Riding the bubble

Last July, I met an educationist-turned- entrepreneur at a family gathering. Urbane , service class people, when they approach midlife in our part of the world ,often decide to settle in cities- selling off bulk of their ancestral property in villages to their sharecroppers. He had used the proceeds to set up three technical institutes in Rajasthan . The management is family-run, staff are home grown pass outs from these institutes and admission standards are not very stringent if you can afford the fee structure.In June-July the City Centre in Bokaro buzzes with agents from such technical institutes putting up in lodges, looking for prospective clients.

Good times carry their own risks. It is very difficult to distinguish between clarity and craziness ; publicity and exaggeration in a booming,competitive market. The first two decades of 21st century in India, when looked back at by historians , will show a conspicuous policy thrust at both Union and state level towards education infrastructure expansion - perhaps driven by demographic necessity since nothing essentially happens in a democracy when it is not desired by people. It may be a bit premature to predict the fate of this expansion , but there are signs that the private universities' entry in education sector might swell up into a mega bubble.
You might have perhaps by now come to realize that you'd find none of those cute looking girls who pose as students of these universities in their full page ads in national dailies. But then a bigger farce is played over the promised USPs printed in text. The terms of reference remain vague , unsubstantiated or even fake. As a UGC led probe found out in case of 44 such private universities in India , "virtual library " being promised by one of them was nothing but a computer center with internet , similarly there are others who exploit public ignorance to boast of exchange programmes with foreign universities that may actually be open to any student irrespective of his enrolment in that university. And then there are some more obfuscatory combinations of adjectives and nouns like "excellent placement" , "latest pedagogical techniques" , "state-of-the-art laboratories " that simply can't be measured objectively . A majority of such universities invariably offer engineering degrees.

NASSCOM came out with a very widely debated survey last year that found 75% of engineering graduates unemployable. Still the ground reality remains that engineers tend to get better and bigger white collar jobs with considerable ease. The employers of most of these apparently unemployable engineers are firms that export IT services and have more than 95% of their operations overseas. Number crunching or code weaving in mechanical fashion is an important attribute of these job profiles . The amazing figures posted as profits by this sector are both a result of depreciated value of rupee in terms of dollar that gives more rupee profit returns for every dollar earned and tax holidays provided by the state. Some time in this decade, both these factors are going to stop working in our favour and IT services will return to more balanced growth comparable with other sectors in the economy. Then , the training costs of ill-trained half-baked pass outs will begin to pinch. We can't risk unemployment on such a massive scale when half of the country's population will be under 35.

The reason unfair business practices and unscrupulous education sector entrepreneurs thrive is because of the strongly seductive charm of engineering not as a degree but as an investment. An admission into any engineering institute even at a cost of Rs. 7-10 lakh for four years guarantees a return (job) of 3-4 lakh rupees just on maturity (passing out).So as long as there are enough fathers who have children with mediocre aptitude for academics but enough appetite to take this risk, there will be no dearth of entrepreneurs raising money by selling off their idle property to set up private mom-and-pop universities.

Negation of an existing policy often seems to be the most definitive but undoubtedly the most fatal way to deal with an impending crisis. Reverting back to the days when higher education was primarily state-run , ostensibly to protect national interests from commercial will be denying ourselves the economies to be exploited from a young population.
Higher Education is inevitably moving from being a no profit activity to a business and that is the way it should be. But like all free markets, it should be promoted with adequate legal safeguards for consumers. In that sense, medical services and higher education have similarity because it is difficult to repair the damage or indemnify a customer once he has been cheated or hurt by the businesses. This is the direction regulation should adopt in this market for preventing higher education from becoming the next bubble. We need to be paranoid about transparency ,impose stricter accreditation norms and provide authentic education to the consumer to help them make their decisions , probably some thing like a state run credit rating agency for private and government higher education institutes.

PS: Contributors to discussion - Jayant Kumar, Neeraj Trikha.