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UPSCEssay:CreditBasedHigherEducationSystemStatus,OpportunitiesandChallenges.|KheloIndia

KheloIndia
ESSAY

UPSCEssay:CreditBasedHigherEducation
SystemStatus,Opportunitiesand
Challenges.
SEPTEMBER17,2012|SUPERMAN|6COMMENTS
EducationinIndiahasalwaysassumedalargerthanliferoleinthesociety.Whetheritbethe
GuruGobindDonoKhadey,KaakeyLaagunPaayeofRahimorthetwiceborndoctrinein
theVedas,educationhasalwayshadthatspiritualconnectionandthebusinessofimparting
educationwasneverconsideredabusinessatall.Perhapsoutofthisconceptualizationonly,
educationhasalwaysreceivedthepatronageofthetasteandthewealthythroughourhistory
andwasneverafinancialburdenonthestudents.WhetheritbetheKumaraguptafounded
Nalanda,ortheGangaiKondaCholaMandapmentionedintheAnaiyyavaraminscriptionof
RajendraChola,orthemadarassasfoundedbySherShah,thestudentsandtheteacherswere
alwayscomfortablymaintainedoutofthedonationsandIndiamaintaineditsdistinctionof
beingoneofthemostsoughtafterdestinationsofhigherlearning.
ThingschangedforthefirsttimeunderBritishIndiawhereitwasclearlyfeltthatfree
educationwouldnotbevaluedproperlybythenatives,andhenceshouldbechanged.But
postindependence,theIndianconceptualizationagaintookthecenterstageandtheseatsof
higherlearningbecamethetemplesofmodernIndia.Nehruknewthecentralimportanceof
highereducationinhisvisionofaplannedeconomicdevelopmentandhenceensuredthatthe
doorsofthesetemplesremainedopentotheverybestofmindsirrespectiveoftheirfinancial
capabilities.Soliberalstategrantsweremadeforthiscauseandthusthefeesweremaintained
lowaswell.Withinallitsconstraintssuchasystemfunctionedremarkablywellinservingthe
needsoftheeconomy.
However,bythe1990sthestructureofthiseconomybegantochange.Stateledapproachgave
waytoamarketdeterminedpatternofdevelopmentandtheenterprisingpotentialofthe
economywasunlocked.Naturallythewantsofthiseconomyfromitseducationsectorwere
muchlargerinscaleandmorediverseanddynamicincharacter.
Tomeetthesenewdemands,thehighereducationsectorhadtoreformaswell.Firstofallits
sizewassimplynotbigenough.Indiahadaparticularlyunimpressiverecordofthe
penetrationofhighereducationandthiswassimplynotconsistentwiththeambitionsof
takingtheeconomyonahighgrowthtrajectory.
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Nexttherewasaneedtomeetthenewunconventionalneedsoftheeconomy.Nolonger,thus,
itsufficedtoproducegraduateswithstandarddegreespossessingstandardskills.Oneneeded
tobedynamic.Similarly,asoureconomycompetedonaglobalscale,weneededhuman
resourceswhocouldworkwithworldclasstechnologiesandmanagementpracticesaswell.
Thusalargescaleinvestmentinthesectorwasneeded.
Nowthisiswheretherelianceongovernmentcouldbecomeaconstraint.Becausepublicfunds
arescarceandslowincomingandarejustnotsuitedforsuchadynamicenvironment.Thus
budgetconstraintsbecamehardandthesectorwasforcedtorelymoreoninternalresource
generationandthusthecreditbasededucationsystemproliferated.
Therewereotherfactorsdrivingthechangeaswell.Forinstancetheneweconomyoffereda
largernumberofbetterpayingjobs.Sopeoplewerenowpreparedtopaymoreforthehigher
educationwhichcouldlandthemwithsuchjobs.Anditisalwaysdifficulttorunagainstthe
marketforcesinfullswing.Ifwehadntallowedthehighereducationinstitutionstoincrease
theirfee,itwouldsimplyhavecreatedmorecomplianceissuesasthehigherfeewouldhave
beenpushedunderthetable,becausemarketforcescantberesistedonamacroscalewithout
significantcosts.
Moreoverastheeconomybecamemoreintegratedwiththeworld,sodidthepeople.
Migration,speciallyofthequalifiedpeople,increasedandifourinstitutionsdidntofferbetter
termstotheteachers,themorequalifiedoneswouldhavesimplymigratedaway.Similarlyif
ourinstitutionsdidntofferworldclassfacilitiesandeducationtothestudents,boththe
studentsandtheirprospectiveemployerswouldmigrateawayaswell.
Thustherewasaclearneedforhigherinvestmentinthesectorandsothecreditbasedsystem
emerged.Withtimetherehasbeenagradualstrengtheningofthesystemasmoreandmore
privateinstitutionscomeup,governmentinstitutionsincreasetheirfee,privatejobsdevelop
moreandbanksreorienttheirbusinesstotakeadvantageoftheopportunity.Finallyaswe
speak,thereareproposalstoallowforeignuniversitiesintoIndiaandabilltothateffectisin
theparliament.
Havingexaminedthetransitiontowardsthecreditbasededucationsystem,letuspauseand
askourselveswhataretheimplicationsofsuchatransition.Canitcontinuetosuitusinfuture
aswell?Whataretheopportunitieswhichlieforward?Orwhatdoesitdotothestudentand
toourcherisheddreamofequalopportunitiestoall?
Letuslookattheopportunitiesfirst.Clearlythebiggeststrengthofthemodel,asseenearlier,
isthatitisalignedwiththemarketforces.Thismakesitsmooth.Thismakesitdynamicand
thismakesitscalable.Thisgivesusthepotentialofcreatingworldclasshumanresources.The
modeliscapableofgeneratingandattractingresourcesfordevelopingstateofart
infrastructure,forretainingtoplevelteachersandstudentsandthuscreateapositivefeedback
mechanism.Apartfromprovidingthelubricanttoruntheeconomyefficientlythemodelcan
alsohelpenhanceIndiassoftpower.Asourhighlytrainedprofessionalsgoabroad,theywill
helpcreatetheimageofanew,richIndia.Finally,thismodelisuniqueinthesensethatitcan
producethebarefootengineersneededtoadviseontheMGNREGSprojectsandcanalso
producethebestinvestmentbankerscapableofdealingincomplexderivativetransactions.
Thustheopportunitiesofferedbythemodelareimmense.Butbeforepassingtheverdict,letus
alsolookatthepotentialcausesofconcern.
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Giventhealignmentofthemodelwiththemarketforcesanditspotentialtoserveus,should
wethenleaveitentirelytothemarket?Well,certainlynot.TobeginwithECO101tellsusthat
educationhaspositiveexternalitiesandthusiflefttothemarket,themarketwillalwaysover
priceitandprovidetoolittleofit.Thusstateinterventionisneededtocorrectthisdistortion.
Thenthinkofwhatthemodelisdoingtoitsprincipalstakeholderthestudent.Itisupping
thestakes.Andbyuppingthestakesitisputtingherunderalotofadditionalpressure.Andin
aneducationalsystemnotexactlyknownforitssensitivitytowardsthestudents,addonemore
woetoheralreadylonglistofwoeshowwillIeverrepaythecreditifIfail?Thereisalready
atleastnesuicideeveryyearinmyalmamatersinceatleastadecadedowewanttoincrease
thatanyfurther?
Nextthinkoftheimplicationsinthecurrentcontextwhenaneffectiveregulatorymechanismis
lacking.Oneaspectclearlyisthatthisputsthestudents(andtheirguardians)inaworse
situationsincetheyarelockedinandthussubjecttobeingmanipulatedbythecollege
authorities.Evenapartfromit,thinkofthewidercontext.Highereducationisaspherewhere
thereisaclearinformationasymmetrywiththestudentsbeingatthereceivingend.Thiscredit
basedmodelwillcreateaclassicallemonsproblemsincebecauseonewouldexpectthebetter
institutestochargehigherfees,eventheworseoneswoldchargeahigherfeeforotherwise
theywouldbeconsideredbadbythevirtueofchargingalowerfee.Thenhavingputsomuch
atstake,theseinstituteswouldbeinclinedtopublishpaidrankingsinthemediaandthus
compoundingtheinformationproblem.
Worsestill,whatwouldhappenifsuchinstitutescometogetherandformcartelscreating
artificialscarcityandhigherfee.Andinallthisletusnotforgetwhathappenstotheresearch
outputinsuchacase.Clearlyhavingpaidsomuchfortheeducation,studentswouldbe
inclinedtotakeupjobsinindustryratherthandonningthescientistscoat.
Andfinallytheconceptofequitywhathappenstoitunderthismodel.Weallknowcredit
flowstowardsthehaves.Itfiltersoutthehavenots.Howcanweexpectapoormanschild
toeverfurnishahundredthousanddollarsloanguaranteenotwithstandinghowever
deservingshemaybe.Thusthesystemautomaticallyweedsoutthepoor.
Havingseenthepracticallimitationsofthemodel,itisclearthatweneedtobuildinsufficient
safeguardmechanismsfirst.Thiswouldensureitcontributestogrowthmeaningfulinclusive
growthandnotjustanumbercalledgrowth.Clearlythereisaneedtosafeguardtheinterests
ofthefinanciallypoorerchildren.Isthereanywayofdoingthiswithoutputtingastrainonthe
publicfunds?PerhapswecandrawupontheUniversalServiceObligations(USO)Fundmodel
fromthetelecomsector.OrwecanlooktowardsaRTEkindoffeature(25%reservation).
Toaddresstheotherissues,speciallytoprotecttheinterestsofthestudentsatlargeandalsoto
preventalemonsproblemfromoccurring,weneedtoputinplacestrongandindependent
regulatorymechanisms.Theproposedbillonthehighereducationiscertainlyawelcomestep
inthedirection.Studentcounselingmustinvariablybeapartofthisregulatorypackageand
weneedtobringlawswhichempowerthestudents.Andfinally,tomakesurethatresearch
activityisnotsacrificedinthedin,wewouldneedtoputinplacelargerincentivesstructureso
astomakeIndiaahubforglobalR&D.

Thecreditbasedmodelispowerfulbecauseitisalignedwiththetrendsoftheage.Itoffers

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Thecreditbasedmodelispowerfulbecauseitisalignedwiththetrendsoftheage.Itoffers
tremendouspotentialtoservethecountryaswell.Andcertainlywemustencourageit.Butat
thesametimeweneedtoputinsufficientsafeguardsaswell.Thefutureawaits

6thoughtsonUPSCEssay:CreditBasedHigher
EducationSystemStatus,Opportunitiesand
Challenges.
1. mmshariffsays:
APRIL28,2014AT5:15PM
Thisisveryusefularticle,everyonemustreadthis.Everystudentmusttakeeducationasa
challenge.
2. sonusays:
JULY31,2014AT4:17PM
Wellfurnishedcontent.Thanx
3. Pingback:FromMacaulayPutra,WithLovePart2|KheloIndia
4. vikassays:
NOVEMBER8,2014AT1:31PM
excellentarticle(y)
5. Pingback:HowtoWriteEssayforUPSCMainsExam?ToppersAdvice
6. sovsays:
JULY7,2015AT9:10PM
canalsoproducethebestinvestmentbankerscapableofdealingincomplexderivative
transactions
roknahinpayekya
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