Friday, August 24, 2007

Prime Minister's Independence Day Address -- Part 2


Reforms in Education constitute the third focus for my Government.

Analysis of Government spending in education reveals a startling fact: expenditure on higher education (medical, technical, engineering and managerial development) is orders of magnitude higher than on primary education.

This is an unsustainable and unacceptable distortion. Insufficient investment in primary education implies that a significant fraction of Indians are not provided the opportunity to earn even a high-school certificate.
Overspending on higher education -- while neglecting primary education -- is perhaps the single-largest mistake we have made in perpetuating discrimination within India.

Insufficient investment in Primary Education (and, I may add, Primary Health) also means non-competitive and anti-merit steps such as quotas and reservations need to be taken to provide symptomatic relief for this underlying flaw.

Finally, international evidence has demonstrated that government subsidisation and control over higher education is largely unnecessary. This is because higher education is usually self funding since degrees typically translate directly into employment opportunities. This has also been proven in India, where private colleges, despite working in a highly restrictive environment, have created tremendous value. They have conferred degrees on lakhs of engineers, doctors and professionals who are now in a position to compete for -- and win -- global opportunities.

Against this background, my Government's Education reform agenda has two simple objectives: universal Primary Education, and a liberalised, competitive higher education sector.

We plan to treble investment in Primary Education -- buttressed by "Education vouchers" similar to healthcare vouchers -- to ensure universal primary education becomes a reality.
Even as investments in Primary Education are increased, the mode of delivery will also be revamped. Special Purpose Vehicles (SPVs) managed by educational professionals will be formed, under strict performance-payment contracts to ensure that Education is actually being delivered.

In conjunction, the Government will begin the slow divestment of higher educational facilities. Key institutions like the IITs, IIMs, Medical Schools and other higher educational institutes will be transferred to autonomous Trusts, with complete authority -- and responsibility -- for maintaining standards and remaining fiscally viable.
Liberalising the rules to allow private institutions, along with fiscal reforms to facilitate funding of higher education will ensure fee levels remain competitive -- and educational supplies flex to match changes in market demands for talent and skills.

To ensure that quality is maintained in a multi-provider environment, robust regulation is also required. A Primary Education regulator shall be formed to monitor the performance of the SPVs referred to earlier. Existing higher educational regulators (e.g. the UGC) will be vested with higher executive authorities to effectively regulate (as distinct from control) a more diverse higher education provider base.

We believe that, for a nation with a unique dempgraphic like india, a "students' market" that provides skills ased upon job seekers' needs -- rather than an "educators' market" which provides skills based upon suppliers' ability to provide -- is preferred.

Economic Performance
The robust economic growth shown by Indian enterprises since Prime Minister Narasimha Rao initiated liberalisation in 1991 is one of the major success stories of post-independence India.
This growth has weathered several storms -- recessions, boom-bust cycles and global crises. Even as Indian companies have made record profits, acquired global companies and expanded, domestic consumption of virtually all goods (commodities, services, retail) has increased strongly across all sectors -- demonstrating that Indian enterprise is second to none in value creation.

Given this stellar track record in value creation, my government believes that this responsibility should be left to the Indian private sector. The role of the government here should be restricted to regulating the system and preventing distortions.

This will free up government resources and expertise to focus on creating value in areas where the private sector is unable or not suited to value creation -- such as law and order, healthcare and education.

[to be continued]

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