Impact of Liberalization in Services on Higher Education

Abstract

Since independence, the higher education system has grown rapidly and today, India is the third largest higher education system in the world (after China and the USA) in terms of enrollment. However, in terms of the number of institutions, India is the largest higher education system in the world with 17973 institutions (348 universities and 17625 colleges).The actual expenditure has increased by more than 100 times from Rs. 140 million in the first Five-Year plan to Rs. 15 billion in the eighth Five-year plan at current prices, and 6.5 times in terms of real prices. Thus, although higher education in India is characterized by massive public investment, this investment is still regarded as much below the required levels. Based on the United Nations Provisional Central Product Classification, trade in educational services is organized in five categories of service — Primary Education, Secondary education, Higher Education, Adult Education and other Education.Different modes of higher education services are--Mode 1: Cross-border Supply, Mode 2: Consumption Abroad, Mode3: Commercial Presence, and Mode 4: Presence of Natural Persons.It is estimated that nearly 70,000 to 90,000 students leave India every year for studying abroad. At any given time these 320,000 students cost the country a foreign exchange out flow of nearly US $9 billion per year or nearly Rs. 400 billion per year, enough to build 40 IIM’s and 20 IIT’s per year. India can become an Educational Hub for the world and earn US $ 100 billion per year, after 10-20 years. Indian needs to start now, but has to liberalize higher education further.Presently India is incurring on an average expenditure of about Rs. 50 thousand per head for about 1,800 foreign students coming under the purview of the ICCR. Some of the leading universities are reluctant to accept ICCR scholars from abroad at normal fees.Presence of female students in the higher education in India has been constantly increasing. Female students’ percentage in academic year 2001- 2002 rose to 39.8% from 36% from that of 1995-1996.To combat the declining competitive advantage of India with respect to China and to emulate the Excellency of higher education institutions of US, UK, Australia, New Zealand and Canada, the following steps may be initiated:* Develop efficient Higher Education Statistical Systems.* Reduce multiplicity of regulatory system (create credible mechanisms to strengthen regulation and universal access policies).* Diversify existing branded public institutions into different modes of trade in higher education services.* Setting up of export oriented higher education institutions/ institutional areas (Like 100 % export oriented manufacturing units).* Eulogize abroad ‘Study India Programme’.* Provide incentives for expanding into new geographical region for private sector higher education institutions.* Ease of facilitation for Indian faculty members & scholars while pursuing Mode- 2&4.* Differentiated academic system for fostering excellence.* Create at least 10 to 20 world class self sustaining higher educational and research facilities like ISB in the next five years.