Abstract
The initiative taken by the Ministry of Human Resource Development (MHRD) for removing the legislative deadlock over the Foreign Education Providers (FEPs) bill is going to involve changes in the recently passed Companies Act, 2013, and also a reframing of some of the University Grants Commission (UGC) guidelines. This initiative has certain implications and possible future repercussions which have given rise to many questions regarding the objectives and functioning of India’s higher education system. The way this bill has been posed, it seems poised to usher in a fresh bout of private and foreign education institutions with their positive and negative dimensions for higher education. This commentary aims to bring these and many other contradictory aspects of this bill under the ambit of corporate social responsibility (CSR) and the UGC guidelines.
The Ministry of Human Resource and Development (MHRD) seems to have finally decided to bypass the legislative deadlock over the Foreign Education Providers (FEPs) bill, which has been pending in the Indian Parliament since 2009. In order to make headway for foreign universities to function in India, it is evoking Section 25 of the Companies Act and has obtained the support of both the Department of Industrial Policy and Promotion (DIPP) and the Department of Economic Affairs (DEA). One may wonder what the rush is, especially as the relevant bill is not yet passed by the Parliament. Of the 102 pending bills, 44 were listed for the monsoon session, but not the FEPs one. Although the intention of the government cannot be anticipated, prima facie, Section 25(1)(a) of Companies Act, 1956, restated in Section 8(I)(a) of the new Companies Act, 2013, stipulates that the formation of companies with charitable objects will be allowed where it is proved to the satisfaction of the central government that a person or an association of persons proposed to be registered under this Act as a ‘Limited Company’ (a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object; and (b) intends to apply its profits, if any, or other income in promoting its objects (GoI, 2010).
Of the two important aspects of this bill, one is where the government has tried to project clause (b) by empowering the University Grants Commission (UGC) to frame rules as per the power vested with the central government to make rules under the UGC Act. The ministry is in the process of finalising the UGC rules under which foreign universities can set up campuses in India and issue foreign degrees (GoI, 2010), given that foreign universities will fall under the ambit of the UGC and will have to follow its rules.
The second pertains to allowing private, not-for-profit universities that have been already existing in India, to enter into social sector under the Corporate Social Responsibility (CSR) Act. Given some of these conditionalities, the objective seems to be that of allowing genuinely non-profit-making FEPs, as well as private enterprises, to enter into this ambit. However, experience tells us that although many private universities in the country are registered as not-for-profit or charitable institutions, in reality, they make a lot of money. It is almost an open secret now that most of the private institutions provide education of low quality and are treated as vehicles for making money for the managers and controllers of those institutions (Tilak, 2007). This raises suspicion about the objectives of foreign universities and private business houses intending or being invited to open and run campuses in India. Those private universities which have been operating or waiting to enter into higher education are backed by some of the India’s best names in business. The list of companies includes many well-known corporate and business houses. One may ask why these business groups are investing a large chunk of their capital into education, whereas money for them is meant to be for business. The suspicion deepens more when one goes through the Twelfth Five-Year Plan document which suggests that profit making should be allowed in higher education. The Planning Commission has suggested the idea of allowing higher education institutions to run for profit. In the final draft of Twelfth Five-Year Plan, the Planning Commission has incorporated this suggestion despite strong opposition from the MHRD (Government of India [GoI], 2011). Advocating the mantra that ‘...when resources are limited, philanthropy isn’t the best practice, the Planning Commission has retained a suggestion to allow higher education institutions to run for profit in the final draft of the 12th Five-Year Plan’ (Chopra, 2012). If this is the intent of the government, then this will eventually be given legitimacy not only in practice but on article as well, and the foreign education companies will then be allowed to repatriate significant portions of their profits abroad.
If, on the other hand, one agrees to believe that the foreign institutions will be actually coming to India but not for profit making, then we have to be curious as to what could possibly be at stake for them in India. Firstly, could the FEPs’ interest in producing human capital for India according to their home country standards, and that too at a fraction of the cost, be the overriding motive? Could it be that they will be providing courses and curriculum so that the produced human capital, or ‘semi-finished human capital’, will be more relevant to their country’s future requirements than ours? Second, will their objective be to neutralise their own diseconomies of scale in education, because they are running out of students. Third, could their interest be motivated with an eye to the subsidised land being provided by the Indian government and potentially possible lobbying to expand their base in India? For example, M. Anandakrishnan, former vice chancellor of Anna University and chairman of Indian Institute of Technology (IIT) Kanpur, has been quoted in the Business Standard (2013) saying that for some private players, ‘Setting up universities has become a real estate business.’ Fourth, will their interest also stem from the fact that they will be handling a large quantum of liquidity and thereby exercise power through reinvestment of their profits in the creation of tangible and intangible assets in India? Fifth, given that Section 25 of the Companies Act allows for easy transferability of ownership, what implications will this have on mergers of FEPs with the Indian private education companies? Lastly, is it just a prestige-seeking exercise or an opportunity to have an association with India’s higher education system which they can exploit in the long run?
Concerning the Indian Education Sector
There have been umpteen number of questions regarding the FEPs bill pending in the Indian Parliament. One primary question that continues to remain unanswered has to do with governance in terms of the curriculum, that is, what kind of courses will the FEPs provide in the professional, technical, social science and humanities courses? Another is about the tuition fee policy that they will be implementing. How will they come up with the administration of faculty recruitment? How will these universities help in providing quality education and quality research when promises may not lead to the enhancement of quality, as is evident from the hundreds of low-quality private institutions run by recruiting faculty of uneven quality on an ad hoc basis? Will these universities be teaching universities only, as is the present status of Indian universities, or will they be research universities with more funds directed towards research to improve the current quality crunch in this particular field? Therefore, it becomes extremely important to see whether the role of FEPs with reference to the national agenda of inclusiveness is clearly addressed or not.
The global experience suggests that none of the developed countries like the United States (US), the United Kingdom (UK), Germany, Australia or Canada have built their superior world-class structure of higher education on the shoulders of foreign entities. India, having finally woken up to the wisdom that the development of higher education has no trade-off with the development of primary education—a wisdom that has been eluding Indian policymakers for decades by the deliberate lobbying by some developed countries as well as international development and donor agencies—need not necessarily stick to this trend. As latecomers do, India can indeed tap the superior and established universities of other countries for both quality and access to higher education. However, one concern ought to remain: how will this entry bear on the existing and emerging universities of our own? In the short to medium run, these may lose indispensable inputs, such as, teachers and students, to the FEPs, making them decline further from being bad institutions to worse ones. In the long run, the proliferation of foreign universities in India will perhaps lead to an aggravation of the brain drain of our ‘ready-to-use human capital’—the graduates—rather than mainly our ‘semi-finished human capital’—the students—that is the case at present. Khadria (2010) poses the concern about the pitfalls of higher education in the name of internationalisation, when the developing countries are offering their talented ‘knowledge workers’ to the developed countries on platter.
Towards Positive Thinking
The initiative to induct FEPs through the doors of companies may not serve any lofty purposes unless their long-term objectives are clearly comprehended and addressed. This sort of stand will just be an extension of the vagueness that surrounds the privatisation of the Indian higher education sector. A significant question can be flagged: why not mandate a proactive objective of CSR as the sole purpose of these companies under Section 25 rather than the negative objective of being a non-profit? Can the objectives of both foreign and Indian private educational institutions—in their new legal incarnation of education ‘companies’—be explicitly mandated as 100 per cent CSR in contrast to a meagre 2 per cent that is being stipulated for the other companies? Then, the entry of the FEPs will move towards more a positive and constructive goal—that of acquiring a responsibility towards the other—rather than the age-old professional instinct of profit making for one’s self.