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Red tape tangles US institutes’ entry into India

Higher Education, Licenses and Regulations

United States has cited Indian bureaucracy and uncertainty over Foreign Education Providers Bill as two major bottlenecks for setting up campuses of its foreign universities in India. A guide prepared by the Institute of International Education for the US government’s department of state
says that the US institutions should be aware that Indian bureaucracy may present a “significant challenge” for setting up study abroad programmes in India and building partnerships with Indian institutions.

The report prepared by Parricia Chow and Kimberly Cho with the help of US-India Education Foundation also says that a legislation — Foreign Education Providers’ Bill — to alleviate bureaucratic hurdles has an “uncertain future” even though it has been introduced in Parliament.

The bill was first drafted in 1995 and its latest version was approved by the Union Cabinet in March 2010. A parliamentary standing committee has submitted its report to the HRD ministry and minister in-charge Kapil Sibal expects to introduce the bill in Parliament in winter session starting from November end.

“Disputes within the Indian government, as well as with private (education) providers has slowed down passage of the bill,” the guide named Expanding US Study Abroad to India, said. The report suggested that that US institutes interests in initiating large scale operations in India may want to focus on joint and dual degree programmes in partnership with Indian institutions, rather than wait for future opportunities to establish brick-and-mortar branch campuses in India.

US is eyeing India as the next destination for its universities considering the Central government’s ambitious target of achieving up to 30% of gross enrollment ratio in higher education by 2017, end of the 12th five year plan.

The report, however, projects Indian higher education system in a bad light saying it lacks quality control standards and national-level assessments. It also says that there are only few effective strategies to address issues of quality and accreditation and only IITs and IIMs are quality institutions of international reputation. “With over 21,000 colleges, creating national standards has been an arduous task, rife with political and social implications,” the report said.

Its consequence had been obvious with Indian universities attracting just 2,690 US students in 2008-09, a decline of 15% from the previous year, whereas over 1.04 lakh Indian students joined American universities that year, witnessing an increase of 37% since 2005-06.

Speaking on rich-poor educational divide, the report said, the increase in fees by IITs and IIMs and private institutions has made higher education “prohibitively” expensive for the nation’s poor. “As a result, entrance examinations for top universities tend to favour the nation’s rich, who are often from large urban centers,” the report said.

The guide has advised of not eyeing India as a big market unless the government brings in structural changes in its higher education system.

Hindustan Times, 5 November 2011

Comment

Education sector: fail marks this year

Edupreneurship, Finances & Budgets, For-profit education, Licenses and Regulations, Private Equity

Everonn Education Ltd’s corporate governance troubles have thrown the spotlight on education services stocks. Given the much talked about demographic dividend, the shortage of employable people and the government’s thrust on vocational skills training, it would seem there was easy money for the taking in this sector.

But the reality is far different in the listed stock universe. While the recent troubles may have seen the Everonn stock losing some 42% over the past three trading days, the sector as a whole has underperformed the broader markets for quite sometime now. Even before these allegations came to light, the scrip had shed 23.6% since the start of the current fiscal, against the 12.7% fall in the BSE-500 Index of BSE.

Rival Educomp Solutions Ltd lost half its market value in the same period (though that was partly due to a Securities and Exchange Board of India consent order on alleged insider trading by the promoter). Others such as Career Point Infosystems Ltd and Zee Learn Ltd, too, have fallen behind the BSE-500.

The primary reason these stocks are lagging is that the financials—which may look good in isolation—are not meeting Street expectations, say brokerages. Many of the stocks had listed at high price-earning multiples of up to 100 times, which implied growth rates of 50-60% for investors. That hasn’t happened.

The latest new share sale in this sector, Tree House Education and Accessories Ltd, listed at some 50 times fiscal 2011 earnings and has declined since.

Secondly, while there is strong demand in this sector, the potential has meant that competition has grown strongly in the past few years leading to saturation and driving down margins.

In the case of Everonn and Educomp—to name the two most visible stocks in this sector—high capital intensity in their preferred segment of multimedia education has led to wobbly balance sheets.

“Like Educomp, Everonn’s cash burn from capex has risen substantially, which has begun to meaningfully impact PAT (profit after tax) as interest costs almost tripled in the last quarter,” Ambit Capital Pvt. Ltd said in a recent note.

Thirdly, firms have to deal with a fragmented market, and for some, geographical concentration risk. For Career Point, which is mainly in the business of test preparation, nearly half its revenue comes from one city—Kota, in Rajasthan. While it is expanding into schools and private universities, these are more regulated segments.

Firms operating in this segment have to come up with smart capital structures to beat the not-for-profit clause, and it will be quite sometime before the results show.

These problems may not go away overnight, but those who have lots of patience may do well to remember that education is the biggest middle-class household spend after food.

Mint, September 6, 2011

Comment

House disruption hits education reforms After the end of Parliament’s monsoon session, 13 HRD Bills are still pending

Licenses and Regulations

The country’s education reform agenda has been hit hard by the continued disruption of parliamentary proceedings. At the end of the monsoon session — the eight session of the 15th Lok Sabha that commenced in June 2009 — as many as 13 Bills of the Ministry of Human Resource Development (HRD) were pending at various stages.

Among those pending are some very significant ones including the Bill to set up educational tribunals for out-of-court redress of educational disputes; another to amend the 2007 National Institutes of Technology (NIT) Bill to strengthen these premier technical institutions and grant national status to five Indian Institutes of Science Education and Research (IISER) at Mohali, Kolkata, Bhopal, Pune and Thiruvananthapuram to enable them to confer degrees; another to amend the RTE Act to include disabled children in the definition of the disadvantaged.

The non-passage of the NIT Bill means IISERs can’t award degrees as they are not governed by an Act of Parliament. The move endangers the future of students of IISERs Kolkata and Pune which started functioning in 2006.

Picture this: in the 26-day monsoon session, only one Bill — The National Council for Teacher Education Amendment 2010 (of the seven listed for consideration) — was passed by both the Lok Sabha and Rajya Sabha. This Bill empowers the NCTE to lay down uniform teachers’ qualifications for schools across India in the wake of the RTE Act.

That apart, even the most urgent Bill replacing ordinance listed in this session — The Indian Institute of
Information Technology Kancheepuram Bill 2011 (to accord national importance to this institute and recognise degrees awarded to its first batch which enrolled in 2007) — could not be passed as the Upper House failed to take it up after the LS cleared it on August 25.

Since the Bill remains pending, the ordinance may lapse, forcing the HRD Ministry to find new way to safeguard students’ interests. Sadly, the Bill got stuck in the RS after Congress’ JD Seelam objected to the absence of a quota policy for faculty in institutes of national importance.

HRD Minister Kapil Sibal’s explanation that reservations existed only for students failed to calm frayed tempers of socialists, who quickly jumped on to the quota bandwagon and junked the Bill.

A similar fate awaited the Educational Tribunals Bill 2010 which the LS had passed on August 27 last year. Even this Bill had been thwarted in the RS by Sibal’s colleague Keshav Rao, who had wanted Sibal to honour parliamentary committee recommendations. A year on, the Rajya Sabha failed to take up the legislation even though the ministry had incorporated some parliamentary panel suggestions.

***
Status of 13 pending HRD Bills

Passed by LS; pending in RS

Educational Tribunals Bill 2010
Indian Institute of Information Technology, Kancheepuram Bill 2011
Institutes of Technology Amendment Bill 2010
National Institutes of Technology Amendment Bill 2010

Introduced / pending

RTE Amendment Bill 2010
Central Educational Institutes Amendment Bill 2010
Copyright Amendment Bill 2010

Yet to be introduced

Foreign Educational Institutes Bill 2010
Prohibition of Unfair Practices Bill 2010
National Accreditation Regulatory Authority Bill 2010
National Council for Higher Education and Research Bill 2010
Universities of Innovation Bill 2010

Introduced this session

National Academic Depository Bill

Passed by both Houses this time

NCTE Amendment Bill 2010

The Tribune, September 11, 2011

Comment

INDIA: Implications of the foreign education bill

Higher Education, Licenses and Regulations

India’s foreign education legislation was briefly in the limelight once again this summer. There was even talk about it at last coming before parliament by the end of the Monsoon Session. That time has passed and still there is no legislation.

The extraordinary events involving Anna Hazare and the protests against corruption have dominated the last few weeks. When it comes to parliamentary time it seems the foreign education bill is forever the bridesmaid, never the bride. The twist in the tale is that, for the vast majority of universities, the legislation could be more relevant than they have bargained for.

Despite reading volumes of editorial about the foreign education bill over the last year, one point seems to keep slipping everyone’s attention: it isn’t just about setting up a campus but regulating all foreign university activity in India that leads to the award of foreign university qualifications.

For those universities with no plans to establish a branch campus, the all-encompassing legislation may come as a surprise. Hundreds of institutions have already decided that partnership-focussed India strategies are the way forward. Therefore while some institutions eagerly await India’s foreign education legislation many more need to urgently review their existing strategies.

The proposed Foreign Educational Institutions Act explicitly relates to both international universities operating independently and those working in collaboration with Indian institutions or other local partners.

In fact, effective regulation of these collaborations is the primary motivation for the legislation, which acknowledges that “due to lack of policy or regulatory regime it has been very difficult to make meaningful assessment of the operations of the foreign educational institutions and absence of such meaningful assessment has given rise to chances of adoption of various unfair practices besides commercialisation”.

As importantly, accredited foreign institutions offering degree programmes in India help the government achieve its three objectives for higher education – “excellence, expansion and inclusion”.

They help widen opportunity and accessibility to higher education and will also potentially retain some of the £8 billion (US$13 billion) currently leaving India’s shores with foreign education-seeking Indian students.

Hosting international university campuses will also help India become a destination for students from other countries. Research investment will be attracted to foreign universities that have a presence in India and this will also help India retain and develop its own intellectual talent for the benefit of all.

Who will be affected and how?

So who exactly will the act apply to and what sort of arrangements does it cover?

According to the proposed legislation a university is a foreign education institution if it is already offering, or proposes to offer, awards or degrees or diplomas or certificates either: independently, for example via its own campus which could be operated with or without an infrastructure partner or investor; or with any educational institution situated in India via a partnership, collaboration or twinning arrangement.

A twinning programme is defined as “a programme whereby students enrolled with a foreign education provider complete their study partly in India and partly in any other educational institution situated outside India”.

The proposed legislation requires a foreign education institution to become an approved ‘foreign education provider’ if it wishes to work in India. To get this status an international university must be “notified by the central government, as a foreign education provider, on the recommendation of the commission”.

The commission is either the University Grants Commission or associated bodies such as the advisory body, the AICTE, or the proposed all-encompassing National Commission for Higher Education and Research.

The UK-India Education and Research Initiative has identified more than 161 international universities that have been involved in delivering 641 collaborative programmes in India. Most of these are US and UK institutions offering twinning programmes, where a foreign and an Indian institution jointly recognise a programme and often award dual or joint degrees.

The proposed legislation clearly says that those foreign universities that are “providing educational services in India before the commencement of this act, [must] apply within a period of six months from the date commencement of this act and shall cease to provide educational services in accordance with the provisions of this act if its application for recognition and notifying as foreign education provider has been rejected”.

What will universities with existing or proposed partnerships have to do to get approved status?

To receive soon to be highly-prized foreign education provider status a university must “submit an application [and] every application…shall be accompanied by” documentary proof that the university:

* Has been established for minimum 20 years and has adequate financial and other resources to conduct the course or courses of study in India.
* An undertaking to maintain a corpus fund of not less than fifty crore rupees (US$11 million) or of such sum as may be notified, from time to time, by the government in consultation with the statutory authority.

In other words, according to the proposed legislation, the requirement for a corpus fund applies to twinning programmes as well as branch campuses.

Consequences

So what are the consequences?
The proposed legislation states: “Any person who, being associated with an educational institution or a foreign educational institution not being a foreign education provider…offers or gives admission to any student on any course provided by a foreign education institution will have to pay a penalty of £15k to £75k.” (US$22,300 to US$121,300)

This will obviously act as a strong deterrent for local partners to work with unapproved international universities. Currently AICTE will only “inform the public” of an infringement – as it already has done on its website for more than 100 international partnerships. As far as we know the AICTE has never taken steps to “initiate action under the Indian Penal Code” although the ‘show cause’ notices recently issued could be a first step.

Any university found to be in contravention of the rules risks the “forfeiture of the corpus fund in whole or part thereof”. If no corpus has been provided then one would think the only recourse the authorities have would be to ‘advise’ agencies such as the Ministry of External Affairs to stop granting visas to foreign university staff and-or stop allowing funds to be repatriated to the university.

Kapil Sibal, Minister of Human Resource Development, signs off the act with a ‘Statement of Objects and Reasons’, which reiterates the true scope and ambition of the legislation.

“[Those] who, being associated with an educational institution or a foreign educational institution not being a foreign education provider [publishes an] advertisement which is misleading or gives wrongful information or fails to publish disclosures as required under the proposed legislation shall be liable to a penalty of not less than 10 lakh rupees [US$219,000] which may extend to 50 lakh rupees in addition to refund of the fee and confiscation of any gains made out of it.”

There is no doubt that hundreds of universities will immediately be affected the moment this legislation comes into law. Universities that wish to continue offering their awards in India will need to become foreign education providers. This process may be lengthy and uncertain, but it cannot be ignored. The legislation must be taken seriously as it adds considerable, and to be frank much-needed, bite to AICTE’s current bark.

Once the foreign education bill passes (and it will one day!) foreign universities will have to go through either the commission approval process or seek the consent of the Advisory Board for exemption.

India represents the greatest opportunity in the world for higher education institutions. The government knows this and therefore rightly wants to protect the interests of Indian students from a gold rush of commercially aggressive institutions.

Those universities that are aware of the impact of the legislation on their own India strategies will be better equipped to deal with it when the time comes.

University World News, September 04, 2011

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Demand for private tuition classes under the free education policy. Evidence based on Sri Lanka

Licenses and Regulations, Literacy

Research Paper
Authors: Pallegedara, Asankha

Private tuition classes are growing phenomenon in Sri Lanka especially among students who prepare for competitive national school qualifying examinations. It is one of major education issues under the free education policy in Sri Lanka. It can tarnish the real purpose of free education policy. In this paper, we examine the demand for private tuition classes in Sri Lanka by using two waves of Household Income and Expenditure Surveys (HIES) conducted by the Department of Census and Statistics (DCS) of Sri Lanka in 1995/96 and 2006/07. We find that the demand for private tuition classes has increased in recent time among households. It seems that the private tuition expenditure has changed from a luxury good in 1995/96 to a necessity good in 2006/07. If the increased demand for private tuition classes is reflecting parents’ concerns on inadequate and poor, but free education in public schools, the Sri Lanka government needs to reconsider its free education policy.

To read the full length paper, click here.

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Syllabus tussle costs schools dear

Curriculum Development, Licenses and Regulations

CHENNAI:The legal tussle has cost schools and parents not just time, but money too. Starting classes two months later than usual this year, they had to spend on old text books and now on the new ones.

When the state government announced the amendment to the Samacheer Kalvi Act postponing the implementation of the common syllabus in May, several private schools rushed to place orders for textbooks under the old syllabus with private publishers. As there was but little time to get the books printed, the cost of books went up.

Now that the Supreme Court has ordered the implementation of Samacheer Kalvi this academic year, schools are being forced to either buy a second set of books – either the common textbooks or those printed by private publishers and approved by the state common board of school education. “We will use the old syllabus books for extra reading and reference material to go beyond the boundary of the textbooks.

Around 70% of our students’ parents have agreed to pay again for Samacheer Kalvi books. For the others, we would refund the money for the old syllabus books. They will be kept in the library as reference material,” said N Vijayan, correspondent of Zion Group of Schools. Schools said they also have to spend on training teachers and bringing in experts to suit their own curriculum. “Schools are likely to have spent around Rs 25 lakh only on textbooks and preparations for delivering the curriculum content this year.

Even if a common syllabus is implemented, schools should be given the autonomy to implement Samacheer Kalvi through the available books rather than be forced to buy textbooks prescribed under the common syllabus,” said Alpha Group of Institutions CEO S Alfred Devaprasad. Schools that wanted individual books said they were also being forced to buy the complete set because the regional godowns selling the books were not prepared to handle the demand for the supply of individual books. “There are no alternatives to Samacheer Kalvi textbooks for Tamil. Schools that prefer to use alternative textbooks are given no choice but to buy the complete set or wait for some more time till the books are sold on retail,” said the correspondent of a matriculation school. The Supreme Court has directed the implementation of Samacheer Kalvi by August 19.

The Times of India, August 14, 2011

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Private schools complying with RTE norms may get state’s nod

Budget Private Schools, Licenses and Regulations, Right to Education

PUNE: Private institutions that have been waiting to open schools for the past two years may finally get the nod now from the state government. However, it comes with a rider.

The state government will place a self-financed schools’ bill in the monsoon session of the state assembly for private unaided schools. Permission to start schools will be given only to those institutions that will follow the guideline laid dowm by the Right to Children for Free and Compulsory Education (RTE) Act, 2009.

However, no grant will be given to these schools, minister of school education Rajendra Darda said on Thursday. Financially strong private institutions are interested in starting schools, the minister said.

Thousands of schools in the state receive grants-in-aid where the state government provides funds to pay salaries, construct school buildings and other facilities.

Darda, who was in the city to inaugurate the e-learning classroom at the Camp Education Society, said that rural areas needed more schools. “The school education department with the help of ‘Google Maps’ found that rural areas in the state need schools according to the parameters laid down by the RTE Act. We know the exact number of schools required in each district. If any institution is interested in starting a school, they will be given permission, but without a grant,” he added.

The schools would need a playground, specific number of classrooms, a particular teacher-student ratio and infrastructure.

In the past two years, the state government has received thousands of applications seeking permission to start new schools. These proposals were put on hold since the mapping of the schools was being done and decisions on which areas needed more schools were to be taken.

Darda also announced the introduction of a new subject called ‘information and communication technology’ (ICT) for standard IX from the next academic year which will be continued when students move to standard X in 2013-14. The subject contents would include e-commerce, e-governance and basic software development.

On the fees regulation act for private schools, Darda said the last of the panel meetings, formed for drafting the act, will take place on July 25. “After this meeting, a joint legislature committee will prepare a final draft which will be submitted to the state cabinet.” The panel has conducted seven meetings till date.

The state has already given e-learning a boost, the minister said. “About 2,500 schools have received computers and other facilities to run an e-learning classroom,” he added.

The Times of India, July 21, 2011

Comment

Stamp of approval for all Punjab schools

Licenses and Regulations

In a major decision aimed at wooing a section of society ahead of the next Punjab Assembly polls, the Punjab government on Saturday announced it would recognise the unaffiliated and unrecognised private schools and academies across the state.

With this, these “illegal” institutions, numbering around 20,000, have not only escaped closure, which they faced under the Right to Education (RTE) Act, but have come at par with the government’s own schools and those aided, affiliated or recognised by it.

While Punjab Education Minister Sewa Singh Sekhwan, who took this decision after a meeting with over 300 representatives of the “beneficiaries” at the headquarters of Punjab School Education Board (PSEB) in Mohali, attributed it to “the interest of lakhs of students enrolled in such schools as well as those running such institutions since long”, the educationists feel it a “step aimed at reaping political and self interests” and in turn “degrading the standard of education, already low in the state”. As per the decision, all such schools will pay a lumpsum fee of Rs 20,000 to get their institutes associated with PSEB, besides paying Rs 10,000 annual fee for continuation of their association. In this way, the Board will earn almost Rs 40 crore initially besides generating Rs 20 crore annually.

By being brought at par with government and private reputed schools as well as Open School, the associate schools will get a right to award their students internal assessment of 30 per cent of the total marks on the pattern of regular school students.

Divulging further details of the decision, PSEB Chairman Dr Dalbir Singh Dhillon said that different rules and regulations will be formulated to associate all such unrecognised private schools and academies with the Board. “These regulations shall be simple to the extent that it will be acceptable to all types of private institutions,” he hinted, while revealing that the minimum criteria as per qualification of teachers shall also be set by the Board so that the academic level of the teachers of the associated schools may be brought at par with the affiliated and recognised schools of repute.

Though under the RTE Act all such institutions were debarred from getting their students to appear even as private candidates, the PSEB chairman claimed that “these measures shall be in tune with the spirit of the provisions of RTE as well”.

Indian Express, April 17, 2011

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NCHER will be an independent body: Sibal

Higher Education, Licenses and Regulations

India’s proposed “super regulator” for higher education, which will oversee universities as well as institutes of technical, legal and medical education, will not operate under the human resource development (HRD) ministry, minister Kapil Sibal has said.

The clarification is expected to ease the concerns of the health and family welfare ministry and the law ministry, which have been worried that the new regulator would transfer their control over institutes of legal and medical education to the HRD ministry.

Sibal told Mint on Friday that the HRD ministry, which is preparing the final draft to create the National Commission for Higher Education and Research, or NCHER, proposes to make it an independent regulator. “It does not belong to the ministry of HRD. It will be a separate statutory authority,” he said.

“(The) HRD ministry will not be able to give direction to NCHER,” he added, although it “may be the service ministry”.

Universities currently operate under the University Grants Commission (UGC), while technical institutes are controlled by the All India Council for Technical Education (AICTE). Teacher training institutions fall under the purview of the National Council for Teacher Education (NCTE). The HRD ministry is in charge of all these bodies.

NCHER was conceptualized on the basis of the report submitted by the Yashpal committee last year, which suggested an overarching regulator that will give more freedom to universities and institutes of higher education to run their affairs. The National Knowledge Commission in 2005 had also recommended doing away with AICTE and UGC, and their replacement with a “super regulator”.

HRD ministry officials expect NCHER to be set up in this fiscal year.

The ministry’s proposal placed medical and legal education institutions as well under the purview of NCHER, raising the hackles of the ministries of law and health and family welfare.

K. Sujatha Rao, secretary in the health and family welfare ministry, is scheduled to meet higher education secretary Vibha Puri Das this week. HRD ministry officials said, on condition of anonymity, that the meeting will focus on the regulation of medical education.

But Sibal played down talk of a tussle between the ministries. “(Since NCHER) is going to be an independent statutory authority…there is no question of tension with anybody.”

“Controlling higher education is certainly not our intention. NCHER will provide greater freedom. NCHER will facilitate, not concentrate power in itself,” he added.

The minister said he was yet to receive the final draft for NCHER, which is being prepared by education experts, but was optimistic that more autonomy to institutes of higher education will improve the standard of education.

Sibal said he aims to improve the gross enrolment ratio (GER) in higher education to 30% from the current 12.4% by 2020. That means 30 out of every 100 students in the 18-24 age group will pursue higher education.

Around 9.95 million students are currently pursuing higher education in more than 460 universities and 22,000 colleges, according to HRD ministry data.

To increase the GER to 30%, Sibal says India needs 700 more universities and 35,000 colleges by 2020. He is open to more private participation in higher education.

“(The) government does not have that kind of resources. But resources are available to the private sector,” he said. “The opportunity is enormous. There will be private participation; there will be private-public partnership,” he said.

Prashant K. Nanda, Mint, 24 May 2010

Comment

Plan to lift ban on deemed tag

Higher Education, Licenses and Regulations

The human resource development ministry is preparing to again start awarding deemed university status to institutions, lifting a ban it had imposed in June 2009, officials have told The Telegraph.

The move comes after a massive pile-up of applications from institutions aspiring to the deemed tag, which allows them to award degrees without direct legislative scrutiny unlike full-fledged universities.

But the decision to re-open the deemed university “bazaar” — as some officials jokingly referred to the move — comes amid a feeling that the tough new regulations adopted will help enforce standards at these institutions.

The new regulations require new aspirants to hold the highest possible rating that is offered by accreditation agencies.

Institutions must exist as colleges for 15 years before they become eligible for deemed university status.They are also barred from offering distance education courses.

The ban on awarding deemed university status was formally put in place by HRD minister Kapil Sibal on June 4 through an order to the University Grants Commission.

The UGC was also asked to conduct an inquiry into all 130 institutions already granted deemed university status. The ministry conducted a parallel probe.

While the UGC probe recommended that all 130 deemed universities be allowed to retain their tag, the ministry review found 88 of them unfit. It suggested that 44 among these 88 be given three years to try and improve their standards.

It also recommended that the remaining 44 be stripped of their deemed status immediately. The Supreme Court is hearing a case on these deemed universities.

The Centre had asked the Supreme Court to stay admissions to these 44 deemed universities till it decided the issue, but the court has turned the request down. The apex court had earlier ordered the government not to act against these institutions till it had delivered its verdict.

Charu Sudan Kasturi, The Telegraph, 8 May 2010

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