Indian corporate sector's lip service toeducation

India's corporate sector bemoans the lack of investment in education and the resulting skill shortages. It talks of education a a great opportunity. Businessmen have been quick to latch on to money-making opportunities in professional courses- engineering, medicine, management. But their commitment to producing first-rate educational institutions has been zilch, as Devesh Kapur points out in TOI.

The commitment of Indian business to philanthropy in higher education was strong prior to independence and has dwindled ever since. Pre-independence, business interests not only made the transition from merchant charity to organised professional philanthropy, but did so in a significant way. They created some of India's most enduring trusts, foundations and public institutions, including the Aligarh Muslim University, Banaras Hindu University, Jamia Millia, Annamalai and Indian Institute of Science. Of the 16 largest "non-religious" trusts set up during this period, 14 were major patrons of higher education.

Today, the so-called not-for-profit educational institutions do not engage in philanthropy. Their income comes from fees rather than endowments and investments. Thus even while the number of "trusts" set up for philanthropy in higher education has been steadily rising, the total share of "endowments and other sources" in higher education funding has been consistently falling - from 17 per cent in 1950 to less than 2 per cent today. Some of this decline is to be expected, as the government has expanded its role in higher education, yet the extent is remarkable.

So, what is the implication for policy? If we accept that quality in education exists only in the non-profit model and Indian business is not interested in this model, how do we produce quality education? The answer, it would seem, is a combination of higher investment by government and foreign universities. I have my doubts about foreign universities coming in entirely on their own: their cost structure would make it difficult for them to provide mass education. Perhaps, central universities and the proposed national universities forging partnerships with foreign universities may be a solution.

Greater government investment would also require putting in place proper governance mechanisms. This does not mean leaving matters to academics or 'autonomy' as interpreted by some IIT and IIM faculty, which means boards run by professionals, with government keeping a distance. This hasn't worked and it won't work, as I have argued ad nauseam in my posts. The proposed collegium for IIMs and the pan-IIT council are the sort of mechanisms we need but much work needs to be done to make these effective.