The New Economic Challenge: FDI in Education.

The New Economic Challenge: FDI in Education Sector.

India has rightfully earned its place among the countries having the largest pool of trained professionals in the IT. The credit also goes to the policy makers who just capitalized on this newly earned reputation in a free-market world and directed a lot of foreign exchange towards the Indian Software companies. INFOSYS, WIPRO, TCS, SATYAMs have successfully made the transition from being merely another Indian software company to a globally accepted brand delivering quality. Now if we delve deeper into this IT success perhaps, the most significant factor which effected this change is the world class educational infrastructure we have in place. The institutions like IITS and IIMS are serving the cause with pride and perfection.

With the advent of Asian Century clearly, the world is getting to the fore of this truth that the most powerful tool for economic growth is a proper educational infrastructure. A system is needed which can successfully meet the demands of the available manpower.
Clearly the number of educational institutions has grown in the last decade but the question is that, do we have a match between the numbers of eligible people seeking for higher education and the institutions we have to train them? The answer is a straight negation. Just this year I took the Common admission Test conducted by Indian Institute of Management which is used as a procedure to screen the candidates seeking graduate level management education. Now, about 175,000 students took the test this year however, the sum total of management seats available at all the management institutions accepting the test scores would come at around 14000. The figure stands at around 8%. And this figure will go down further, if we introduce the variable ‘quality of education’ into the equation. So what we see is that only 8-10% of the admission seekers will have the access to quality management education. The statistics further blurs when we see the ratio of students into other professional course to the ratio of students who aspired for that.

The last decade also has witnessed mushrooming of institutions of higher learning like Engineering colleges, Medical/Dental/Nursing colleges and Business Colleges. States of Karnataka, Tamil Nadu, Andhra Pradesh and Maharashtra have attracted a bunch load of these without putting some benchmark for quality of education in place. The picture will become more vivid if we treat investment in higher education as investment in better future. Now investment in quality of education, from both education seeker (the price he is paying for getting educated, factors like time, effort and money) and from the provider of education (may be government or a private firm) would require a return of investment. From the view of a student the return of investment is the pay package and skill sets acquired (however skill sets is not a true indicator as it can’t be converted into monetary terms without comparing it to his salary figure) at the end of the course and from the institution side the ROI will be the money garnered from the individual as fees and a strong alumni base (remember how much money IIT Powai gets in donation from his alumni).

Continued.................