Review:India Is Going Great ?

American Treasury Secretary Timothy Geithner is visiting Delhi to discuss economic and financial cooperation with India. But a significant opportunity now on the table involves human rather than financial capital. India's parliament is considering allowing foreign universities to set up full-fledged campuses in India, a move championed by Human Resource Development Minister Kapil Sibal. It could also prove an important turning point for the country's educational system by demonstrating the positive effect of greater competition.

As India's middle-class population—now around 50 million—continues to swell, demand for postsecondary education will only grow. At present, only 12% of young people enter university. The quality of the education they find there remains low. A McKinsey study famously reported that only 25% of engineering graduates and 10% of generalist graduates were considered employable by multinational companies. That may explain why about 160,000 Indians head abroad every year for higher education.

After creating a small number of elite institutions, such as the Indian Institutes of Technology, the state has rested on its laurels. "One of the main reasons is over half a century of under-investment in the system, and also a problem of no political direction," says Philip Altbach, director of the Center for International Higher Education at Boston College.

The government has half-heartedly tried to promote public-private partnerships, but these, too, have fallen short. India has failed to capitalize on collaboration opportunities and engage with corporations and wealthy private investors, who have previously helped set up quality institutions like the Birla Institute of Technology & Science in Rajasthan.

"The corporate sector is sitting there waiting for higher education in general to become more active—the government could actually use these resources," says Dr. Rahul Choudaha, a U.S.-based education specialist. He cites the education efforts of tycoons like the Ambani brothers and Azim Premji. "They could have engaged the corporate houses in a much more proactive manner."

Even if the new law passes, the increase in tertiary places is expected to be a drop in the bucket of India's existing 400-odd universities and 18,000 colleges. The response from foreign universities has so far been cautious: Conditions in the bill, such as a required investment of $11 million and restrictions on repatriation of profits, will make entering the India market less attractive. There is also the possibility of a populist push to impose India's affirmative action-style quotas on the newcomers. The legislative drafting process has already been plagued by dissension, with anti-competition and anti-foreign forces on both the left and right in opposition.

Nevertheless, New Delhi could use the new law as the first step in reorienting education toward the market. Over-regulation stymies innovation and differentiation by controlling university administration right down to tuition rates and salaries.

"The higher education system is rigid and centralized under government control. Institutions haven't been encouraged to take risks and be innovative," says author Gurcharan Das. "And I think most importantly, if you give foreign universities in India autonomy, then this is a good foot in the door for Indian universities to also demand autonomy from the shackles of government control."

Since the reform era began in 1991, one of the most powerful forces for change has been the demonstration effect. So it could be, too, with education. "It's like what happened with the telecom sector in India," says Dr. Choudaha. "All the players had to shape up, and everybody benefited."

Source:-WSJ

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