There are three levels of education; elementary, secondary and higher. The first two are imparted at the school level, whereas higher education is imparted at the college and university level.

There may be two types of providers of education: public and private. Private institutions may be partly funded by the government (aided) or entirely self-funded (unaided).  Public institutions are established, funded and managed by the government.  Private providers of education often step in when the government has limited resources to provide universal access to education. In most markets, the private sector is characterised by a profit-motive.However, when it comes to education, the private sector is required to operate on a not for profit basis.

The Standing Committee on Human Resource Development is currently examining the subject Role of Private Sector in Higher Education’.In this context, we present an analysis of the role of the private sector in providing higher education in India. This note maps out the regulatory framework and highlights key issues with regard to private higher education.

Regulatory framework

What are the Constitutional Provisions

Education falls under the Concurrent List of the Constitution. This means that both the centre and states can enact laws related to education. In addition, the mandate of determining standards of higher education and research lies with the centre, as this falls under the Union List. Further, states have powers to incorporate, regulate and wind up universities as a subject under the State List.

Administrative framework

At the centre, the Ministry of Human Resource Development (MHRD) formulates policies, and implements laws and schemes related to education in the country. Under the Ministry, the Department of Higher Education is responsible for the higher education sector.  At the state government level, Departments of Education carry out similar functions. Institutions offering specialised professional disciplines in sectors such as health, agriculture, etc, are regulated by their respective ministries.

Regulatory bodies
The main regulators for higher education are the University Grants Commission (UGC) and the All India Council for Technical Education (AICTE).  In addition, there are 15 professional councils regulating various professional courses.  These are statutory bodies established by Acts of Parliament such as the Medical Council of India, Bar Council of India, Council of Architecture, etc.

Establishment of Private Universities

A university must be a trust, society, not for profit entity or should be run by one.  There are two routes to establish a private university.  Primarily, it may be set up through an Act of Parliament (central university) or an Act of a state legislature (state university). Till date, no private university has been set up through an Act of Parliament. The other route is by being declared a deemed university. Currently, 229 universities are privately managed.  States may differ in the land norms and other procedural steps required in setting up a private university. However, an analysis of laws in some states such as Rajasthan, Madhya Pradesh and Gujarat shows that largely these requirements are similar across states. An example of the requirements for setting up a private university in the state of Haryana is provided in the adjacent text box.

Procedure to establish a private university:

• Other routes to establish a private university through the central government:An existing private institution/college may be conferred the title of a deemed university in the general or de novo’ category.  Under the general category the institution should: (i) have been in existence for at least 15 years, (ii) be engaging in areas of specialisation and not conventional degrees such as engineering, management, etc, (iii) have undergone external accreditation and assessment, (iv) possess the necessary infrastructure for quality research and have modern information resources, etc. Symbiosis International University, Pune has been declared a deemed university through the general category. 
• Under the ‘de novo’ category, the institution must be devoted to unique and emerging areas of knowledge, not being pursued by existing institutions.  The Ministry may notify the institution as a deemed university under the de novo category on completion of five years of the institution as such.  The Energy and Research Institute (TERI) acquired the deemed university status through this route.
• Note that no institution has been declared a deemed university since 2009.  The centre derecognised 44 universities in January 2010 as they were found to be deficient on several counts such as lack of infrastructure, disproportionate increase in intake capacity, high fee structures, little evidence of efforts in emerging areas of knowledge, etc.  The centre’s move was appealed to the Supreme Court by the universities. However, the Court did not reverse it and left the final decision with the UGC.  

Regulation

The UGC has powers regarding the recognition, functioning and de-recognition of deemed universities.  It is also empowered with disbursing grants to other universities for their maintenance and development, and with regulating fees charged by universities.  Failure to comply with UGC standards may result in withdrawal of grants or termination of affiliation of a college to a university, if the college does not comply with fee and other regulations.  Private universities offering technical courses such as engineering, town planning, management, etc, and receiving funding from AICTE, are required to comply with its academic standards and regulations.

Key issues and analysis:

• The National Knowledge Commission (NKC) was set up in 2005 to give recommendations on building a knowledge base in India, including reforms required in the education sector.  NKC did not encourage for-profit educational institutions.3  The Yashpal Committee was set up in 2008 to recommend changes to the higher education sector.  It also suggested that private providers of higher education should not be driven by the sole motive of profit.4  However, both NKC and Yashpal Committee recommended that it is essential to stimulate private investment in higher education to extend educational opportunities.   This aspect is further discussed in detail in the issue of access, under fee structures.
• There are many private, not for profit higher education institutions that have been operating in countries like the USA for many years such as Stanford University, Massachusetts Institute of Technology, etc.  Alternatively, the University of Phoenix in the US is private and for profit.  The UK higher education system is also characterised by many private providers, which operate on a not for profit basis. 
• Low enrollment:  The total population of India is currently 121 crore.[17]  Gross Enrollment Ratio (GER) is calculated as a percentage of total number of students enrolled in a specific level of education (higher education in this case) divided by the total population within the relevant age group (18-24 years).  In 2013, the GER for higher education ranged from 14%-24%. The GER for higher education differs on the basis of two official reports for the same year, the Ministry’s All India Survey on Higher Education (24%) and the Standing Committee report examining the Demands for Grants of the Department of Higher Education (13.6%).
• Expected increase in demand for higher education:  The GER for elementary education is over 100%.  For secondary education, this ratio is over 50%.  As enrollment in elementary education has been maximised, and enrollment and drop outs in secondary education are being addressed, the pool of students seeking higher education opportunities will increase over the next few years.  Therefore, there will be a greater demand for university education.  The NKC recognised that government financing cannot be enough to support the massive expansion in the scale of higher education. 

Reservations: 

In the past, the Supreme Court has stated that private unaided educational institutions have full autonomy in their administration.   The Court has also stated that the principle of merit should not be sacrificed, i.e., students should be admitted on the basis of their academic capability or merit.  The management of a private institution can exercise its discretion for quota in admitting students, subject to satisfying the test of merit based admissions.  This meant that the government could not mandate its reservation policy on a private unaided educational institute.  Reservation is affirmative action for socially and economically backward classes, scheduled castes (SCs), scheduled tribes (STs), etc.  The justification for disallowing reservations in these institutions was the encroachment of their right and autonomy in determining admission procedures, etc.  Such reservation was only possible if decided mutually by the institution and the government.

The Constitution (93rd Amendment) Act was enacted in 2005, inserting Article 15(5) in the Constitution.  This empowered the government to mandate reservations in private (aided and unaided) educational institutions, except in minority educational institutions, for socially and educationally backward classes of citizens, SCs, STs, etc.  This was challenged in 2008, wherein the Court upheld the constitutional validity of Article 15(5).  It said that if reservations were imposed on these minority institutions, they would lose their minority character and would fail to be brought on the same platform as non-minorities.  However, the Court left the question regarding applicability of reservations to private unaided institutions unanswered, as this aspect had not directly been challenged. In 2014, this issue was challenged in Supreme Court in context of the Right to Education Act, 2010.  The Act mandates 25% reservation in elementary schools (including private unaided) for economically weaker sections of society.  The Court reasoned that the law mandates the government to reimburse the cost of such education to private institutes, and is in line with the constitutional goal of equality of opportunity.   It held Article 15(5) constitutionally valid with regard to reservations in private unaided educational institutes.

Fee structure: 

Private higher education institutions are often accused of charging capitation fees (any amount in excess of fees charged for the course of study) from students, in turn making them unaffordable.   Fee structures of private institutions may be one reason for inaccessibility of higher education.  According to the Yashpal Committee figures in 2008, capitation fees in private institutions ranged from Rs 1-10 lakh for engineering courses, Rs 20-40 lakh for advanced courses in medicine, Rs 5-12 lakh for dental courses and Rs 30,000-50,000 for courses in arts and science.

Accreditation: 

It is important to improve the quality of higher education institutions along with quantitative expansion.  Accreditation is a way of measuring such quality of institutions.  It is the process of assessing the performance of institutions that volunteer to be accredited, on the basis of a few set parameters.  These parameters may include: (i) curriculum, (ii) teaching-learning evaluation, (iii) research and consultancy, (iv) infrastructure and learning resources, (v) student support, (vi) governance, leadership and management, (vii) innovations and best practices, (viii) students’ performance, (ix) improvement in attainment of outcomes and, (x) facilities and technical support, etc.  Once these have been considered a final grade is assigned to the institution by the accrediting authority.

In India, the National Assessment and Accreditation Council is an autonomous body established by UGC in 1994.  Its main function is to ensure quality education via assessment and accreditation of institutions that volunteer for the same. The reassessment of an institution takes place after a period of five years. An institution may apply for reassessment of a grade it has been accredited with, by the Council, after one year of acquiring such a grade, but not later than three years.28 The National Board of Accreditation was established under the AICTE Act, 1987. The Board’s powers include: (i) conducting assessment or accreditation of a technical institution or programme, (ii) working with colleges and technical institutions to develop mechanisms for quality assessment, and (iii) sharing results of the assessment process with institutions. Largely, the Board looks at programme accreditation. Both the Council and the Board, accredit public and private higher education institutions.

Source: PRS