The decision of the government of India to allow foreign direct investment in higher education is based on a consultation paper prepared by the commerce ministry, which is marked by shoddy arguments, perverse logic and forced conclusions. This article examines the issues and financial compulsions presented in the consultation paper.

FDI in Higher Education

Official Vision Needs Correction

The decision of the government of India to allow foreign direct investment in higher education is based on a consultation paper prepared by the commerce ministry, which is marked by shoddy arguments, perverse logic and forced conclusions. This article examines the issues and financial compulsions presented in the consultation paper.

RAJESH KUMAR SHARMA strangely – is improved literacy. A linkis suggested between “market-comples press reports indicate, the gov-mentary arrangements in education” inernment of India seems to have the developed countries and the highmade up its mind to allow foreignlevels of literacy that obtain there. Imdirect investment (FDI) in higher educa-proved literacy has all along been taggedtion. A group of ministers has cleared awith better primary education, yet the proposal on foreign service providers andconsultation paper expects to somehow a bill is expected to be prepared shortly. raise the literacy levels with FDI in higherA short while ago, the ministry of com-education. merce had released a consultation paperThe second requirement is to contain thewith the stated purpose of initiating dis-outflow of money to other countries in thecussions on the issue of allowing FDI. Itsshape of fees and related expenditure. Thetone and tenor clearly indicated the officialpaper does not, however, rely on any dataposition which, as democratic conventions based study of the courses and institutionsdemand, should have been arrived at onlychosen by the Indian students abroad. Itafter a sufficient and comprehensivelydoes confront the reality that a very largedocumented debate. Instead, the govern-number of students go abroad to work andment is pushing the bill with extreme andearn and not to get education at someungracious haste as if it is answerable onlyinternationally reputed university. It is to the World Trade Organisation (WTO) also silent on how the fees received byand not to its own people. We can, there-foreign-based universities in India willfore, only hope that the Parliament willbe utilised. discuss the issue threadbare. But that, The third requirement, based on aunfortunately, is not very likely.McKinsey-NASSCOM study, is the needWhat is most disturbing is that theto train a large number of graduates to decision to allow FDI has been taken on handle the expected bonanza of offshorethe basis of a consultation paper which isbusiness and to work for multinational marked by shoddy arguments, perversecompanies. Most of these “millions” oflogic and forced conclusions. Indeed, ajobs will be in the information technocareful reading of it leads to the conclusionlogy (IT) and information technologythat there is no case for allowing FDI.enabled services (ITES) sectors and will This article raises essentially four issues certainly not require Harvard-standardwhich need critical attention: the objectiveseducation. Moreover, let us not expectof higher education, its contextual rel-a few Harvard and Oxford-like satellite evance, the prevailing financial situationcampuses in India to turn out graduatesand the viability of alternatives to FDI. in millions over the next five or six years.The fourth requirement arises from the dubious ambition to join the league

Major Issues

of education-exporting countries likeThe first issue is addressed in the lightthe US, UK and Australia. The idea that of four requirements, one of which – we will import education in order to

Economic and Political Weekly December 9, 2006 export it derives from a rather simpleminded notion of education as just another commodity. Also, we shouldnot forget that the best universities in thewest do not treat education as a business and may not be interested to come toIndia “to do business”. In the name of the best, let us not open our gates to unscrupulously mercenary corporateinterests. In any case, have we given achance to our own universities to perform at their best? The Indian Institutes of Technology (IITs) and Indian Institutesof Management (IIMs) did come up without FDI.

To say the least, these four requirementsonly constitute short-term objectives andare formulated in terms of current trends in world business. But higher educationalso needs long-term objectives and a broad vision in tune with the projected futureof the country and the world. Its contextual relevance in the case of India has to be conceived in terms of our civilisational history and the contribution we wish tomake to the future of humanity. Unfortunately, the consultation paper makesno efforts to understand the peculiaritiesof the Indian situation in the national and global contexts.

Financial Compulsions

The principal argument of the paper isbuilt around compulsions of the prevailing financial situation. According to it,higher education will require Rs 20,000 toRs 25,000 crore over the next five or more years to expand capacity and improveaccess. For such a huge amount, the paper argues, we can only look to FDI. But isthis really such a huge amount for a country that commits three to four times thatamount every year to defence? The budgetary estimate for 2004-05 alone standsat Rs 77,000 crore. It is not that defence should not be funded as per requirements.The point is the priority we need toassign to higher education and the question of enhancing access and ensuring equity. The FDI in itself cannot guaranteebetter equity and access as the paperunreasonably presumes.

In fact, the amount required to upgradeand expand higher education turns outto be a pittance if we remember that it has to be shared between the central and state governments over a number ofyears. If non-profit organisations andwell-intentioned corporate houses andindividuals chip in, the edifice ofhigher education can really rise to touch the sky.

Email: sharajesh@gmail.com

Economic and Political Weekly December 9, 2006

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FDI in Higher Education

FDI in Higher Education

Official Vision Needs Correction

Major Issues

Financial Compulsions

EPW

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