Access to the world’s best education

These policies should be seen in the context of the broader reform agenda outlined in SBP’s manifesto. Free markets require strong and effective governance. Without governance reforms detailed in the manifesto, that will build capacity and honesty in the government machine, the policies detailed below will not deliver the expected results. You can also download this policy in Word | PDF

Access to high quality school education for children of the poor

Today, about 16 per cent of India’s children in the age group 6–14 do not go to school at all, amounting to tens of millions of children. Most that do go to school drop their studies before year 12. It is impossible for India to become a Sone Ki Chidiya when hundreds of millions of its people are illiterate or ill-educated.

To ensure equal opportunity, a government needs to ensure that the children of the poor receive access to high quality education.

We will support the education of all permanent residents of India up to year (class) 12 or age 18, whichever comes first, noting that this does not amount to compulsory education. This includes a commitment to support equivalent vocational streams.

Since school education is largely a state subject, this policy will apply initially to Central Government schools, with the States significantly incentivised to move to this model. Any elected governments from Swarna Bharat Party in the States are fully committed to implementing these policies.

Like all other policies outlined in this manifesto, the school policy should be considered as part of a package of reforms, for example, it cannot be considered in isolation from basic governance reforms.

1.1         School education

1.1.1      Privatization of all schools

A government has a role in ensuring that the children of the poorest of the poor receive high quality education, but has no role in managing schools, which should be entirely left to the market. Many parents (regardless of their income levels) prefer to send their children to private schools, which are usually more accountable for student outcomes. Teachers cannot be held to account in a government school system, nor schools held accountable to parents. Managing hundreds of thousands of teachers in a dispassionate manner is beyond the capability of any bureaucracy. No amount of decentralisation and delegation can hide from the fact that even the best government systems are racked with chronic inefficiency – and under the current governance system, with chronic corruption.

Further, private school owners have the incentive to create and use an optimal level of school infrastructure, while there is demonstrable inefficiency in the management of government land and buildings associated with schools. In brief, no government can do better, on average, than privately managed schools. The failure of the current government managed system has nothing to do with the intentions of government teachers; it’s just that the system can’t work.

We will get the government completely out of school ownership and management. Privatizing all government schools will ensure that all schools in India become fully accountable to parents and the country’s land allocated to school education managed efficiently.

Over the course of the first 30 months, all government schools will be privatized, with their land,^[1] buildings and equipment sold through open tender. Educationists in these schools will be encouraged to make a bid, through a (small) preference in the conditions of the sale. They could form companies or societies and raise loans to buy the schools, with repayment from their earnings over the years.^[2]

The following conditions would apply to the sale:

• a school’s land cannot be sold for 50 years, nor the school’s land or buildings used for any primary purpose other than school education;
• school owners will be able to operate approved business activities (approved by the local government) from the school campus after school hours, so long as the funds raised from these activities are used to fund the school and lower the fees; and
• the consortium which buys the school will not disadvantage existing permanent staff for up to five years from the date of purchase.              

It would not matter whether a privatized school is run as ‘for’ or ‘not-for’ profit. If a good school can also make a profit, it can only help, not hinder, the supply of more good schools.

To prevent risk of school closure due to financial mismanagement, each school will be required to purchase bankruptcy, fire, workers’ compensation and public liability insurance, to be reinsured initially by an education regulator who would coordinate the private insurance market to create appropriate instruments, until the school collapse rates are better assessed by the private market and premiums fine-tuned. If buyers of a school turn out to be bad managers, or worse, this insurance will prevent the school from folding and the students from suffering.

1.1.2      Regulator

Governments tend to be soft on their own failures, while being hard on ‘market’ failures. The market tends to have close to 100 per cent accountability, the government close to 0 per cent accountability.

It is easier, therefore, for a government to find fault with private schools. This will allow the regulator to become an effective arbitrator of school quality, subject to industry standards. It will be ensured that the regulator imposes no unnecessary expectations/ requirements on schools beyond the industry standard.

In addition, the regulator would play a role in the initial years in ensuring that all schools are insured for financial and other risks.

1.1.2.1    Standards and curriculum

The regulator should play a very limited role in establishing standards, being confined to confirming that a school’s own declared standards (linked with industry standards) are being followed.

We will work with the education sector to co-regulate a range of minimum (including assessment) standards established by school industry associations. Each school would choose (and publicly declare) one of these standards, notifying the school regulator both of their existence and of their chosen standard. Penalties would apply if a school was found to have violated its declared standards.

We do not expect to influence these standards but hope that the following principles are included:

• no school should teach specific religious practices, which are a matter for parents to teach;
• schools should teach the basics of liberty and India’s constitutional democracy, to prepare children to participate in the democratic process at age 18; and
• schools should be free to choose their medium of education. However, it is hoped that English proficiency will be achieved, along with some emphasis on Sanskrit (or Urdu), Hindi, and one regional language.

This system will ensure that parents ultimately determine the curriculum through their choices.

1.1.2.2    Improving teacher quality

There is – in the short run – a role for the government to help ramp up the supply of high quality teachers. Without availability of a large number of high quality teachers, even the private school system will fail to deliver equality of opportunity to Indian children.

We will establish a Task Force to work out innovative mechanisms to rapidly create (within three years) an army of world-class school teachers, fully trained in e-learning as well. Special funding for creating a strong supply of good teachers will be allocated tho the higher education system, which will be simultaneously reformed to make it more agile and of far higher quality.

1.1.3      Market competition in schools

Governments tend to destroy competition by setting high barriers to entry. We will not shield schools from competition. Practically anyone could set up a school and charge any fee, subject to compliance with the broad regulatory requirements. There will be no number-counting, either, i.e. no restrictions on the number of schools that can enter any area. These fiercely competitive measures will prevent any monopolies or lobbies from arising, to the detriment of educational quality. Only the schools most accountable to parents through the market system will survive. We expect poorly managed schools to be bought out by the more efficient ones.

Private sector provision of education is as guaranteed to succeed as India’s current government managed method is guaranteed to fail.

1.1.4      Child-based funding for children of the poor

We will provide digital vouchers to poor parents identified through the NIT-type process, which can be encashed in any school. This method will ensure that choices made by parents are honoured. No one can be a greater well-wisher of a child than his or her own parents. Only if both parents have a conclusive record of neglecting their children should a government be allowed to make decisions on behalf of the child.

1.1.4.1    Identification of children

By the thirtieth month, we would ensure that an Aadhaar number is allocated to each child between the ages of four and eighteen, in preparation for this programme. This number would be linked to a database which records key biological features of the child, along with photographs and Aadhaar IDs of his/her parents, to prevent potential falsification of records. (A new identification number would be allotted to each child who subsequently reaches the age of four.)

1.1.4.2    Calculation of voucher value

This database will be linked to the previous year’s income tax return of the child’s parents and would automatically generate a voucher of a specific value, linked to that income and to the expected educational costs for a child of that age. Vouchers will differ in value. Children of poor parents will get vouchers of a much higher value than children of relatively better off (but still below poverty line) parents. This higher allocation of funds for children of poorer parents is a crucial part of the model. It will make it very attractive to establish schools in rural areas or slums, since children with predominantly high-value vouchers will attend such schools. Schools in economically backward zones will be able to afford much higher salaries for teachers, and potentially attract even better teachers than schools in urban areas. Thus, all schools will be able to provide a robust quality education.

An annual adjustment would be applied to the value of a child’s voucher after the income of the child’s parents is declared to the tax office. Excess payments made for the child to the school would be recouped through the parent’s future taxes.

1.1.4.3    Parents to pay any top-up

Parents would pay the amount above what the government voucher reimburses the school.

Poor parents would not pay anything since they would have high-value vouchers. Children of slightly better off parents (but still below the poverty line) will pay a top-up amount.

1.1.4.4    Management by private providers

The voucher system will be managed by a range of private service providers under strict conditions of accountability. The education regulator will monitor the quality of these providers and ensure the overall integrity of the voucher system. Stiff penalties will apply if preventable fraud is detected at any level.

The social infrastructure department, which will manage the overall budget for school education, will work with the education regulator to ensure that minimum outcome standards of educational attainment are met by each school, and that vouchers are administered properly. Education directorates and inspectorates would be largely disbanded by the end of the thirtieth month. Many of their teaching and non-teaching staff would have been, by then, employed by the larger consortiums.

1.1.4.5    Payment system to schools

Schools will bill the government for each child individually for the amount specified on the relevant voucher. This will create an incentive for schools to go out and literally beg parents – such as parents of child labourers – to send their children to school. How many times have we seen government school principals go out and beg parents in such a manner?

The more the children that these schools can enrol and pass out at an agreed, independently tested standard, the greater the money they will receive from the government.

Schools would be required to report a child’s death or transfer from the school within one month to the voucher service provider. Should it be found that a school has charged the government for a child who was no longer studying there, the school will face penalties, including potential withdrawal of the school’s registration and criminal prosecution of school owners.

1.1.4.6    Plan B in places where private schools do no emerge on their own

In the event that the privatised system does not work in some remote areas (although there is no reason why it shouldn’t), procurement of school education will be considered from private suppliers through a tender system, with a significant portion of funding at risk on the basis of the quality of the output. This tender would have two independent components: one for school buildings and maintenance, and the other for school management. In any event, the government will not directly deliver school education anywhere in the country, but get it delivered to the poorest of the poor.

1.2         Pre-school education

Pre-school education is not part of the requirements of equal opportunity. However, we will strengthen the regulatory regime for this sector to incrementally increase quality and accountability, with such education being supplied by private enterprise (including through charitable work).

Free enterprise in tertiary education

India is a young nation, with the majority of its population aged below 30. Unfortunately, most of our youth are inadequately educated and are often unemployable. We need to ensure urgent access to world-class education for our youth. This does not mean the government should directly provide education. Indeed, it is precisely this (direct provision of education by the government) that has led to the current situation.

Instead, a government should liberate the education industry and lightly co-regulate it for quality. Citizens will then be liberated to educate themselves and their children, untrammelled by obstructive official directives.

In this section we discuss our vocational and higher education policies. The school industry is discussed separately since there is a more direct role for government in that area.

The role of a government in tertiary education (i.e. post-year 12 vocational and higher education) is fundamentally different from its role in school education. That is because the benefits of higher education are largely captured privately by students who will earn far more, on average, than the average taxpayer. This means any subsidisation of the sector is a reverse subsidy – from the poor to the (future) rich. There are also no entitlements or rights to higher education on grounds of equal opportunity. Entry into a portal of tertiary vocational and higher education is a privilege, contingent upon hard work and capability. The equal opportunity argument justifies funding education of the poor up to year 12 in school (including vocational education), but not beyond that. Beyond all this, of course, is the fact that the skill-set required to manage institutions of higher education is different to that required by bureaucrats and politicians, who should therefore not have any role in the direct management of such institutions.

1.3         Tertiary (post-year 12) vocational education

India has grossly underperformed in tertiary vocational education, which underpins all manufacturing, construction and services capability. Our outdated system of vocational education is ill-equipped to build and support the high quality workforce India needs for the twenty-first century.

In Germany, training for many vocations is provided through a dual programme of training and education. Apprentices spend three to four days a week at a company receiving vocational training, with the remaining one or two days at a vocational school, receiving the relevant theoretical grounding. Such apprenticeship lasts between two and three-and-a-half years. During this period, trainees receive about one-third of the salary of a trained skilled worker. This system has created a vast number of high-skilled workers in Germany, which gives it a significant competitive edge on a global scale.

Our policy is essentially two-fold:

• On a similar pattern to normal school education, we will open up the vocational education sector entirely to private enterprise (under co-regulatory control, for ensuring a minimum standard) to ensure that India’s youth is equipped with employable skills. This will include corporatisation and full privatisation (sale) of existing government technical institutes on the lines of school privatisation, detailed elsewhere.
• A regulatory system similar to that for schools will be introduced. These institutes will be enabled to issue certificates and diplomas comparable with those in developed countries. Tie-ups with international training institutes will be encouraged. It will be required of these vocational institutes to find paid apprenticeships for students on the German pattern, except for new industries or where the relevant industry is not located within a reasonable distance from the institute.

1.4         Higher Education

We have very few world-class institutions of higher learning. Lakhs of our students are forced to go abroad to access quality higher education. Most of them do not return, particularly since foreign countries are keen to retain their most competent students. The only way we can create the world’s best tertiary education system – with a hundred universities of Ivy League standards – is by opening up the sector to private competition, thereby enabling it to attract much-needed investment and expertise.

There is no reason for the government to fund or manage the delivery of higher education, but there may be one small role: to ensure that everyone admitted to higher education institutions is able to attend, despite any funding capacity limitations. This can be resolved without the government directly subsidising the students or managing higher education institutions. The detailed policy is outlined below.

1.4.1      Comprehensive privatization of the higher education sector

All government universities, technical colleges and the like will be sold off by the 30^th month on the same pattern as government schools, after due preparation and with conditions of sale specified below. In some cases, lands for such institutions will be reduced, particularly in the heart of major cities, to allow these to be sold independently for revenue generation.

The conditions of sale would include that these institutions:

• be co-regulated for quality. No bureaucrat can teach Einstein or tell him how to teach physics. Each university must be free to decide its own standards. We will dissolve the UGC and similar bodies, such as the AICTE. We will, however, require the affiliation of each university to a well-established consortium of universities that maintains self-regulatory standards comparable to (or higher than) the best in the world (including standards for the area and use of land). This co-regulated system will weed out any fraudulent ‘universities’ that have proliferated in India in recent years due to our corrupt system. Any obvious failings in the probity or integrity in a university will also be cause for regulatory action.

• become for-profit corporations with shares traded on the stock market. Their sole objective would be to provide tertiary education. The land sold to these institutions will need to be used for the primary purpose of higher education for 199 years, after which it could be used for any other purpose.
• have comprehensive operational independence. They would set their own salary structures and determine the course-mix and degrees. The competitive market for higher education will deliver the best mix of options for students. Not one rupee will be spent on any government-funded ‘educational planner’ to predict the demand for graduates in specific areas. This system will ensure that only as much higher education is provided as the market is prepared to bear. The freely operating tertiary education market, interacting stakeholders like students and businesses, will decide the course mix.

Given advance announcement of the details, this privatisation will attract investment and expertise from across the world and help make India a knowledge and research hub. This will also raise significant revenues (since most university land is now extremely valuable) and virtually eliminate government higher education expenses, thereby also releasing funds for essential government activities.

Fee hike and other concerns are unfounded

The reason why universities won’t increase fees to astronomical levels upon privatization is because (to survive) they need to attract high quality students. Such students will look for high quality education at the lowest possible cost, thus forcing the fees down.

Privatization will also not adversely affect courses in the arts and philosophy. No one can claim that Harvard University has ignored these areas. Further, modern private sector corporations recognize the value of liberal education in broadening the perspective of managers. Arts graduates often do better in businesses than technical graduates because innovation, entrepreneurship, leadership, people management and strategic thinking often have less to do with technical skills and more to do with understanding the society and markets.

1.4.2      Low interest loans for students

We will provide low interest loans to all Indian tertiary students (i.e. not OCIs or PIOs – or dual citizens once such arrangements are in place) who gain admission into a properly (co-regulated) affiliated tertiary institution in India. These loans will bear a low interest, at around 1 per cent above the bond rate. The loan, under the arrangements initially established, will cover all fees, costs of books and equipment, and modest living costs. Given the bargaining power of the government, we will engage with universities to lower their costs and force the fees down. If it becomes necessary in the future (due to a high rate of loan defaults), we will institute a cap on the loan amount and/or income eligibility.

Repayment of the loan will be through the income tax system after the student finds a job and starts earning three times above the poverty line (the social minimum). Income streams from university students are more secure than houses, since almost all university graduates are likely to earn well. A rolling debt model will be used for administering the loans. From our government’s thirty-first month, ten-year bonds will be issued for the amount of student loans expected to be issued that year.

Prudent Indian investors are likely to purchase these secured bonds, which will be retired every ten years using recoveries from students who would mostly be in the workforce by then. This model is intended to be self-sustaining, except for some possible mismatch of timing between student earnings and the face value of the bonds, the costs of administering this programme, and write-offs for default. Such costs will be subsidised (and incrementally reduced), being justified by the enhancement in equal opportunity for those unable to pay their fees or loans.

Steps taken to reduce risks of default would include actions to prevent students who leave India after their studies from reneging on their loans, such as the following:

a) We will make a specific endorsement on the passport of all such students that prevents them from leaving India (even temporarily) without a bank guarantee equivalent to twice the amount of their outstanding loan (this multiple of two accounts for the loss to India if they permanently migrate), which will be forfeited if they fail to return within a declared period. Those who do not provide such guarantee will be turned back at the immigration check.

b) In addition, we will seek to enter into tax treaties with key Western governments so that the international income of such students is subject to Indian tax and the Indian loan repaid. Where such treaties are entered into, the travel restrictions for such students will be eased, subject to appropriate record-keeping of such movements.

This loan system will allow all meritorious persons, regardless of parental income, to pursue high quality higher education.

1.5         Pre-school education

Pre-school education is not part of the requirements of equal opportunity. However, we will strengthen the regulatory regime for this sector to incrementally increase quality and accountability, with such education being supplied by private enterprise (including through charitable work).