Maintaining that ‘education is not a business to earn profit’ the Supreme Court (SC) in its latest judgement in the last week of November has ruled that ‘tuition fee has to be always affordable’. This decision is regarded as nailing the head of the issue of the commercialisation of education in India, as the earlier judgement in June 2022 in a similar case by the SC stated that education in India has become an “industry run by big business houses”.
The latest judgement was pronounced by a bench led by Justice MR Shah upholding the High Court (HC) of Andhra Pradesh order quashing the state government’s decision to a seven-fold increase in the tuition fee of medical colleges to Rs 24 lakh per annum. The June judgement on the other hand came from a vacation bench of Justices BR Gavai and H Kohli on a petition by the Pharmacy Council of India (PCI) challenging the orders of the HC of Delhi quashing PCI’s decision imposing a five-year moratorium on the opening of new pharmacy colleges.
The SC lamented that students pursuing medicine have been forced to go to far-off countries or forced to forgo their dreams because of the prohibitive fees in medical colleges. In the PCI case, the solicitor general argued that the moratorium was imposed taking into account the mushrooming of pharmacy colleges, making them a business proposition and leading to the lowering of education standards in the country.
The education sector has evolved over the years from the traditional Gurukuls to present-day‘ private’ and ‘deemed to be Universities’ having crores of rupees as their annual advertising budgets. For a long in the early periods’ education was driven by the devotion and personal commitment of the Gurus while after Independence the government took up the financial onus, making it their social commitment.
Although the private sector in education has been allowed in India since the 1970s, it is only in the last five years that the sector has attracted significant private capital. With the emergence of the Indian middle class to prominence, parents are willing to shell out huge sums to get their kids a good education. Rightly or wrongly, it is also being perceived that the private sector has a qualitative edge in imparting education over public-funded bodies. This has paved more way to up private educational institutions to pursue investments in education as a lucrative business opportunity.
According to the data available on IBEF, a trust established by the ministry of commerce and industry the Indian education market is estimated to grow to $225 billion by 2025. India has the largest population in the world in the age bracket of 5-24 years with 580 million people. Currently, there are 26.44 crore students in Indian schools and the numbers are expected to grow to 30 crores by 2030 which additional seating capacity has to be created, presenting a huge opportunity in the education sector. From April 2000-March 2022, the FDI equity inflows stood at $7.72 billion while the Indian ed-tech start-ups have received a total investment of $3.94 billion across 155 deals in 2022. This is the market opportunity the private sector is presently eyeing.
Of late, the state governments are shying away from making investments in education. Aided educational institutions in many States have been denied their due share of non-salary grants and the regular vacancies of teachers are allowed to freeze. A small state like Assam has gone to an extent of keeping teaching vacant for a long period till the retirement of the contractual teachers. Meanwhile, State-funded universities too have failed to keep pace in terms of faculty competence, curriculum and pedagogy.
The private sector has taken advantage of governmental apathy to fund education, investing huge sums in huge infrastructure, and collaborations to provide quality education but at an unreasonably higher cost. Of the total number of colleges in India today, around one-third were set up in the last five years and 60% of these are privately owned, according to 12th Five-Year plan data. The official documents prove that the cost of private education is roughly about 15 times that of Government-aided institutions besides capitation fees, yet the cut-off crawls up as demand shows steady growth.
In India, it’s not legal to run educational institutions as a business organizations as only trusts can run such institutions on a non-profit basis. However, there appears to be a systemic method by which many corporate houses form these trusts, and subsequently turn these non-profit institutions into their profit centres.
In India, the average cost of starting a private college goes upwards of Rs. 50 crores while private universities are usually set up by business groups costing anywhere upwards of Rs 300 to 3000 crores depending on the location, infrastructure and technology choices that the company makes. The capital investments are raised either through equity or debt while the regular maintenance is borne through CSR funding.
On average, the return on investment in private educational institutions is around 15-20 per cent and it ordinarily takes up to ten years to achieve the same. Once the brand is established, to speed up the recovery of their investments the private bodies are found raking up their fees.
In the year 2011, the SC through a bench of justices MR Shah and S Dhulia had ordered the private colleges to refund the amount collected over the fee last fixed by the state government, stating “Education is not the business to earn a profit, and the tuition fee shall always be affordable”. The petition was about a private medical college in Andhra Pradesh challenging a September 2019 decision of the Andhra Pradesh High Court striking down the fee hike and ordering refunds to students admitted to the college.
Thankfully the Courts in India are conscious of the hardships faced by students who arranged to pay the amount by obtaining a loan from banks and financial institutions at a high rate of interest. The responsibility to ensure that the interest of students is protected ultimately rests with the government. It must be checked that modern educational entrepreneurs are not guided by profit motives alone.
