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Individual Assignment
Impact of Privatization on Education in India

Asif Khan Mohammed – 2230254

University Canada West
MBAF 504 (13)- WINTER 2023
Reihaneh Gaskari
Mar-12-2023
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Table of Contents:
Introduction

Education System in India

Privatization and its Objectives

Significance of the Privatization in India

Problems

Conclusion

Reference
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Introduction:
Education has always been an essential and most important need of humankind. It plays a
crucial role in shaping individuals and societies, providing them with knowledge and skills to lead
productive and fulfilling life. There has been a growing tendency towards the privatization of
Education in India. Globalization has become a pervasive aspect of the economy in India and
worldwide, although more needs to be noticed in India's educational system. Apart from the abuse of
government resources, infrastructure, educational programs, and assistance,

The education industry in India has faced substantial problems as a result of the country's
shift from a centrally planned economy to one that is more market-oriented. The educational financial
crisis and privatization have only increased the opportunities for private players and educational
institutions to engage in dishonest practices. Many Corporates took up this opportunity as CSR
(Corporate Social Responsibility); nevertheless, in terms of business, and on the other, the
government has begun offloading its moral responsibility under the banner of liberalization,
globalization, and privatization. (Private Not the Same as For-profit, The Economic Times, 2009).
Without a doubt, the government invests a significant amount of money into building and running
educational institutions wherein higher study is offered. The question of whether the finances are
sufficient and adequately utilized arises. The educational demands of India according to its population
have never been considered, and neither have private organizations implemented education quality
and sustainability in rural India. Schools, universities, and other learning institutions have been
established and developed in metropolitan areas or for the benefit of their employees under the banner
of corporate social responsibility (CSR).

Particularly in professional areas like engineering and management, the expansion of higher
education has depended heavily on the commercial sector. But how many of these institutions offer
high-quality education? Even if privatization is expected to improve facility conditions, quality of
knowledge, and research, this issue and its solution still need to be addressed. Better facilities will
result from privatization, but students will have to pay more incredible service prices. Hence,
privatizing education will only benefit the wealthy in society, not the segment of India's population
that is economically weak. (Privatization of Education in India Is Anti-Poor and Anti-People, Youth
Ki Awaaz, 2019)

Education System in India:

Despite having one of the most comprehensive systems of academic education in the world,
in India, only a few educational institutions like (IITs), (IIS), and (IIMs) have been successful in
making an impact on the global scene. In India, educational trusts or societies are in charge of private
educational institutions. Due to their status as not-for-profit organizations, educational trusts are
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eligible to state incentives like tax exemptions and land at discounted rates. Yet, the reality of many
private institutions contradicts their claim to be non-profit organizations. Instead of relying on funds
from the trust, they run mainly on the hefty fees they charge students.

The distribution of professional education has a distinct geographical imbalance over the
country resulting from the fast expansion of private institutions in only a few states. With 25% of
India's population, More than half of the country's engineering and medical institutions are in these
states. Karnataka and Maharashtra have half of all hotel management schools, and only three states
from the south region, Telangana, Karnataka, and Andhra Pradesh, have almost all nursing schools. It
was recently reported that Prof. Anandakrishnan, Chairperson of IIT Kanpur, expressed his worries:
There are now 2250 engineering colleges, up from 1600 in only one year (Kasturi, Higher education:
The underbelly of privatization, India Together, 2008). Engineering colleges are opening up in a rush.
Additionally, there are 506 engineering colleges in Andhra Pradesh alone and 340 in Tamilnadu.
Much has yet to be done to stop this crisis in technical education.

Several overseas organizations are eager to work with Indian organizations. The 2010 Bill on
Foreign Educational Institutions aims to control foreign institutions' access to and operation in the
country. The legislation is essential for encouraging private sector participation in India’s education
sector. A system like this will guarantee the functioning of famous universities worldwide and prevent
students from leaving such institutions to attend lower-quality schools elsewhere (Peter Bray, Money-
first Indian Collaborations Won’t Pay Off, Times Higher Education, 2022). Today, the globalization
of higher education has made it possible for scholars, educators, and researchers to travel freely and
select the programs that suit them across nations.

Privatization and its Objectives:

Due to several historical factors, India has developed a multi-source finance system where the
central and state funds education and local governments via fees and additional funding through
scholarships, grants, and other public donations. Therefore, Kothari Commission advised setting up a
national program to use local resources fully. This would increase community interest in learning. The
primary objectives of privatization are to:

1. Reduce the budgetary deficit;

2. Mobilise resources;
3. Reduce the additional tax burden;
4. Flow revenues to the public;
5. Recover government employees from public companies so they may be used more effectively
in administration and governance.
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6. Increase in domestic and international competitiveness, a reduction in government

intervention in the economy, and promotion of the more individual initiative

The Annual State of Education Report (ASER) that asserts for Rural Regions in 2011,
presented by former Minister Kapil, In remote places, the vast majority of children choose private
schools. In remote areas, between 30 and 50 percent of children attend private schools. Yet
establishing public schools is an increasing trend in the private sector that demand far higher tuition
fees than government-run and government-aided institutions (ACER, Annual Status of Education
Report (Rural) 2011, 2012).

Significance of the Privatization in India:

What motivation other than profit might any business or private group have in accepting such
duties in the current economic environment? The benefits of privatization vary widely when we
examine different Indian industries. According to the founder and director of Bangalore's Indian
Institute of Management, Prof. N S Ramaswamy, liberalization would increase competition in the
Indian educational sector, just as it has improved performance and efficiency in the corporate world
(K R S Murthy, Social Context of Management Education: Institution Building Experiences at IIMs,
2004). The study by Frydman et al. (1997) found that the benefits of privatization are more substantial
when control is centralized in one person or a few individuals or entities rather than being spread out
among many people.

India has a large number of students pursuing higher education which is rapidly increasing.
Privatizing the educational system is seen as the only viable solution to meet this demand. Giving
corporate entities too much power and independence might lead to the monopolization of higher
education, creating a host of problems. These issues include high fee structures, capitation fees,
exploitation of staff, and malpractices such as forged degrees and paid seats (T.T. Ram Mohan,
Privatization in India: issues and evidence, IIM, 2014). The government can't control private
universities, which are essential for creating and sharing knowledge. We need more universities and
colleges, and the curriculum should change regularly. Students should have more choices, but funding
for these changes is limited, making it hard to improve.

Problems:

About 80% of schools in India are government, yet 27% of students in India join private
schools because of the inadequate quality of public education. Studies claim that private institutions
often provide better outcomes while costing less than government schools. Despite increased funding
for education, 25% of the community still lacks literacy. The percentage of private educational
institutes in India is relatively low, accounting for only 7% of all educational institutions. Many of the
poorest individuals in India choose to attend private schools, even though government schools are
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free. UNESCO reports that India has the lowest public spending on higher education per student
globally. When governments allowed privately owned educational institutions, corruption became
more prevalent in some way or another.

Conclusion:

In light of India's current social and economic climate, private education funding will become
more prevalent. As India shifts towards an open economy and requires skilled workers and research
and development, there is a growing demand for private universities to meet these challenges. Despite
government efforts, the quality of public education in India is declining, leading to increased
enrollment in private schools, colleges, and universities. India needs more skilled workers due to the
education at the basic, intermediate, and college levels being of poor quality. Privatization of
education could improve quality and reduce costs, but an effective transfer-payment system must be
implemented to ensure access for all. The government must also keep an eye on and regulate the
standard of education provided by the private sector to prevent exploitation by some institutions.
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References:

Private is not the same as for-profit. (n.d.). The Economic Times.

https://economictimes.indiatimes.com/opinion/et-commentary/private-not-the-same-
as-for-profit/articleshow/5380085.cms

Privatization Of Education In India Is Anti-Poor And Anti-People. (2019, January 19). Youth
Ki Awaaz. https://www.youthkiawaaz.com/2019/01/why-privatization-of-education-
is-anti-poor-and-anti-people/

Privatization of Higher education in India - 2492 Words | Studymode. (n.d.). Privatization of

Higher Education in India - 2492 Words | Studymode.
https://www.studymode.com/essays/Privatization-Of-Higher-Education-In-India-
48228042.html

Kasturi, K. (2008, November 8). India Together: Higher education: The underbelly of
privatization - 08 November 2008. https://indiatogether.org/highered-education

Money-first Indian collaborations won’t pay off. (2022, May 19). Times Higher Education
(THE). https://www.timeshighereducation.com/opinion/money-first-indian-
collaborations-wont-pay

ACER. (2012, January 16). Annual Status of Education Report (Rural) 2011 (Vol. 1).
http://img.asercentre.org/docs/Publications/ASER%20Reports/ASER_2011/aser_201
1_report_8.2.12.pdf

Social Context of Management Education: Institution Building Experiences at IIMs. In

journals.sagepub.com. Vikalpa. Retrieved March 9, 2023 (2004), from
https://journals.sagepub.com/doi/pdf/10.1177/0256090920040208

T.T.Ram Mohan.- Privatization in India: issues and evidence(A doctoral dissertation

proposal)- Visiting Faculty, Finance and Accounting Area Indian Institute of
Management Ahmedabad, India.