A Neoliberal Approach to Policy Making in Indian Higher Education During the Post-liberalization Era

Abstract

It looks at the series of higher education reforms which have been mooted and implemented since the beginning of the liberalization phase in India. It unravels the rationality behind the reform measures and traces its evolution over the last two and half decades. It then questions whether the rationale of promoting market in higher education, changing governance of public institutions and the increased role of the private sector based on the concept of efficiency are tenable or not in the context of higher education in a developing country like India.

1 Introduction

Policy making in the education sector and in particular in the higher education sector gradually came under the influence of the new economic policy which consisted of the Structural Adjustment Program (SAP) advocated by the World Bank and the stabilization package advised by the International Monetary Fund (IMF). While the loans from the World Bank sought to foster competitiveness at the sectoral level by encouraging private sector participation in a regulated market, the stabilization package targeted fiscal deficit in terms of gross domestic product (GDP) to stabilize the macro-economy by reining in the expenditure growth and mobilizing more revenue.¹ Initially the Centre and later the states were required to enact the Fiscal Responsibility and Budget Management (FRBM) Act to keep the fiscal deficit within the limit of 3% of GDP. Higher education policy making gradually started reflecting the major tenets of the new economic policy like budget cut, restructuring of the public sector, facilitating the entry of the private sector and a move towards construction of a higher education market.²

Reforms could broadly be categorized into two kinds: one, funding reforms and two, non-funding regulatory and/governance reforms. The undertones of all these reforms have been efficiency—both allocative and technical, in the higher education system.

This chapter seeks to chronicle the reform measures mooted and implemented for the higher education sector as India geared up for embracing the gradual unfolding of the new economic policy in three phases. The chapter then assesses the implications of these recommendations on excellence or quality, and juxtaposes the objective of efficiency with achieving excellence or quality.

The chapter is structured as follows: at the outset, it highlights the nature of higher education. In the sections that follow from there, it discusses reforms under the four categories: trends in public funding, infusion of private players, governance reforms and construction of regulated markets, during different phases beginning with the new economic policy. The chapter concludes with an appraisal of these reforms on quality of higher education in India.

2 Higher Education as a Public Good

The new economic policy questions the role of the public sector and argues for a larger role of the private sector. The Indian Higher Education has seen a profusion of either market principles in the functioning of public universities or direct privatization with the rampant growth of private sector in the system (as we would also see in the sections that ensue). There has also been a tendency to move from input based funding to output based funding and channeling funds through market like vouchers, fee reimbursement scheme, industry funding, and more recently through Higher Education Funding Agency³ (HEFA). The nature of higher education is put to question as a result of these changes; is it a public good or a private good? In a way, the reform measures can be viewed as a debate on the nature and extent of public-private divide in funding of higher education and regulatory intervention of the government.

Higher education is often classified as a public good which forms the basis for arguing in favour of public funding of higher education. But we need to distinguish between the positive and the normative approach. In terms of specific characteristics, higher education is not a pure public good. This is also evident from the fact that there has been an increase in private participation in higher education world over. This is different from saying that higher education should be a public good to capitalize on publicness of higher education to inculcate responsible citizenship and build an inclusive society. If we go strictly by the definition of public good as given by Samuelson (1954), higher education is excludable as access to higher education is regulated depending on eligibility and paying capacity. Higher education is both rival in its consumption and excludable in benefits⁴ as admission is not assured for all in view of the limited number of seats in the HEIs and merit as one has to become eligible for admission in a HEI. Non-rivalry is essentially a case of externalities. However, those who take admission and pursue higher studies undergo transformation to generate externalities for the society. There arises a case for public funding because these externalities account for the difference between the social demand and private demand. Should there be public funding only because of the positive externalities that HE generates? The portrayal of the private demand and social demand does not include those who cannot pay for education and hence they remain outside the realm of the market. For the purpose of social mobility, inclusiveness needs to be ensured. Those who are meritorious need to be supported by scholarship otherwise they would end up investing less on their education and the nation as a whole would suffer. There is a transformation that education brings about in the individuals to create a public sphere to build up a society of concerned and responsible citizens. Without scruples and morality, no economic system can function at its best as corruption erodes the fundamentals of the society. The outcome of education in the form of human capital formation is embodied in an individual who stands to gain in terms of higher stream of future earnings as a reward for higher productivity.

Higher education is therefore best argued as a quasi-public good (Marginson 2007; Chattopadhyay 2012) as it combines the features of both private and a public good. The development of scientific literacy is essential for, distribution of knowledge and promotion of arts and culture (Marginson 2016). This is not only necessary to achieve participatory and inclusive development but also to gain from merit and cultivate talent to build up a knowledge based competitive economy.

Higher education should not be considered as a merit good either as graduates do not suffer from the same kind of deficiencies as the school going children and their parents do.⁵ Generally primary education is considered to be a merit good which warrants full public support for the schools as the Right to Education (RTE) Act exemplifies. There is one more dimension to the public funding of higher education and that is the mode of funding. While it is widely recognized that higher education needs to be publicly funded, the issue of poor governance has been a matter of concern for the policy makers. Despite ‘higher education’ being a quasi-public good, the Indian higher education policy has been steered by the neo-liberal principles which has sought to undermine the public good character of higher education. We would now examine the policy trail in the rest of the paper and try to understand the ramifications on equity, excellence and quality, the three often-quoted objectives for the higher education sector as a whole.

3 The Neoliberal Elements of Higher Education Reform Measures

The entire gamut of new economic policies framed under the neoliberal influence can be classified into four categories (i) a cut in public sector funding, (ii) facilitation of entry of the private sector, (iii) restructuring of the public sector and measures to improve governance; and (iv) construction of a regulated quasi-market. Public sector governance reform upholds the principle of technical efficiency and the rationale for market construction is based on achieving allocative efficiency (Jongbloed 2004). The governance reform is advocated in line with the new public management (NPM), which is based on corporate principles. Public-private partnerships (PPP) can also be viewed as one way of governance reform. Under the NPM as well as PPP, public HEIs are governed in the corporate style to make them efficient and productive. The governance reforms aim at improving technical efficiency, by making the institutions cost conscious. Technical efficiency essentially focuses on the strengthening of the use of input and production of output/service with the purpose of restoration and consolidation of the educational production function. This entails institutional governance reform. The other strand is a cut in the public expenditure, coupled with exploring other modes of funding, which is often argued to curb wastage and ensure accountability in the HEIs. Accountability brings in efficiency in public institutions (Mortimer 1972; Berdahl 1990; Alexander 2000; Huisman and Currie 2004; Kai 2009) by reduction in wastage of resources and by providing justification for expending public money by registering their performance. It was argued that funds be reallocated from higher education to school level education, which was thought to be conferring greater externalities on the society. A cut in public expenditure, thus, is a case of allocative efficiency within the education sector. Table 13.1 shows the relative shares of GDP spent on school level education and higher education over years. It can be seen that the share of school level education (elementary and secondary combined) has been consistently above that of higher education. On an average the expenditure on school level education constituted 2.5% of the GDP from 2005–06 to 2012–13, while the expenditure on higher education as a proportion of GDP stood at 0.74% on an average during the same period.

Table 13.1 Public expenditure on education as a percentage of GDP

Despite the abysmal public expenditure on higher education vis-à-vis school education, the gross enrolment ratio (GER)⁶ has shot up from 8.1% in 2001–02 to 25.8% in 2017–18, as shown in Fig. 13.1.

Fig. 13.1

Source Education Statistics at a glance (2016). Report on All India Survey of Higher Education, various years

Gross enrolment ratio over years.

As would be seen in the ensuing sections, much of this enrolment is catered to by the private sector (privately managed colleges). It was an outcome of the other two reform measures, that is private sector participation and construction of a regulated market which are presumed to bestow sovereignty on the market participants to make choices, providing freedom to the providers as well as to the students who are viewed as consumers, changing thereby the role of the State to only that of a regulator or facilitator’ of the market conditions and foster competitiveness. These two measures seeking to achieve allocative efficiency in the system improve, arguably both quality of service delivery of the HEIs and saving of government resources. These claims are however highly contestable. Given that efficiency in an education market is selection based or S-efficiency rather than exchange based or E-efficiency, the role of free choices and competition is limited (Glennerster 1991). Further, the typical forces of market are required to be regulated to give more space to merit and the deserving rather than those who can afford to pay for the sake of quality and equity (Chattopadhyay 2012).

Though the market for higher education is an imperfect one by all counts, a market is still desired because it gives freedom to the students and the education providers to choose from and foster competitiveness as an instrument of realizing the potential of human capital embodied.

Since 1991, higher education policies reflect both the attempts, construction of a regulated higher education market as suggested by various commissions and committees and its culmination in the repeal of the UGC Act proposed on 30 June 2018. The various kinds of freedom to the providers and the consumers which are required to install market like conditions can be summed up as given in Table 13.2.

Table 13.2 Eight conditions for market

Market entails that both the consumers and the producers respond to the signals in terms of the prices and the composition of demand. However, there is an internal contradiction if we juxtapose freedom to determine prices with that of freedom to determine courses to be offered. Cost recovery would mean that the HEIs would be required to customize their courses and admit students who can pay rather than who deserve to be given admission based on their merit and societal and economic backgrounds to ensure equal accessibility.

Students, as consumers, are to be provided with freedom to choose not only the institution they would like to pursue studies from but also freedom to choose the courses (credits) they would like to opt for. The students are provided information regarding the course-wise price in the institution brochure and also with the information on ranks of HEIs as a guide to the relative quality of HEIs. Following the World Bank argument, students should be charged high price for their education because the private rates of return for students, in terms of future income streams, are higher than the social rates of return (Psacharopolous 1986) and thereby role of prices in generating signals would be restored.⁷ Giving freedom to the students begs the questions whether the students are really the customers. Both in teaching-learning and research, students and the teachers are the co-producers of quality knowledge. This entails that the students have to work hard for the degrees as degrees are not for sale as paying fees ensures admission to a program of study. These are the fundamental flaws in the application of market principles to undertake governance reform. Not only these freedoms are internally inconsistent, these freedoms do not do justice to the principles higher education should seek to uphold for societal and economic benefits.

Starting from the early 1990s, the entire reform phase can be categorized into three periods as (1) 1991–2007, (2) 2007–08 to 2013–14 and (3) 2014–2018. Here the beginning of the second and the third phase had a major policy break from the previous one. We would like to discuss policy making under the four aspects of new economic policy during these three phases. As shall be discussed subsequently, such a paradigmatic shift, with a growing role for the private sector, has serious ramifications for all the three objectives, namely, expansion, inclusion and quality.

4 Policy Making During First Phase of Reform (1991–2007)

During this phase, there was an emphasis on only cutting public funds, exploring other modes of funding, and entry of private sector in the system, but no concrete regulatory framework to usher in markets in higher education sector, in true sense.

4.1 Public Funding

The policy during this phase, kick started by exploring other sources of funding higher education, than relying on public funding only. To begin with, the Punnayya Committee Report (1992–93) (GOI 1993) argued that the central universities should supplement the state efforts by raising their own resources and thus stabilize their functions and development. To promote internal efficiency and quality, negotiated mode of funding should be discontinued with.⁸ It was proposed that the Central universities shift to a mix of input-funding and a student based funding system. This was argued to be promoting cost efficiency and competition amongst the universities.

The Birla-Ambani Report (GOI 2000) on reforms in education, also suggested for a creation of a market oriented competitive environment for higher education institutions. It proposed that funds be reallocated to primary education and user-pay principle must be applied in case of higher education, supported by loan provision. Basically, the Report argued for treating higher education more as a private good and creating a level playing field for larger private sector participation without giving any specific directions for the extent of regulation the market would need. There was opposition to the role of the private sector and the stage was not set for ushering in the market, albeit quasi-market in the context of higher education with adequate safeguards.

The Tenth Five Year Plan (2002–07) proposed rationalization of tuition fees, generation of internal sources of funding, and exploration of other avenues for receipt of contributions, donations, gifts, and sponsorships from the alumni, trusts, private sector and industries.

The CABE Committee (2004–05) (GOI 2005) contended that universities should have freedom to bring in entrepreneurial education, self-financed and job-oriented courses and to look for alternative sources of funding higher education, which would incentivize them to perform better. The level of funding should be enhanced by charging high and differentiated fees, to cover the cost of provision to generate reasonable amount of surplus. The Committee noted that financial aid acted as a tool to curtail freedom of the providers, both academic as well as financial. Thus there was a focus on improving the governance of the public funded institutions and be more responsive to the demand through changes in the mode of funding. The Committee also suggested to set up an Internal Quality Assessment Cell (IQAC) to ensure quality improvement.

Let us look at the trend in public funding during this phase. During the early 1990s, there was a cut in the public expenditure for the universities. The plan and non-plan expenditure registered a decline in real terms from 1990–91 to 1995–96, with expenditure on higher education as a percentage of GDP by the Centre was hovering around 0.4% (on an average) from 1990–91 to 2000–01 (Tilak 2004). This reduction was mostly felt in the maintenance grants, which is meant for recurring expenditures, including teachers’ salaries. That the higher education was relegated as compared to school level education can be seen by the fact that the share of expenditure on higher education as a percentage of total expenditure on education was only 11.5%, on an average, during the same period (Tilak 2004). It was also a period when the White Paper (GOI 1997) on government subsidies branded higher education as a non-merit good which was used as a justification for compression of government subsidies⁹ (Chattopadhyay 2009). The annual growth rate of the HEIs and the enrolment during 1995–96 to 2005–06 were 7–8 and 8% respectively (Duraisamy and Duraisamy 2015).

The Punnaya Committee (GOI 1993) suggested funding via cash support to the students as a part of this approach. The CABE Committee (GOI 2005) recommended choice-based credit courses which would bring in flexibility in the academic structure besides promoting students’ mobility both within the country and abroad, thus ensuring academic parity with international standards. Though educational loans were made available for the students, the demand was low. During 1990–91 to 1999–2001, the annual growth rate in the loans accounts was 5.5% with a growth rate in outstanding loans amounting to 23.8% (Duraisamy and Duraisamy 2015).

4.2 Private Providers

The number of private providers in the first phase was very few. However, the 10th FYP gave an indication towards increased private participation in the management of colleges and the deemed to be universities, with the two key words of liberalization and internationalization of higher education constituting the overall thrust of education policy reform. The period could be characterized by installation of concrete policy regarding the role of the private sector, as argued by Tilak (2014).

4.3 Governance Reforms

Governance reforms were rather subtle during this phase. Drawing on the Academic Audit practised in the then UK higher education system, the Punnayya Committee in early 1990s, suggested introduction of a monitoring system for the Indian Universities, which required developing indicators on their academic, financial and administrative operations. This was suggested to have information about the functioning of universities, which was expected to result into internal pressures for improved performance. It was also during this phase that National Assessment and Accreditation Council (NAAC) was set up, in 1994, to assess the performance at the institutional level. The NAAC didn’t make a dent on internal life of universities because (a) accreditation was discretionary, and (b) it did not directly affect individual faculty behaviour; not every faculty was mandated to perform and deliver outputs every year. The CABE (Central Advisory Committee on Education) (GOI 2005) recommended implementing of academic audit and setting up on Internal Quality Assessment Cell (IQAC) and improve accountability of faculty thereof. But in the aggregate, the governance reforms were at a nascent stage during this phase.

4.4 Construction of Market

While this period did not witness any significant regulatory changes to construct markets in higher education, the CABE report recommended the Ministry of Human Resource Development (MHRD) to streamline the establishment and governance of private sector institutions and Self-Financing Institutions. The role of State was clearly mentioned to be that of a facilitator of self-financing courses.

In sum, we can say that this phase had set in the stage for a shift towards market-like condition in the Indian higher education, with a strong emphasis being placed on diversification of funding base by exploring other sources. The typical neoliberal governance reforms did not take off during this period, although the policy witnessed a move towards recommending such reforms in the form of having IQAC, or having performance indicators. It was in the next phase that there was a furore in the policy about privatization and market-based governance reforms.

5 Policy Making During Second Phase of Reform (2007–08 to 2013–14)

5.1 Public Funding

With respect to mode of funding, the 11-th FYP proposed that the government must ensure that fee levels are not profiteering and beyond this the State should not interfere in institutional governance (GOI 2008). The FYP therefore did not question setting up fees at levels which meets the costs. In order to meet the need for an expansion in HEIs, the National Knowledge Commission (NKC) (GOI 2009a) recommended that the funding should be enhanced from both the public and the private modes. It reiterated that the HEIs should look for alternative sources of funding.

During this phase, the share of public expenditure on higher education in GDP showed only a marginal improvement, at 0.83 during 2007–08 to 2010–11 (GOI 2012a)¹⁰ caused by an increase in the number of public funded universities¹¹ from 253 in 2007–08 to 308 in 2010–11.¹² At the same time, the average share of school level education in GDP for the same period was higher at 2.31%. The annual growth rate of the HEIs and the enrolment were higher compared to the first period at 13 and 14% respectively during 2005–06 to 2010–11 (Duraisamy and Duraisamy 2015).

The 11th FYP clearly spelt out the three major objectives of higher education reform: expansion, inclusion and quality. The budgetary provision was raised significantly with a larger role for the government to achieve all the three without there being any trade-off between them. To mitigate the adverse impact on inclusiveness because of rising private sector participation, scholarship was to be largely relied upon. The 11th FYP vision document, however, sought to make it clear that public sector based expansion could deliver on inclusive expansion if corrective measures are adopted to improve quality. Setting up of central universities in all the states was proposed. The 11th FYP budgeted for a massive rise of around 4.6 times in its budgetary allocation in comparison with the 10th FYP (GOI 2008).

5.2 Private Providers

In addition, this phase witnessed a sharp rise in the state private universities. The number went up from 14 in 2007–08 to 262 (as on 31.03.2017), with a sudden shoot up in the year 2009–10 (Table 13.3).

Table 13.3 Number of state private universities over years

Table 13.4 shows the growth of privately managed universities during this period, along with the growth of total number of universities in the country. It needs to be noted that the number of privately managed universities increased from 178 in 2010–11 to 343 in 2017–18, which is a 93% jump in a span of just 7 years. The proportion of privately managed universities to the total universities increased from 28.7 to 38.0% during this period.

Table 13.4 Proportion of privately managed universities in total universities (in percentage)

Colleges cater to a large chunk of student in the higher education. Across the country, a majority of colleges are privately managed, with a significant proportion of that belonging to the unaided category, reflecting a support given by the State to the establishment of pure private institutions. These privately managed have as much as 67.3% of the total students in all the colleges. This can be seen from Fig. 13.2.

Fig. 13.2

Source All India Survey of Higher Education (GoI), various years

Share of privately managed colleges and enrolment in privately managed colleges over years (in percentage).

During this period, the cost recovery by the public HEIs went up to nearly 40% (CABE), partly contributed by the self-financing courses, rise in tuition fees and other incomes (GOI 2005).

5.3 Debate on Public-Private Divide

There was apparently a clash of ideas towards higher education reform between the 11th FYP and the National Knowledge Commission (NKC). While the 11th FYP favoured a larger role for the public funding in achieving the higher education objectives, the NKC argued for a larger role for the private sector. The other major contention was the role of the UGC in the emerging context and installation of a regulatory body. Possibly to negotiate between the pro-public sector role envisaged in the 11th FYP and pro-market pro-private sector role as envisaged in the NKC, the central government set up the Yashpal Committee apparently to revisit the debate in policy approaches and resolve to suggest policies for possible implementation. The Yash Pal Committee Report sought to reverse the trends of fragmentation and compartmentalization in the system of knowledge generation and knowledge dissemination and suggested setting up of research networks for fostering collaborations.

The 12th FYP favoured participation of the private higher education while at the same time, advocating policies for access, equity and quality with an objective of meeting the international standards. It highlighted a need for an improved governance system with the application of new management principles. As a measure to enhance inclusion as well as to support the private self-financing institutions and move closer towards market, voucher system was recommended to meet the financial needs of the students from marginalized group (GOI 2013b). However, implementation of the voucher scheme raised two concerns, (a) the students suffer from lack of information on the quality of courses or the institutes, making them vulnerable to uninformed or poor decision making, (b) the voucher system will infuse demand driven mechanism wherein the institutes of higher education would compete with each other resulting in stratification of the market.

The 12th FYP advocated strongly Public-Private Partnership (PPP) in higher education, for setting up new universities and colleges and for creating quality infrastructure and physical facilities in the existing colleges. Under this system, the investment is shared in varying degrees between public and the private sector with respect to management of the HEIs and their infrastructure. Further, it recommended models for industry-institute interface whereby large education hubs can be set up with the active support by the state government concerned including provisioning of land (ibid.).

The National Higher Education Mission (Rashtriya Uchchatar Shiksha Abhiyan, RUSA) (GOI 2013a) also sought to generate competition amongst the HEIs by recommending performance based funding of the state universities. It recommended financial as well as academic autonomy in order to prevent further deterioration. For rendering financial autonomy, the RUSA suggested that every state should set up State Higher Education Council (SHEC), which would disburse funds to the state universities. Also the Committee suggested that by providing freedom to the state universities, they would enhance their quality.

5.4 Private Providers

The NKC argued that private investment in education should be encouraged. For this purpose, public resources like land should be leveraged especially in the form of land grants to attract more private investment. It also recommended that 1500 new universities be set up, which would be accorded autonomy to fix student fees and tap other sources for generating funds. These new universities should develop strong interfaces with industry.

As mentioned earlier, the 12th FYP had argued for a larger role private sector should play in raising the Gross Enrolment Ratio (GER) to 30% by 2020. The amount of resources required was five times the current expenditure. The private sector was envisaged to emerge as a massive investor particularly in the professional and technical education. The Narayana Murthy Committee (GOI 2012b) suggested a larger role of the private sector, university-corporate link up in order to enhance the relevance of education and as also to explore an alternative mode of funding research in the universities.

5.5 Supply of Skill

In addition to all this, the 11th Plan sought to address the deficiency of skilled manpower in the labour market by introducing the National Skill Development Mission. The goal was to create skilled and employable personnel in line with the requirement of the economy. It aimed at generating 500 million skilled people by 2022. This was to ensure that the supply-side responses are perpetually in sync with the demand side impulses both from domestic as well as global economies and therefore both private and public sector need to be involved via a public-private partnership (PPP) mode. Two Bills were introduced in the Parliament to set up 8 new IITs and 5 new Indian Institute of Science Education and Research (IISER). A scheme was also framed to set up colleges in 374 educationally backward districts with lower than the average GER for India.

The integration of skill development with the conventional education has also been proposed by the State under the ‘Minimum course curriculum for undergraduate courses under choice based credit system’.¹³ This would confine the learning of students to getting trained in certain skills only, in order to become employable.

5.6 Governance Reforms

As compared to the previous period, the policy in this period was emphatic about increasing monitoring mechanism in the higher education sector, which marks the beginning of NPM based governance reform. In 2010, to ensure credible recruitment of teachers and their performance in higher education institutions, the UGC advocated minimum qualifications for appointment of teachers and other academic staff in universities and colleges by way of Performance Based Appraisal Scheme (PBAS) (GOI 2010). As argued by Das and Chattopadhyay (2014), implementation of PBAS amounts to straight-jacketing of regulatory interventions with disregard for individual differences in conceptualization of performance, disciplinary differences and differences in university mandates. The National Assessment and Accreditation Council (NAAC) was set up in 1994. But only in 2013 that it was made mandatory for universities to get themselves accredited. It can be seen from Fig.  13.3, that there has been a drastic increase in the number of institutions getting accreditation over the years. In 2016–17 a total of 1640 institutions got accreditation.

Fig. 13.3

Source NAAC Annual Report, various years

Number of institutions accredited over years.

In the same year, 2013, there was an attempt to make funding contingent upon relative performance of the state universities under RUSA.

During the first phase of reform the focus was more on the reform of the government funded institutions through changes in the mode of funding what is called endogenous privatization¹⁴ (Ball and Youdell 2007). In a way, this pursuit for technical efficiency was deemed necessary to enable the public funded institutions to enter the market and compete with the private in due course of time and to expand the choices faced by the students.

The second phase can be named as the phase of endogenous as well as exogenous privatization¹⁵ (Ball and Youdell 2007) because the government aims to realize expansion of higher education by (a) bringing in financial form of privatization of public HEI through fees, student loans, self- financed courses and also (b) by both active involvement of private sector and through different modes of public-private partnership (Tilak 2012, 2014). Only with the emergence of a strong and credible private sector in higher education, the government could start veering towards the construction of the market. The presence of the private sector was rather small during the 1990s.

5.7 Construction of a Regulated Market

The period saw a rampant change in nature of regulatory bodies in a manner/installation of new regulatory bodies, with an objective of constructing markets in the higher education sector. The NKC (GOI 2009a) argued for the formation of an Independent Regulatory Authority of Higher Education (IRAHE), which would be an overarching body, under which all the bodies would be subsumed. A single body would lead to hassle-free establishment of HEIs, particularly private. Thus, there were indications clear enough towards implementation of a full-fledged neoliberal reform agenda. It was also felt by the NKC that all three objectives of expansion, inclusion and quality cannot be pursued unless the private sector is brought in view of poor governance of the publicly funded institutions. The idea of setting up a new regulatory body called National Council for Higher Education and Research (NCHER) in place of multiple regulatory body, with an objective to reduce bureaucratic interference in the working of higher education system was put forth also by the Yash Pal Committee in 2009.

The year 2010 introduced certain Bills in the higher education sector. It was argued that the Bills sought to address certain problems that higher education sector was found to be suffering from, like information asymmetry, abuse of freedom amounting malpractices in the delivery of education, and irreversibility of educational choices (Chattopadhyay 2012). All these factors lead to market failure, which were sought to be corrected by the Bills. The Bills introduced were the Foreign Education Institutions (Regulation of Entry and Operations) Bill, Bill on Prohibition of Unfair Trade Practices, Educational Tribunals Bill, Universities for Innovations Bill, National Accreditation Regulatory Authority for Higher Education Institutions Bill and National Commission for Higher Education and Research. The underlying rationale was to correct the sources of market failure and infuse competition within the higher education sector.

But the competition would be amongst the unequals and might accentuate the prevailing hierarchy and dualism in the higher education sector (Glennerster 1991; Winston 1999). It would lead to a loose framework of regulations particularly for the agricultural institutes and for innovation universities, rather than addressing the issue of quality (Tilak 2010). The Unfair Trade Practices bill may not have addressed the issue of low quality of education being delivered even at high costs (Sharma 2010). Establishing the overarching National Council for Higher Education and Research (NCHER) was thought to be expediting setting up of private universities, without having to seek permission from a plethora of regulatory bodies (Sharma 2010). They may not help address all the three major objectives of expansion, inclusion and quality simultaneously in the wake of rising participation of the private providers (Chattopadhyay 2012).

The UGC during this phase also encouraged Choice Based Credit System (CBCS) from July 2015, allowing students to transfer their credits amongst the universities recognized by the UGC. This was also suggested in the RUSA (GOI 2013a) which was supposed to give a boost to student mobility and expand student choices to let them reign supreme in such a system.

But the idea of a regulatory body to oversee the entire higher education system and ward off political intervention and confusions arising out of overlapping jurisdictions continued to be considered as a very important policy measure by the policy makers (which primarily led to the formation of a committee headed by Prof. Yash Pal).

6 Policy Making During the Third Phase of Reform (2014–2018)

6.1 Public Funding

It was reiterated by the NKC to dedicate 6% of GDP to education and 1.5% to higher education. It is yet to be materialized. Though there was a significant jump during the 11th FYP, in real per capita terms, the higher education budget has not seen any rise. In fact, as argued by Tilak (2016), it even declined. It has to be noted that an increase in budgetary allocation is not a guarantee for good quality as long as internal governance remains an issue of concern. A significant portion of the budget is earmarked for an increase in the salaries of the teachers. Resources are scarce for development of the infrastructure and augmentation of facilities. Further, given the huge size of the higher education sector, public funding for research is minimal. The students’ loan has gained importance but at the same time, loan recovery has emerged to be a problem (Krishnan 2017). As per the latest news report, the growth in outstanding educational loans slowed down to only 0.02% during 2017–18. There has been an overall tendency to move towards output-based funding to be routed through the market to effect improvement in governance (Chattopadhyay 2016) by linking funding to accreditation, world ranking, financial autonomy to the Category I HEIs under the new scheme of graded autonomy.

A drastic shift towards market as a source of funding has happened as a result of setting up of Higher Education Funding Agency (HEFA), for providing additional funds for research and infrastructure in Universities through 10-year loans. The principal of the loan would be repaid through internal receipts, to be earned by HEIs through fee receipts and research earnings. The sources for internal receipts include tuition fees and research receipts. It is not hard to argue to such a measure would cause exclusion of students who are meritorious but cannot afford to pay for their education. Also, the nature of knowledge generated would be restricted to the one that can generate resources without much risks involved; fundamental research/basic research, the outcome of which is uncertain and time consuming, would suffer and applied research or reproduction of the same principles in research, would be reined in. Autonomy of researcher in the universities could also get hampered, as output might get structured as per the needs of the funders providing resources for research.

6.2 Governance Reform

The third phase marks a major departure from the earlier two phases in terms of major policy changes which seeks to overhaul the entire higher education system in line with the neoliberal principles. The major policy initiatives are graded autonomy (GOI 2018) and setting up of institutes of eminence (GOI 2017) or what are called World Class Universities.

The policy of graded autonomy is expected to usher in a sea change in the way the universities are regulated and funded. This new policy shows very clearly what does the government think about the possible relationships amongst regulation, autonomy and quality. These are as follows: one, that the government believes that autonomy is crucial for achieving quality; two, autonomy can be bestowed on those institutions who have performed well and hence are trust worthy and capable of exercising autonomy to achieve quality and three, the role of regulations is to help attain minimum standard as stated in the UGC Regulations.

The way the categorization of the Universities has been conceived of are as follows for the grant of graded autonomy. Category I HEIs should have NAAC score of 3.5 and above or it has been awarded a corresponding grade/score by a reputed accreditation agency empanelled by the UGC or it has been among the top 500 of reputed world rankings such as the Times Higher Education or Quacquarelli Symonds (QS). Category II HEIs should have a NAAC score between 3.01 and 3.49 or it has received a corresponding accreditation grade/score from a reputed accreditation agency empanelled by the UGC. Category III HEIs are neither I nor II as above (GOI 2018). PPP and financial autonomy under graded autonomy to the public institutions amount to infusion of private sector principles in the functioning of the public sector institutions.

The conditionalities attached to funding show that autonomy has to be defined carefully. Autonomy for the institutions need not get translated to autonomy for the teachers to exercise their academic freedom. Autonomy to the institutions to pursue goals in line with what the UGC has recommended does not imply of course that the teachers will be autonomous. Further, in the name of financial autonomy, the greatest casualty is likely to be the academic freedom and the institutional autonomy.

6.3 Selective Autonomy

That the Category I institutions are trust worthy is evident in the very first dimension of autonomy to be given to the institutions regarding the review process. For these HEIs, there will be no external review and only internal review will do. For Category II, however, external review is required. Autonomy comes in the form of permission given to offer new courses/department in self-financing mode including skill development courses under the Ministry of Skill Development. Development of research parks, incubation centers, university-society linkage centers, under PPP or self-financing mode are to be encouraged and the institutions need not seek any prior approval. The most important change which is in a way a path breaking one is to allow the universities to hire foreign faculty up to 20% of its total faculty strength with the provision to allow for arriving at the remunerations through mutual agreement. This marks a departure from the determination of the pay scales in line with the recommendation of the Pay Commission. The institutions can admit foreign students up to 20% of its total strength based on merit. The scope for incentivization is in the form of career advancement if the basic minimum as prescribed by the PBAS-API system is complied with. There is no provision for the reward at the margin for the extra points that the faculty accumulates. Now the university is allowed to provide for building in an incentive structure to attract talented faculty as long as incentives are paid out of own funds. Autonomy is being given as long as the HEIs can raise resources. This will foster competition among the HEIs. So, the extent of competition will be regulated depending on the categorization of the HEIs because competition presupposes ability to compete and the ability will now be determined by their respective performances as measured in terms of ranking and NAAC score. Eventually the Category I will be moving farther from the remaining set of institutions and the extent of differentiation that exist today among the institutions, which is, in a way, systemic and inevitable, will get more and more accentuated. This will render the credentials more differentiated depending on the category of the institution it belongs to. Given the uniqueness of the human capital, this competition in the education market is a zero-sum game.

This is one way of privatization of the governance structure of the publicly funded universities. The teachers at the individual level will not be able to exercise much autonomy as the universities will be keen to offer courses and programs on skill development. The infusion of funding conditionalities will circumscribe the academic freedom and accentuate hierarchy between the university authority and the faculty.

The basic idea is to invoke Regulations to govern the HEIs to optimize its full potential to get the best of an institute and attain at least a minimum standard. At the same time, the universities within a set of defined rules of the game, are required to compete with each other to achieve higher ranking. There are certain implications we would like to point out. Market competition requires a level playing field to exist. Increasing importance of quality assurance and ranking not only in measuring but guiding by changing evaluation mechanism. The foreign faculty and incentive based pay structure will mean that the Category I institutions will no longer be under any compulsion to follow the PBAS-API system. Opening the doors to the foreign students and foreign faculty is a step towards internationalization of the Indian higher education program. This will be extremely crucial both for the academic program, collegiality that prevails among the faculty. This is also privatization of the publicly funded universities. As more and more courses are offered in the self -financing mode, fees would go up.

6.4 Private Providers

The growth of the privately funded institutions continues. Within this period the State Private Universities grew from 201 as on 23rd February 2015 to 262 as on 31st March 2017 (Table 13.2). Public-Private Partnership has also led to an expansion in the provision of education by private sector.

6.5 Construction of Market

Much in line with the previous phase, in 2017, it was again proposed that the UGC and the AICTE should be replaced by a new body called Higher Education Empowerment Regulation Agency (HEERA). It was felt that multiple regulatory bodies led to excessive and restrictive regulations.

In 2018, government again proposed to repeal the UGC Act and set up Higher Education Commission of India (HECI), which is apparently a step towards regulation of market. But the way the draft of the HECI has been prepared, a selective set of public funded institutions are enabled to participate in the market. The issue is can the policy makers gradually move towards setting up of a market for higher education? Market is a central piece in the architecture of the economy the neoliberals envisage. However, as pointed out by Marginson (2016) that the neoliberal construction of market has failed world over as it is very much intrinsic to the functioning of a higher education market that a full-fledged market construction will remain incomplete due to the public good nature of knowledge and political impediment.

7 Concluding Remarks

As the policy making in higher education sector continues to be guided by the neoliberal principles the sector has to grapple with the aims of achieving three objectives of equity, quality and expansion as discussed above. However, by leaving higher education to the vagaries of market, which is premised on the logic of efficiency, it is unlikely that these objectives would be met (See Appendix Table 13.5). This is because the economic principles that guide neoliberal policy making are not readily applicable for the functioning of a university and higher education market. It is discussed how the idea of efficiency clashes with the aforementioned objectives of policy.

7.1 Can Construction of a Market Overcome Market Failure in Education?

The overall thrust of policy making has been to construct market for higher education which entailed corporate style governance reform of the publicly funded institutions, make scope for the private sector to play a larger role. The question is whether market can help overcome the intrinsic deficiencies of an education market. Policy reform also should take note of the specificities of education in creating conditions for growth and inclusive development by promoting talent and widening access. As the market for higher education seeks to achieve S-efficiency rather than exchange based E-efficiency, competition has a tendency to attenuate the hierarchy as the ranking order particularly at the top remains stable. However, market as an institution to guide reform is favoured for its ability to generate competition by giving freedom to the institutions and the students in what they seek to do and to improve quality which remains constrained by the availability of human capital and financial resources. Accountability to market is also thought to be reflective of the demand society generates for higher education and the society expects the universities to cater to. But marketization is inherently problematic for another reason. The students and the education providers (or the teachers) are the co-producers as the students cannot buy the degrees but they have to earn it and hence treating them as customers leads to dilution of quality the teachers would strive to deliver.

7.2 Politics and Market Failure in the Indian Higher Education

In the Indian context, the intrinsic problems of an education market have appeared to be very pronounced after three decades of neoliberal reform. Though there are a few good quality private universities, overall privatization has not led to any major improvement in quality. The majority of the public funded institutions suffer from typical government failure. The bad quality private institutions continue to cater to a large community of students because the students have no option as the subsidized publicly funded institutions have not grown commensurate with growing demand particularly for the professional courses. Students in a good number of colleges and universities exercise no agency to infuse vibrancy into the system. On the other hand, where they pay high fees, their consumerist approach to learning and research has led to serious dilution of quality. Most of the privately funded ones which run on commercial basis, cut costs at the expense of quality, appease students and end up delivering poor quality of education. The students want degrees and not necessarily quality education, which make things easier for the unscrupulous providers to mint money. It is often argued that the State fund goes waste and/or inefficiently allocated in public institutions. Whatever fund that they receive from the State is found to be insufficient, which makes it difficult for them to support their activities. Another problem that could be found, particularly in many state universities/colleges is the lack of motivation among the faculty to perform. The nexus between the universities and the political parties is a common place, along with political interference in appointment and academic matters of the universities. When this is coupled with stagnant funding to a large number of public universities, it throws up a new dimension to the entire set of challenges for the policy makers. These policy makers are themselves not above boards always. Amidst all these, the role of teachers and the students needs deeper probe for blunting the efficacy of reforms, even if they are founded upon misconceived notion of education as a commodity. Employability of the students has become a major concern. Further, privatization conflicts with the promotion and nurturing of merit, and hinders accessibility as fees become cost determined.

To tackle government failure in the government funded education system and reward those who have performed better relatively speaking, the introduction of graded autonomy has the potential to be a path changer. But it is unlikely to be so. Three categories have been created for differential treatment of regulation. The best ones are supposed to be liberated from the clutches of regulation while the Category III HEIs should continue to be regulated to bring out the best from them before they are set free. But academic autonomy requires public funding based on cost of education rather than market based funding which robs the universities of their academic autonomy. The institutional autonomy has ceased to exist as both market pressure and ranking have led to erosion of academic freedom in the name of accountability and sustainability. A move towards output-based funding and market based funding, loss of academic freedom, and a move towards professional conduct and commercialization have determined the kind of values which are inculcated, as well as teaching and research. According the status of Institutions of Eminence to a set of universities, ostensibly with the purpose of enabling them to acquire the status of world class universities in terms of global ranking means lower funding for the rest in view of stagnancy in the higher education budget.

Massification of higher education in India has not been accompanied by a concomitant improvement in quality. Kapur and Mehta (2017) have sought to explain this in terms of a ‘trilemma’ among scale (expansion), cost and quality where only two of three objectives can be realized. They argue that the transformation in the landscape of Indian higher education has been one of expansion with cost constraint. While it is true that public fundung remained inadequate, the private sector too did not pump in adequate resources as they contributed in a big way to the process of expansion. Tilak (2005) has favoured a larger role of state in funding. One way of negotiating with the 'trilemma' would be to ensure good governance in public funded HEIs and setting up of a regulatory framework for the HE system as a whole. The neoliberal policy reforms have tried to tackle government failure through the construction of market upholding the principles of allocation and technical efficiency. But the Indian higher education system continues to grapple with the challenges which have multiplied rather than getting mitigated. While market failures are systemic for education as evident from the lack of success of neoliberal policy reforms, public funded institutions need more funds and autonomy to chart out their paths.

Appendix

See Table 13.5.

Table 13.5 Framework for looking at the implication of reforms/efficiency on Equity, Excellence and Expansion