23. Embracing the Global Knowledge Economy: Challenges Facing Indian Higher Education

While nearly 77 % of the Indian population was categorized as poor and vulnerable (in 2003–2004) by the Sengupta Commission Report, India has witnessed a steady rise in the number of millionaires.

Alternative Economic Survey, India 2005–2006, 2006–2007.

The Economic Survey, Government of India (2010, 2012) attribute this inconsistency in ranking to rather poor performance in the realm of education rather naively. The rankings are so low, the difference becomes immaterial. The HDI ranking is reported in Global Human Development Report 2011.

The number of higher education institutions would be more than 20,000. In terms of absolute enrolment, it is the third highest in the world though the enrolment ratio is pretty low at around 14 % (Agarwal 2009, p. 36).

As per the 61st Round of the NSS, out of 260 million persons in 15–29 years age group, only about 30 million are trained in any formal or informal ways. The level of vocational skills of labour force was pretty low at 5 percent in comparison with 96 % in Korea and 60–80 % in the industrial countries (Agarwal 2009, p. 192).

The gross enrolment rate was envisaged to rise to 15 % at the end of the Eleventh Five Year Plan. Although the budgetary allocation for higher education was raised by nearly eight times, the actual expenditure may have fallen short of the budgeted amount mainly due to the lack of absorptive capacity of the system and slow completion of the new institutions planned.

Education helps spreading awareness about the need to protect environment and can combat corrupt practices, which is the major source of degradation of nature. Environmental education makes individual understand the importance of the nature and the need to distribute natural resources in a sustainable way. Research and development can develop eco-friendly technologies, which can be useful in sustaining the environment.

The model developed by Solow (1956) assumed constant returns to scale production function which led to diminishing marginal productivity of capital. The nations would therefore reach steady states and technology was assumed to be available to all.

Hanushek and Kimko (2000) conclude that quality of labour force could be measured by comparative tests of mathematics and scientific skills which ‘has a consistent, stable and strong relationship with economic growth’.

The neoliberals advocate a new mode of regulation and a new form of governance. The central presuppositions are self interested individuals, free market economics, a commitment of laissez-faire, and a commitment to free trade (Olssen and Peters 2005).

Neo-liberal policy prescriptions have not been implemented in full even in the UK, New Zealand and Australia. Competition has not led to full cost recovery (e.g., American Ivy League) even in some mass vocational education institutions and also in the University of Phoenix.

It is expected that a university of repute from the Anglo-American world would partner with a HEI in a developing world for the purpose of offering twining programme or under the franchisee of the foreign university. The craze for a degree from a foreign university in the developing world, like India can be so high that the university from the developed world need not be a famous one as many such collaborations in India would testify.

Tilak (2010) argues that this ranking leads to hierarchy as the universities with high ranking attract all the attention and others remain sidelined.

There are four aspects of global trade in education: cross border supply, consumption abroad, commercial presence and movement of natural persons.

Around 50 % drop out by Class VIII. Only around 55 % of those who complete successfully Class XII, pursue higher studies. The ASER report, PISA score which measures the cognitive capacity in Mathematics and science mainly show that learning outcome is woefully poor. As mentioned earlier, this has the potential to affect growth of a country by affecting skill acquisition and innovativeness in the working population.

Not a single Indian university has been included in the top 100 universities across the world. In comparison, universities from China are doing particularly well in view of their late entry into the global high ranking higher education institutions.

As reported by the EXIM Bank of India (2007, p. 21), a survey conducted by McKinsey Global Institute found that only 25 % of the engineers, 15 % of the finance professionals and 10 % of the generalists are considered to be employable at the pass-out stage by the employers.

The IITs and the IIMs are not full fledged universities and therefore in terms of the criteria for ranking, the IITs and the IIMs fail to qualify. Marginson (2010) that India has only one institution in the top 100.

Generally it is argued that because of the principal-agent problem, the quality of service delivery in the government sector is poor as self-interest dominates the conduct of the employees. The neo-liberals advocate for a public choice approach to reform the governance structure.

Profit making in social sector like education is disallowed by the Constitution. However, making reasonable amount of profit can be made and a part of the profit can be re-invested. Through artificial escalation of costs, profit can be siphoned out and that is how the majority of the privately funded institutions are sustaining their business. This also provides enough temptations for the private operators to invest in professional institutions. In fact the growth, or the best way to describe would proliferating of the private sector institutions has been very rapid to the tune of 18–20 % per annum.

It is being felt that there are many authorities with overlapping jurisdictions to regulate the chaotic situation which prevails in the Indian higher education sector comprising a growing number of private institutions who defy regulations recklessly.

Chairperson, Prof Yash Pal expanded the mandate of the Report and changed the focus to rejuvenation of the HE sector as he wanted to have a holistic view of the prevailing situation.

The provision of education loans is a poor substitute for scholarship and subsidization. The capital market for education loans is inherently imperfect and it is more so in India (Chattopadhyay 2007).

As per the observations made by the Thirteenth Finance Commission, the states are now having surplus in their revenue accounts with surplus cash being held. The need to comply with the FRBM Act has possibly led to such a situation.

NKC recommended 3 % for primary education, 1.5 % for school education, 1.5 % for higher and technical education.

NPM derives its rational from Buchanan’s public choice approach to the government. Given the self-interest employees and the hierarchical structure of a public sector organization, the principal agent problem becomes inevitable. Some high ranking universities are motivated by the ‘prestige maximization’ objective which enable the faculty to rise above their narrow self-interest and deliver.

Mowery and Sampat (2006) argue in the context of USA that growth in licensing and university based “spin-offs” need not be entirely attributed to Bayh-Dole Act. The university trained graduates facilitated transfer of knowledge of knowledge to industry and other sectors.

The KPO is a higher end version of outsourcing of businesses processes (BPO) that requires domain expertise. India has a share of about 29 % of the world KPO business. Various types, engineering process outsourcing, LPO (legal), India has a large pool of skilled professionals at a low cost with the competitive advantage of English and IT applications. It is estimated that India is getting 30 % of global EPO (engineering) valued at around $6 billion, 20 % of global LPO. Around 300,000 students in engineering per year are churned out in India. India offers 25% cost reduction with salaries 1/10th of the average salary in USA. There are around 300 R&D institutions and national laboratories in India funded largely by the government.

The best minds are also attracted to IT. Even those who do mechanical and electrical from the best of the institutions join the IT industry after being provided with the necessary training.