One of the major issues plaguing the Indian economy is policy paralysis. There are quite a few policy initiatives that will perhaps help enable the next Prime Minister to almost revolutionalise India's sluggish education sector. These have been culled from the recommendations made by a group of experts.
Also Read: Anu Aga: Schooling India
Madhav Chavan, activist and founder President of Pratham – the largest NGO working in India's education sector; Ashish Dhawan, a private equity wiz turned education philanthropist who now runs the Central Square Foundation; Harsh Shrivastava, who has been in the government with the Prime Minister's Office and the Planning Commission and is now the COO of the Centre for Civil Society, a prominent think-tank; Manish Sabharwal, serial entrepreneur and founder of TeamLease, India's largest temporary employment company; and Dhiraj Nayyar who has anchored the project for Think India, discuss on the matter. A topic that has perhaps been on everybody’s mind is whether For Profit institutions should be permitted at all levels – more importantly in the education sector. Chavan says: “It is not a question of permitting, we have already permitted now it is a matter of legalizing it.” He says most ‘not for profit’ educational institutions are already making profit, only they do not accept it - perhaps back door. He adds there needs to be a clear separation between not for-profit and for-profit. Sabharwal feels the biggest case for legalizing or formalizing such institutions is ending the adverse selection among education entrepreneurs. Dhawan says he never touched the education sector as a private equity investor because of the regulatory sword hanging over it. He feels the reason why the government is perhaps not allowing for-profit organizations is because of the belief that it is a public good and so people are doing this for the greater growth of the society. Shrivastava too agrees with Dhawan. He feels state governments are of the view that education is a social good more than a public good.
Below is the verbatim transcript of Madhav Chavan, Manish Sabharwal, Ashish Dhawan & Harsh Shrivastava's interview on CNBC-TV18
Q: The first point on our agenda and this is a very straight sharp one. We should be permitting For Profit institutions at all levels. If we can do it in health, if we can do it in electricity why can't we do it in education?
Chavan: It is not a question of permitting, we have already permitted now it is a matter of legalizing it. People are running educational institutions which are making profit except they are not saying it is profit. The trick is to start a not for profit and then I ask Ashish to give me management services and he charges what he wants and he makes the profit and perhaps by the back door I get the profit as well. This is hypocrisy.
Q: Why should we do it with such suspicion? Why should we not embrace it as something which is legitimate? Why should we do it only because it is happening by subterfuge, so accept it?
Chavan: I am not suspicious about it. The point is you have to also protect the consumer because I don’t think all for-profits are actually delivering the goods. Once somebody is going for profit then that person also, that institution should also be covered by consumer laws. So, there needs to be a clear separation between not for-profit and for-profit.
Q: The case for strong regulation in any for-profit industry is a given. Other than that we should have no other objection?
Chavan: There are implications to what happens when a society is divided like this. Today in India about 65 percent urban children are going to private schools already. They are for-profit, not for-profit whatever. In rural areas about 30 percent children are going to private schools. So, there is a large proportion of Indian children already going to private schools and there is a definite implication of what this does in a community, in poor villages also – complete separation. That has to be dealt with.
Q: If we are going to now legalize these for-profit institutions, your sense of how we should be running them?
Sabharwal: 90 percent of school and engineering capacity in the last 20 years has been for-profit. Unfortunately on paper it is non-profit which creates an adverse selection among education entrepreneurs. Most education entrepreneurs have either been politicians or criminals or landlords. A teacher can't start a school because in a capital intensive business you can't raise capital. The biggest case for legalizing or formalizing it is ending the adverse selection among education entrepreneurs. We have got the wrong kind of people and in many cases setting up educational institutions.
The second one which is more important is, unfortunately in India our rights as consumers are higher than our rights as citizens. This is not an argument against government schools it is just that as consumers our parents are able to demand more, so, the free schools versus what they should be, what they are on paper.
The third one is there is no reason to be allowing these for-profit institutions to not pay taxes.
Q: Any quick point Ashish?
Dhawan: I would say the cat is out of the bag in the Indian context. We know that government has abdicated its responsibility. If we were to say lets do away with the private sector we are going to end up being in a much worse condition. I totally agree with Madhav we should legalise it. I as a private equity investor we never touched education because we were always worried about the regulatory sword hanging over this sector.
Q: What is the possible rationale of the government - let's look at it from other point of view in not allowing for-profit institutions? As Chavan said they are there but legally not there, why?
Dhawan: I think the belief is that it is a public good and so people are doing this for the greater growth of society.
Q: My point is all of these are public goods. You allow for-profit there, you don’t allow it in education?
Shrivastava: State governments thinking is that education is a social good more than a public good and it is something that it links to what is the fundamental role of government because all the reforms say government should focus on what it does best. When it comes back to what does government do best – law order, education and health.If the government is abdicating everything else then atleast these three things are what so far all the debates say the government's role is. However the challenge if you allow for-profit is also that it allows schools to respond to changing needs. If there is a local demand for something new they can add something, they can get teachers quickly, if technology is changing, if the curriculum requires to be changed. So, one of the advantages of having for-profit is it allows flexibility in schools, it allows you to setup what the economy needs.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
