The government will encourage foreign direct investment (FDI) and external commercial borrowings (ECB) in the education sector to deliver high-quality education, announced Finance Minister Nirmala Sitharaman.

news Budget 2020 Sunday, February 02, 2020 - 15:42

“It is felt that our education system needs a greater inflow of finance to attract talented teachers, innovate and build better labs. Therefore, steps would be taken to enable sourcing External Commercial Borrowings and Foreign Direct Investments so as to be able to deliver higher quality education,” announced Union Finance Minister Nirmala Sitharaman while presenting the Union budget for the fiscal year 2020-21 on Saturday.

Following the Centre's recent announcement, education experts in India stand divided on the latest announcement. Some noted that this will ensure a good teacher-student ration and make youth more employable. Others believe it will lead to the privatisation of educational institution and make education inaccessible to marginalised communities.

 'Need of the hour'

According to data available with the Department for Promotion of Industry and Internal Trade (DPIIT), the education sector in Indian has attracted FDI worth USD 1,465.44 million (Rs 8,263.97 crore) between April 2000 and June 2017. This is only a small slice of the market size of the country’s education sector, noted Education policy expert Baladevan Rangaraju. 

"It is difficult to get returns in education, as the investment cannot be made into for-profit institutions. It has to be given in the form of grants,” he said. Educational institutions are set up through a trust, which then diverts investment by outsourcing various services for the institution through for-profit companies, thus funnelling the money, he added.  

But considering the status of learning levels among children, Baladevan said that there is a dire need to look for alternatives in the absence of government spending. “The concerns mentioned in the speech are real and immediate. The teacher-student ratio is often poor, forcing institutions to hire contract-based staff. Poor children are not getting access to STEM education. In such circumstances, it is better to provide some option, including for-profit education, than not providing any meaningful education,” he said. 

Jayaprakash Gandhi, an education expert, is also optimistic about the move. Emphasising the need for huge investment, especially for access to technology, he pointed out that inviting foreign funds, and investments even from top industries within India is the need of the hour. 

“We need advanced development of laboratories and technology. A basic degree does not help in employment anymore. Skill development has become the most important factor for employers,” he said. 

Pointing out that other than IITs (Indian Institutes of Technology) and NITs (National Institute of Technology), most government colleges are underfunded and there are only a few centres of excellence in government arts and engineering colleges. “If the government is unable to contribute due to economic problems, then this is the right step. Industry in India should realise that unless they invest in education, they will not be able to find employable youngsters,” he added. 

‘Tantamount to commercialisation’

However, many others from the education sector have critiqued the announcement, associating it with the larger trend of shifting towards privatisation in the education sector, particularly in the case of higher education. 

According to Saumen Chattopadhyay from the Zakir Husain Centre for Educational Studies at Jawaharlal Nehru University (JNU), foreign participation is tantamount to further privatisation. He also pointed out that the implications of public and private funding in education, particularly in higher education, are substantially different. 

There is fear that the move, along with other policies adopted by the government, particularly in higher education, is likely to further reduce access to quality education for socio-economically marginalised communities. “Education is not comparable to the power sector when it comes to ECB and FDI. Increased foreign funding is likely to make education expensive, compromise inclusivity and quality improvement within a select part of this huge sector,” Saumen Chattopadhyay said.  

Rajib Ray, president of the Delhi University Teachers’ Association (DUTA), has also said, in a statement, that the budget has failed to address the deepening crisis in public-funded higher education. The statement criticises the government’s move towards privatisation by “reducing grants, promoting more loan funding through greater allocations to HEFA (Higher Education Financing Agency), inviting FDI and encouraging more commercialisation through the provision of full online degree programmes in universities”. He also said that the government has failed to “engage with the growing unrest among students, teachers and karamcharis across the nation's campuses”.  

‘Will cause disparity among students’

There’s also concern that foreign funding will increase the disparity among institutions, by enhancing the existing hierarchy among universities and colleges when accompanied by schemes such as Institutes of Eminence. 

Education activist Haragopal terms the move a ‘disastrous idea’. “One of the very reasons for stunted economic growth is the lack of investment in education. Education is a catalyst for economic development. But more FDI will only lead to commercialisation of education,” he said. He added that the government is abandoning its responsibility of providing education by alienating nearly 80 per cent of the population belonging to disadvantaged communities.  

Laxmi Narayana from HCU also agreed that increased FDI and ECB is only likely to create more for-profit educational institutions. “They (investors) will not be interested in quality or access to students from marginalised communities,” he said, adding that the syllabus and courses offered are also likely to be geared towards market demands alone, sidelining other important streams. 

“We have seen how profit-making colleges function. There are problems with the quality of teaching and research,” he said, calling it a ' dangerous move’.