Expert Comment

Transactions between unequals

To many, and not just Greenpeace activists and protectionist trade unions, WTO (World Trade Organisation) and GATS (General Agreement for Trade in Services) represent forums for aggressive G-8 countries to dominate investment and trade relations with developing countries. Colonialism and the cold war have ended, but not the aspirations of former imperialist powers to exploit the resources of developing nations of the southern hemisphere popularly known as the South. Small concessions were extracted in the WTO parleys in Doha in 2001, and their nuances are being debated ad infinitum. But the fundamental problem is that the proposed free market trade is being transacted between unequals with the industralised nations of the North enjoying an upper hand over the have-nots of the South. This is particularly true of GATS negotiations relating to FDI (foreign direct investment) in higher education.

The first inequality is the availability of, and access to higher education. In India, one of the major reasons why the tertiary enrollment ratio (the proportion of college youth aged 17-23 in tertiary education) is a mere 11 percent, is the paucity of higher education institutions in rural areas. Rural youth who complete their class XII exams find it difficult and expensive to migrate to cities to attend college, and most don’t make the trip. Therefore in effect, university education is accessible only to urban school leavers. In developed countries, colleges, or at least junior colleges and technical institutes are accessible in the countryside. But the greying population of these countries has resulted in lower enrollments and their universities are looking for foreign students to fill classrooms. If under GATS these universities enter India, they will set up campuses in urban centres, where college entrants are plentiful, and rural areas will continue to remain starved of tertiary institutions.

The second inequality is standards and pricing of higher education. Apart from a handful of IIMs, IITs and private institutions, much of the higher education available in India is of woeful standard. Because foreign institutions establishing shop in India will offer higher standard education improving chances of employability, students will be attracted to these offshore campuses. However this education won’t be cheap and again it will only be affluent urban students who will be able to afford their fees.

If FDI is freely permitted in tertiary education as advocated by the Union commerce ministry, many Indian private institutions, especially private deemed universities, will tie up franchise agreements with foreign education providers. In this scenario, there will be little FDI invested by the latter as the Indian partner will provide the infrastructure and most faculty. Moreover typically, the foreign university will be a second or third tier institution (as defined in the annual ranking of US universities by US News & World Report) with the partners sharing the spoils without any significant FDI inflow.

The third extant inequality which is certain to be exacerbated, relates to the quality and remuneration of academics. To keep operating costs down, the foreign university will deploy contract faculty from the foreign country. These will be second rung teachers recruited primarily to project the image of ‘foreign faculty’. Moreover the best Indian academics will be snatched by foreign/franchised institutions by doubling the paltry salaries they earn in Indian institutions. Consequently the academic standards of Indian universities will slide further.

A fourth inequality which will be accentuated by permitting FDI in higher education is the discrimination inherent in statutory control of Indian institutions by government, even of private deemed universities. While the foreign institutions will operate freely, Indian institutions will continue to be strangled by statutory legislation and government.

The unkindest cut is the fact that India is the largest ‘importer’ of higher education worldwide. There are more Indian students studying abroad than from any other country — over 80,000 in the US. Countries that are pressurising India to open higher education to free trade, the US, UK, Australia and new Zealand are all exporters of higher education. Free flow of FDI into India will tilt the scales further in their favour.

So what’s the remedy? First, India needs to triple its expenditure on higher education from the current 0.37 percent of GDP to 1 percent as recommended by the Central Advisory Board of Education. This will raise infrastructure standards in government universities and facilitate the establishment of new colleges, especially in rural India. Second, government and private higher education institutions should be encouraged to establish campuses abroad and to admit more foreign students to transform India into an exporter of education. The foreign exchange earned will negate the need for FDI.

Until the glaring inequalities between Indian and foreign institutions of higher education are reduced and India can trade in higher education on more equal terms, it is premature to offer welcoming garlands to foreign universities knocking on our doors.