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The price we pay for schools

The price we pay for schools
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First Published: Tue, Jun 16 2009. 01 15 AM IST

Photo: Rajkumar / Mint
Photo: Rajkumar / Mint
Updated: Tue, Jun 16 2009. 03 53 PM IST
Few people link the government’s Sixth Pay Commission with the price of private school education. But on reading the fine print, both central board accreditation and the state government’s no-objection certificates for private schools require “pay parity” with government schoolteachers. As a result, many private schools have received government notices to implement this Sixth Pay Commission parity with retrospective effect from 1 January 2006. Many complied and raised fees by 25-60%.
Photo: Rajkumar / Mint
This raise became the breaking point in a simmering confrontation between parents and schools: 15 parents associations in New Delhi, Ludhiana, Kanpur, Indore, Allahabad and Mumbai held street protests and filed court cases asking for fee rollbacks and controls. Public interest litigation filed in the Allahabad high court said, “In Greater Noida there is only one government school. Parents do not have any option except to send their wards to unaided private schools. The petitioners’ grievance is that recognized private, unaided schools in Uttar Pradesh are indulging in the large-scale commercialization of education, which is against public interest. This commercialization has reached an alarming situation because of the failure of the government to perform its statutory function. The fee hike and arrears will break the backbone of parents, especially in the present recessionary period and this association has been formed to fight the arbitrary, illegal and unconstitutional acts of unaided private schools.”
Courts have now begun to respond. In late March, the Delhi high court called the decision by private city schools to hike fees “highly objectionable”, and issued a notice to the government last month to examine whether the institutions were following the “mandatory provisions of law”.
The debate over the price of education is particularly complicated in India because of poverty and inequality of opportunity. While it is easy to take sides, any debate must remember Albert Einstein’s warning to make things as simple as possible but not simpler.
Our school system has problems of capacity (there aren’t enough schools), outcomes (students drop out because of poor value for money or time, output is not work-ready), and inclusiveness (many children don’t have access to quality education). Many parents (poor or rich) choose private schools over government ones: The latter have the same instructor teaching multiple grades, no separate toilets for girls, no English teaching, poor resources, and 35% of the teachers don’t show up for work. This despite government teachers being paid better (the new minimum salary for a government teacher and peon in Uttar Pradesh is Rs18,000 and Rs11,500 per month, respectively) and better qualified than most private schoolteachers.
The case for imposing price controls on private schools is weak because they are not natural monopolies; most do not use government land, or enjoy subsidies. To put this in the perspective of other government interventions, even the highly distortionary drug price control applies to only 35% of medicines— while price-controlled government schools already account for 75% of schoolchildren. But the “public interest” alibi already breeds meddling: This regulatory cholesterol has led to an adverse selection of education entrepreneurs—the enterprise attracts land mafia, politicians and criminals—creating bad private schools.
Moreover, the government’s inability to perform its role with public sector schools will not go away by raising fingers at the private sector. Many “edupreneurs” today relate to actor Shah Rukh Khan’s quip to Sunil Gavaskar’s advice for the Kolkata Knight Riders cricket team— “Buy your own team”, creating unbridled expansion in private schools.
Still, government schools in Mumbai spend about Rs2,500 per student per month—more than the fees of 90% of private schools. Price controls only choke the massive private school expansion that is anyway trying to compensate for state failure.
The current incorporation structure for private schools as a trust is also dysfunctional. Sunshine is the best disinfectant: Schools must be allowed to incorporate as companies that pay tax and have shareholders. Allowing for-profit schools seems counter-intuitive, but competition under a strong regulatory framework has lowered costs and increased quality in other sectors. I agree schools are different because of the limited bargaining power of parents (would you lead a sustained fight with your child’s school about a fee hike that would pay the teacher more?). But our school system is still over-regulated.
Further, regulating private fees only moves payments underground, creates new fees (building, library, summer camp, activity, medical, sport and computer, etc.), sabotages excellence and accelerates penetration of international accreditation boards such as the International Baccalaureate (IB) and the International General Certificate of Secondary Education (IGCSE). For-profit schools must be allowed; in fact, their taxes should be earmarked towards improving government schools.
Government pay parity for private schools must be removed. We must mercilessly measure and publicize outcomes. But, more fundamentally, we must acknowledge that price controls kill expansion. And India needs its school capacity to explode because, in the absence of this capacity, the most expensive school for a child is no school.
Manish Sabharwal is chairman, TeamLease Services. Comment at theirview@livemint.com
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First Published: Tue, Jun 16 2009. 01 15 AM IST