higher investments public or private, and to guarantee uniformly high quality education which fosters innovation, creativity and wealth-creation. This involves both financing reform and structural and regulatory reform. As far as financing is concerned, university fees need to be substantially enhanced in order to meet the growing needs. Even in China, decent university education costs 25,000 to 40,000 yuan( also known as kuai) per annum in all universities. Even high school education from ninth to twelfth grades costs a hefty fee typically 6,000 to 10,000 yuan per annum. The state does not give any subsidy for higher education. However, students are guaranteed subsidized loans to meet the cost of education, and no one is denied an opportunity for want of money. Such a financing model also creates a demand for better quality, since no one would be willing to pay unless the benefits outweigh the expenditure. School education has to be based on universal access and reasonable quality of education to help every child become a productive and self-reliant citizen. But higher education has to promote excellence, help the youngsters fulfill their full potential, and create wealth-creators and leaders to meet the challenges of our economy and society. In addition, higher education must be able to supply the key service providers in the fields of education, health care, governance, and community leadership, and knowledge workers to add value in an increasingly sophisticated, complex, globally integrated economy. Therefore, while access should be based on talent and motivation, costs should be recovered to make quality education sustainable. However, financing mechanisms should be evolved to make sure that access is never denied on grounds of unaffordability. The

notion of free, mediocre quality education has hurt all sections of society. Those who can afford are now fleeing the system, those who go to state institutions are under-performing for no fault of theirs; and the poor in society are subsidizing the not-so-poor for higher education. This model is clearly unsustainable and wrecked our higher education system.

Infrastructure in Higher Education:

The term infrastructure in higher education is comprehensive. It includes facility, research, and faculty. In order to have a functional institution, all the aforementioned elements, must be evaluated, improved and updated. For the higher education institutions strategic planning need to take into consideration the infrastructure and its components. My discussion of this topic will begin with addressing facilities as a primary component to this term, then faculty, and the last element is research. Furthermore, for applied sciences, laboratories and other equipment are needed for experiments and projects of the fields. Up-to-date equipment and substances needed for such facilities will increase the quality of learning and enhance the sense of research among students and faculty in the fields pursued. Also, language labs are useful too. They too should be equipped with the necessary equipment, such as audio and visual tools. Current language labs should have computers, monitoring station and reasonable space.

Public expenditure in educational sector in 1961-62, was 1.52% of the GDP, which increased to 3.68% in 2004-05 (Figure 1). At elementary level the expenditure was 1.78% of GDP in 1990-91, which marginally went up to 1.89% in 2004-05. Similar fluctuating trends were observed for secondary and higher secondary level education. The expenditure on secondary/higher secondary level education was between 1.13 to 1.11% of GDP during 1997-1998 to 2004-05. The percentage expenditure on higher education to GDP was 0.77% in 1990-91, which decreased to 0.62% in 1997-98 and was slightly raised to 0.66% in 2004-05. Similarly, with comparison to other sectors the share of expenditure on elementary education to total expenditure on all sectors was 6.19% in 2004-05 while on higher secondary education it was 3.85% for the period 2004-05.

As far as higher education is concerned, the union gov-ernment has however raised budgetary allocation in the budget for 2007-08. The expenditure on education is budgeted to go up by 33 per cent over the revised estimate for 200607. For higher education, expenditure is budgeted to go up by nearly 29 per cent compared to a rise of 22 per cent for the previous year. Yet, the question of adequacy remains, keeping in view certain factors like escalating costs; increasing needs of the system on the one hand with declining resources on the other. The fall in the expenditure per student from Rs 7,676 in 1990-91 to Rs 5,522 in 200203 (in 1993-94 prices) is an indicator of this [CABE Report 2005]. Intra-sectoral allocation also lacks balance. Elementary Education accounted for 52.32% of the total expenditure on education in 2007-08, followed by Secondary Education, which was 28.76%. The share of University & Higher Education and Technical Education was 11.83% and. 5.33% respectively. Moreover, while the expenditure on higher education has gone up over the years, the major expenditure has mostly been on the non-plan side covering the wage bill of the teaching and nonteaching staff. The improvement of infrastructure etc remains largely deficient. The capital or development expenditure has not been found to be commensurate with the non-plan expenditure.

Fig 1. Break-up of total expenditure on education in India

Fig 2. Growth of recognized educational institutions