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April - 2015 - issue > View Point

Challenge of Higher Education in India: Solving Quantity-Quality Conundrum

Prof. Rathinasamy Maria Saleth
Director-Loyola Institute of Business Administration
Tuesday, April 28, 2015
Prof. Rathinasamy Maria Saleth
The contribution of education to economic development through human capital formation has been established most dramatically by economists as early as the 1960s. With econometric analysis and comparative study of post-war England, Germany, and Japan, it was found physical capital to account for only 40 percent of Gross Domestic Product. The rest was attributed to human capital in general and education in particular. Many would think this to be an overestimation. But, subsequent research with a disaggregated but more inclusive approach towards human capital and education has provided better insights. Human capital is interpreted in broader terms to include not just education but equally also cultural, social, economic, and political institutions that define and signal resource access, game rules, action sets, and decision setting. Education, which was interpreted mainly in terms knowledge creation, is taken more inclusively to cover also information generation. With this broad and inclusive perspective, the overwhelming economic contribution of human capital and education is neither doubtful nor surprising.

The economic contribution of human capital and education is rather clear. But, there are many questions on the education investment and final outcome, especially in India with the largest young population today. Should the investment be in primary, secondary, or higher education? In higher education, should the relative priority be on general (humanities, social sciences, and applied sciences) or technical (medical, engineering, and management) education? Who should make decisions on the level and direction of investment—whether it is the state or the market, or whether it is the public sector or the private sector? Finally, what about the nature of the outcome in terms of quantity vs. quality? These and related questions have far reaching implications for the economic role of education and its welfare impact.

Clearly stated educational policies are there both at the state and national levels. But, most issues implied in the questions above have been resolved by default, though market has emerged to play an increasing role, particularly in medical, engineering, and management education. The government has invested more in primary education and also in higher education involving medical colleges, IITs, and IIMs. But, with changed policy, private investment has increased tremendously leading to the growth of many private schools, engineering and management institutions, and universities. Consequently, public provision of education with lesser cost play in parallel with market-based private provision of the same at higher cost. It is no secret that unlike private investment, most part of public investment in education goes to overheads with lesser impact on educational quality.

The nature and pattern of educational investment observed across India over time has led to few clearly visible outcomes. On the quantity dimension, the achievements are truly significant. There are more institutions, students, teachers, and disciplinary and curriculum options. But, the same cannot be said about the outcome on the quality dimension. In fact, the discrepancy between quantity and quality of education is widening fast in all fields and at all levels. While this is a fundamental problem, equally, if not more, serious is the emergence of a dualism within the education sector. Educational quality in some cases is close to or on par with the best in the West. But, in most cases, the quality is too poor to have any major impact on individuals, not to talk about the country.

Baring few cases, most state-run universities are operating at a lower level equilibrium with sub-optimal performance. In contrast, many private educational institutions are run more efficiently with better performance. But, there are sharp differences in education cost between public and private institutions. Given the prevailing socio-economic conditions, the cost differences and their affordability implications leave less privileged students to go mostly for public institutions with a relatively low quality standard when their better-off counterparts enjoy wider options to choose from a variety of private institutions with better quality standard. In this way, the dualism in the education sector tends to reinforce prevailing socio-economic inequity.

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