Foreign Direct Investment (FDI) in higher education.

Education without borders

In this column, we invite experts to describe what they think is the most pressing issue in higher education in India

PROBLEM: India’s rapid economic growth has put a spotlight on the huge imbalance between supply and demand for quality education, particularly in the
India needs 35,000 more colleges and 800 universities by 2020 to increase the percentage of students pursuing higher education. higher education sector. The importance of addressing this imbalance is highlighted by the fact that there are an estimated 550 million people who are under 25 years of age. The human capital loss resulting from an inability to educate such a large group is unimaginable and has catastrophic consequences for India’s economic future. According to recent government estimates, India will need 800 more universities and another 35,000 colleges by 2020 in order to increase the percentage of students pursuing higher education from the present 12% to 30%. Given that the investment in higher education is a paltry 0.4% of the GDP, this acknowledgment has focused a lot of attention towards Foreign Direct Investment (FDI) in higher education.
While numerous publications have extolled the virtues of FDI for the education sector in India, the pros and cons of liberalisation need to be carefully examined. The National Knowledge Commission report (2007) recommended that foreign education institutions should be permitted to enter the market so long as quality controls could be put in place in order to ensure that only quality institutions were allowed to operate. While there are reputed foreign educational institutions operating in India, it is frequently alleged that there are others that charge high fees for programmes of dubious quality. In addition, there are genuine concerns associated with FDI, as captured in this quote by Hillary French (1998): “As investors search the globe for the highest returns, they are often drawn to places endowed with bountiful natural resources but are handicapped by weak or ineffective environmental laws. Many people and communities are harmed as the environment that sustains them is damaged or destroyed—villages are displaced by the large construction projects, for example, and indigenous people watch their homelands disappear as timber companies level old-growth forests. Foreign investment-fed growth also promotes western-style consumerism, boosting car ownership, paper use, and Big Mac consumption rates towards the untenable levels found in the United States—with grave potential consequences for the health of the natural world, and the stability of the earth’s climate, and the security of food supplies.”
SOLUTION: Foreign Direct Investment (FDI) in Indian higher education
Having spelt out the problem, it is necessary that we have a supportive domestic regulatory framework that can ensure that liberalisation is beneficial, instead of giving in to the claims of cultural imperialism and banning such investments altogether. It has been argued, quite correctly, that reputable foreign institutions, with their extensive research infrastructure, have the capability and capacity to impart cutting-edge knowledge in the critical fields of science, engineering and business. These institutions can also mobilise resources in order to train existing college and University teachers in India, many of whom lack doctoral degrees. Besides updating curricula, these institutions can also help train Indian teachers to familiarise themselves with and integrate online pedagogical tools into their curriculum. This is an effective short-term fix for the severe shortage of well-trained teachers in India, particularly in higher education. FDI can be beneficial for the higher education sector in other ways. For example, allowing FDI in education may lead Indian institutions to export educational services to other countries in the future, particularly those in South East Asia, the Middle East and Africa. Of course, government policy needs to balance these benefits with the concerns for dualism in education which may occur if the spillovers from FDI are restricted and do not occur for mass education. However, given the paucity of public sector investment in this critical sector, there is no other alternative but to allow such investments, albeit with a careful eye towards quality control.

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