Is it Time for India’s Education Sector to be Liberalized?

For all of the furore around Prime Minister Modi’s Digital India campaign, the education sector was badly affected during the COVID-induced nation-wide lockdown imposed in March 2020, affecting over 320 million students across the country. Moreover, according to a survey conducted across 853 school principals, institutional heads, and teachers, 97% of schools (low-cost private, government, and government-aided) required digital support in the form of accessible digital learning solutions and training sessions for teachers. In other words, low-cost private and government schools lack(ed) the resources to shift to online teaching.

On the flipside, private (and privately-funded) educational institutions have the capacity, resources, and technology to make online education available and accessible for its students. For one, enrolment in private schools continues to outnumber free government schools. Between 2015 and 2019 alone, private schools increased at four times the rate of public schools that led to a fall in government school enrolment by 11.1%. Enrolment in private schools, on the other hand, increased by 16 million students.

There is little inherently wrong in private, for-profit education even as the Centre considers three proposals from the Confederation of Indian Industry (CII) on attracting foreign institutions and higher FDI in education. India’s normative stance on keeping education free from profit-making, self-interested capitalists was first tested in TMA Pai Foundation v. State of Karnataka and Others, 2002 at the Supreme Court which held that “schools must be a charitable activity regulated by the State”. Education, the Supreme Court added, [could not] be a profession or trade in the sense of the words used in Article 19(1)(g) of the Constitution. Despite such a restrictive regulatory and legislative environment, private schools have been permitted to have a “surplus”, if not profits. Courts held a similar view in two other cases, the Islamic Academy of Education v. State of Karnataka, 2003 and Modern School v. Union of India, 2004. Either way, private schools continues to be the preferred option for most parents, regardless of their social or economic background. Is it then, an appropriate time to liberalise the education sector?

The first step towards doing so would be to permit the establishment of for-profit educational institutions. Doing so would dramatically increase quality, lower prices, and foster a culture of innovation, if we were to use examples from the liberalisation of other sectors. Liberalisation also provided an increase in choices through market competitiveness. Demand for private education in India has always remained high, more so now with affordable private schools (APS). Such a demand can be better met if educational institutions are allowed to profit. Competition over students and enrolment would force institutions to provide better quality education and appeal to parental wisdom.

There’s little doubt over the game-changing potential of allowing the education sector to adopt a for-profit model. Currently, a lack of incentives for corporates and investors to wade into education and energise the sector. Obfuscated structures are proving too deep a barrier for credible and trusted names to invest, according to Manit Jain, co-founder of the Heritage School and Chairman of FICCI ARISE (FICCI’s Alliance for Reimagining School Education). Existing schools that are unable to expand operations, including APS’, may also benefit from such a move with increased access to capital. However, deep ideological schisms over declaring education a for-profit sector remains likely to derail discussions, regardless of the potential benefits of liberalisation.

As matters stand, the education sector is in desperate need for a booster injection. Private capital is vital to expand the sector, meet industry demand, and improve education accessibility. Market forces will help guide the sector accordingly and bridge social divides by making education inclusive. Competitiveness for a growing demographic dividend would also keep tuition fees in check and foster a culture of quality. Understandably, just being for-profit is no guarantee of excellence and efficiency. Being competitive in the market for a sizeable slice of the pie perhaps, is. It’s essential that we as citizens recognise the value of liberalising a sector that stands to define the lives of future generations and in doing so, respect the role of the private sector in promoting constitutional values like justice and fraternity and in unequal society.