Most of us have heard about Dhirubhai Ambani and Shiv Nadar. But, have you ever noticed how smoothly they have diversified their portfolio to mark their presence in the educational sector? That’s why in my opinion, education in modern India has developed into a business.
Earlier, education was driven by things like devotion and thought, with emphasis on things like occupation and learning. The government and other public bodies were major investors in the sector. As the opportunities in the service sector and manufacturing sector increased for the educated youth, the demand for educational institutions grew. In India it’s not legal to run educational institutions as a business organization as only trusts can run such institutions on a non-profit basis. However, there appears to be a systemic method by which many trusts turn these non-profit institutions into their profit centres. The entrepreneurs, taking advantage of the high demand for education, generally get land allotted at a nominal cost in the name of an educational society. In the initial stages, some temporary structures are put up.
Later on, as students are admitted, funds begin to flow in the form of development fee, building fee, tuition fee, games fee, cultural event fee etc. These institutions chargecost, plus pricing for the services rendered by them. Therefore, over a period of time, these institutions can construct huge buildings and purchase costly equipment to modernise their establishments. In this way, a large percentage of unaided private schools and colleges have converted education into a business enterprise. Earlier, these institutions were confined to metropolitan areas and big cities, but now they are spreading even to smaller towns!
Of late, the issue of charging capitation fees by educational institutions has also been a hot topic. The Supreme Court, in its judgment on the Mohini Jain vs. the Government of Karnataka case in 1992, declared that the right to education was a fundamental right and that the charging of capitation fee was arbitrary, unfair and, therefore, in violation of the fundamental right to equality contained in Article 14 of the Constitution. Mohini Jain, the petitioner in the case, was admitted to the medical college in Karnataka, but she could not take advantage of admission as she could not pay ₹60,000 per year as capitation fee.
A distinction has to be made between privatization and commercialization of education. India has a long tradition of privatization of higher education. Tilak, Karve, Sir Syed Ahmed Khan and many other charitable trusts started educational institutions to widen educational opportunity in the society. But modern educational entrepreneurs are not guided by philanthropic motives of the earlier reformers. They intend to invest in educational institutions to maximise profits, because the demand for professional education is very high and the risk involved in this investment is minimal.
There have also been many instances of promoters of educational institutions getting involved in tax evasion and money laundering cases. Rules under Section 135 of the Companies Act, 2013, mandate that any company with a net worth of over ₹500 crore or annual revenue of ₹1,000 crore, has to spend 2% of their profit on CSR activities. A politician or a businessman would set up a trust to build an educational institution. CSR funds would flow into the trust through legitimate banking channels. These funds are returned to the promoters in cash and the actual expenditure on the institution is met with the illicit hoard of black money. The expenditure is then inflated helping launder the black money.
But, in spite of these negative aspects, there are many positive aspects as well, that have been brought in by the private investments in the educational sector. They have filled up the investment deficit in the educational sector. They have increased the availability of seats, creative subjects, and also developed the other centres including the urban areas. Any development without proper regulations is hazardous for the society. Hence there should be a strong regulatory body across India for the regulation of these institutions frequently. I would conclude this article by quoting Benjamin Franklin, “An investment in knowledge pays the best interest”. Hence, let’s hope investment is not made to run education as a business but to increase knowledge.
I would also like to know what your opinions are on this issue, so please do comment with your views, participate in the poll and share this article with your friends and family.