On February 11, the Supreme Court struck down the Chhattisgarh Private Sector Universities Act, 2002, specifically Section 5 of the Act which does away with the role of the University Grants Commission in the setting up of universities, and cancelled the registration of over 100 private universities which had come up in the state. It was acting on a public interest litigation filed by a former UGC chairman, Prof. Yashpal.
My immediate reaction to the order was one of dismay. Then as I started to ponder over the various facets of the issue, I realised that this order will pose a dilemma for all those believing in a free market in education. Well, maybe not all, because there will be a group who will be very clear in their opposition to the judgement and see it as an unpardonable restriction on the free market. I don’t think it is as simple as that.
Prof Yashpal and the Court were both acting with very honourable motives, no doubt. The Act had been passed by the then Congress government in Chhattisgarh, headed by Ajit Jogi and had led to the mushrooming of private universities in the state, some run on sound business principles (there’s nothing wrong with managing educational institutions on such principles) but many of them hole-in-the-wall kind of establishments and fly-by-night operators taking gullible students and their parents for a ride. Things were bound to come to a head sooner or later.
What I find disturbing with the Supreme Court order is the fact that it is throwing the baby out with the bathwater. And like another judgement two years back banning capitation fees, only treats the symptoms of the disease and not the root cause – the fact that demand outstrips supply of education.
There is no denying that there is an `education market` where the forces of demand and supply work just as they do in other markets. Right now, it is a seller’s market because of the restrictions on setting up of educational institutions by private parties.
The number of students in the higher education system (estimated at 8.8 million) is only 6.7 per cent of the population in the eligible age group. Raising this to even 10 per cent will mean bringing 14 million students into a State-domnated education system which is barely able to cope with the current burden. In such a situation is it right to restrict choices available to students by creating entry barriers for private players? Or by making higher education a State monopoly? Clearly not. The State has no business running educational institutions or creating conditions where the market gets restricted.
But how is one to deal with the phenomenon of unscrupulous operators? Sure, market forces will deal with them and will weed out the genuine from the fakes. But that’s little comfort to those whose hard-earned money the crooks have run away with. Yes, there are laws against cheating and fraud and not honouring contracts and commitments which these people can take recourse to, but we all know the way the law and order and justice system works – or doesn’t work – in India. Sure, this is something that India needs to work on since a sound law and order and legal system is the bedrock of a free market. There’s also immense weight in the argument that the lack of a sound system of justice shouldn’t be an excuse for government intervention in various activities.
But even if a sound legal system were in place, would it be absolutely wrong to have some minimum norms for setting up educational institutions? The libertarians would say, yes, it would be. They also have some case when they say that prescribing such norms and having some organisation to enforce them only results in corruption and doesn’t ensure that the norms are met. The regulatory capture argument cannot be ignored. But I’m not entirely sure that a scenario of not having any norms at all at all is necessarily desirable.
In 1995, the then Congress government at the Centre introduced a Private Universities Bill, which enables the establishment of self-financing universities with their own curriculum, fee structure and degrees to supplement the efforts of the state-run universities. The Bill allowed registered societies, public trusts and companies to set up universities and design the curriculum. The UGC was to vet the proposals and monitor the functioning of the universities. The Bill got put on the backburner thanks to misplaced outrage – from the Left, obviously – that the state was withdrawing from the education sector. Nothing came of the Bill, eventually.
That Bill, I think, struck the right balance on regulating education. Where the Chhattisgarh Act erred was in doing away with the role of the UGC in the setting up of universities. The latest Supreme Court order tries to correct that, but it has ended up tarring all the private universities with the same brush. It will also result in any new initiatives to involve the private sector in education and get the State out being put on hold.
The trick will be to find a way of weeding out the bad eggs (some will still slip in, but the scope will be reduced significantly) without heavy-handed government regulation.
Like I said, this is a real tough one.