Education- The licence permit raj

Indian Express, May 21 2006

- Ila Patnaik

Education, unlike most other sectors, has not been touched by

liberalisation. The removal of the licence permit raj, released

industry from the shackles that had prevented its growth. Telecom

blossomed after entry into the sector was liberalised. The aviation

sector gave consumers access and low prices. But education has been

left mostly untouched.

Consider this. To open a school an association or group of individuals

first has to register as a society with a non-profit motive. Next, the

society needs to apply for a licence called the "Essentiality

Certificate" (EC). The EC is like the industrial licence of the old

days which is issued if the government decides that there is a need

for another school in the area. The number of ECs the Department of

Education of a state decides to issue each year for each zone and each

kind of school -- primary, upper primary and secondary -- are decided

by the department in an arbitrary manner, without any objective

criterion. It is supposed to depend on its estimate of demand and

supply made by the deparment. This restriction on supply often creates

a situation where there are more children in the school going ages

than the number of seats available in schools. Students then have to

queue up for school admissions, little children have to take entrance

interviews and parents have to pay capitation fee. The well connected

always have recourse to political and social networks. This is

reminiscent of telephone connections in the days before telecom


The story does not end there. After obtaining an EC, the school gets

land, then applies for recognition, then affiliation with a board, and

if it wants to become an aided school, for aid to the government who then

pays teachers salaries. After this the school management pays bribes to school

inspectors every year. It often takes more than Rs 1 crore and between

3 to 17 years to achieve all this.

It is hardly surprising that managements of existing schools today do

not want the licence raj to be removed. They have already paid the

costs. After all, when did the incumbents in any closed club want entry

to be freed up for all? Through restrictions on entry private schools

have acquired monopoly status. Nor are policymakers -- politicians and

bureacrats -- whose children get to study in private schools, thanks

to their connections and their money, fighting to take away the

exclusivity of such education.

The situation with higher education is no different. Both Indians and

foreigners are prevented from opening universitites and offering

education regardless of how large the demand might be. The rich can

always put money in and send their children to universities abroad. If

the government allowed universities like Harvard, MIT and Stanford,

which are reported to be interested in opening campuses in India, with

lakhs of seats at a cost much lower than what it takes to send a child

abroad, higher education would be accessible for lakhs of middle class

children who cannot afford to go abroad today. It is again not

surprising that our policy makers, the politicans and the bureaucrats,

Congressmen and Communists alike, who can today afford to send their

children abroad and get them degrees from universities like Harvard

and MIT are not keen to have such campuses in the country and make

such education available for lakhs of students across the country.

Removing licences and restrictions to entry will make education that

is exclusive today, available to the aam admi. But until the netas and

the babus have the will to crush entrenched interests in the sector,

take away the clear advantages their children have, and liberalise

this sector, good education in India will remain the exclusive domain

of the rich and priviledged.

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