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Growing an Ivy League at home

Human Resources Development Minister Kapil Sibal and Prime Minister Manmohan Singh are leading a bold effort to improve key aspects of the Indian education and training system.

Human Resources Development Minister Kapil Sibal and Prime Minister Manmohan Singh are leading a bold effort to improve key aspects of the Indian education and training system. An important element of their reform agenda is the Foreign University Bill now being debated.

Initiatives to improve the quality and quantity of Indian higher education are desperately needed. India’s growing population has recognised that an entire family’s life chances can be transformed if one child obtains a world-class degree,and a huge increase in capacity is required to meet their demands. The existing system isn’t up to this task: far too many graduates are investing life savings to get a degree and then ending up unemployed,and research suggests that 80 per cent or more of them are not employable by companies seeking to compete in global markets.

Unfortunately,the proposed legislation to encourage the leading universities from around the world to set up campuses in India is unlikely to achieve the desired objectives. Below are 10 reasons why these top universities are not likely to come in the numbers projected,one possible exception to this scenario,and a suggested alternative approach to reform that could meet the desired objective more quickly.

Problems outside India

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The timing of the bill could not have been worse for encouraging the world’s best universities to invest in creating new campuses. The global financial crisis,whose worst effects India has admirably avoided,has had devastating effects on the best research universities in the US and UK. The leading private universities have seen the value of their endowments fall 20-40 per cent,while virtually all of the major public universities are now facing major cutbacks in government funding as policymakers seek to close growing budget deficits. Even Harvard,the world’s richest university,has been forced to scale back on its ambitious expansion plans adjacent to its Cambridge,MA campus. In this climate,they are likely to focus any expansion efforts on strategies that will yield immediate new student revenue,not ones that will require significant up-front investment.

Misunderstood motives

When Sibal toured the US in the fall of 2009 to recruit the leading private universities,part of his pitch was they should follow the lead of IT and business service multinationals and come to India because it offers a source of high-quality,low-cost talent. The problem with this analogy is that leading universities are not driven by a desire to lower labour costs or increase profits; indeed,most of them lose money on every undergraduate student. This rationale is even more suspect for the top public universities in the main countries India is seeking to attract (US,UK,Australia or Canada),because it would be hard for them to justify use of taxpayer dollars to make this investment. Rather,India should appeal to their desire to attract the world’s most able students,an increasing percentage of which will come from India’s vast pool of English-speaking talent,and the chance to be part of solving some of the world’s most challenging and important problems.

The bill likewise misunderstands the motives of many of the Indian students now travelling abroad to obtain their degrees. It assumes that India can retain much of the more than $4 billion that these students now spend abroad by offering them a comparable degree that is cheaper and more convenient. This ignores the reality that,even with the huge growth in opportunities in the Indian economy,an equal or greater part of students’ motivation for studying abroad is the chance to get a job in that country after graduation.

Bigger isn’t always better

As India itself has seen through the success of the IITs and IIMs,bigger is often not better when it comes to élite higher education institutions. With a few notable exceptions — e.g. Wharton’s decision to create a small campus in Silicon Valley,the recent forays into Dubai and Singapore — most of the universities that India is seeking to recruit have resisted the temptation to grow for centuries,focusing instead on maintaining research excellence and a low faculty-to-student ratio. And some of the most innovative approaches to globalisation,like MIT’s OpenCourseware initiative,involve free sharing of curriculum,while further raising the value of the core educational experience at MIT’s main campus.

Bureaucracy and costs


Although the government is striving hard in the bill to open up the Indian higher education market to the best foreign universities,a number of factors may discourage them from investing in India: the requirement to post an $11 million bond to establish a university; the steps that will be required to get planning permission for a new campus; the uncertainty about the new body that will govern all higher education and many other forms of regulation in this sector; and the stipulation that they cannot transfer any surplus generated out of India. All of these concerns are compounded by the risk that a change in government could potentially affect their ability to operate in India.

Global competition

As a subset of these universities looks to establish foreign campuses,they are likely to be most attracted to those countries which offer them generous incentives that both reduce upfront costs and the risks associated with global expansion. Countries like South Korea,Singapore,and the United Arab Emirates have all been offering such incentive packages. Even with these,many foreign universities have thus far struggled to attract world-class faculty and to build a sustainable business model. India is not proposing any such financial inducements.

Local competition

India’s domestic higher education market has historically charged a very low rate of tuition,because of a combination of government subsidies and the limited ability of most Indian students to pay. This is likely to place significant downward pressure on what foreign universities can charge,and hence reduce their ability to build high-quality,sustainable business models in India. While there is clearly a significant group of India’s rising middle and upper class who are willing to pay for a top foreign degree,it is not clear whether they will view a new campus in India as of comparable value.

Competing with themselves


Even if foreign universities were able to create viable programmes at a significantly lower tuition level in India,they would be in a quandary: should they offer an education of comparable quality and thus risk competing with their existing campus for Indian and global students,or a lower-quality offering that may threaten the high-status educational brand they have created? One approach that some may adopt is to concentrate their offerings on high-demand professional degrees in small,satellite campuses that don’t require the full research and support infrastructure of a comprehensive university.

Shortage of faculty talent

One of the biggest issues facing India as it expands its higher education system is the shortage of world-class professors to staff these new institutions. Top new graduates with a master’s degree from the leading Indian universities can already earn several times what a senior professor makes,so it is hard to convince the most able young people to consider an academic career or to retain top young faculty. And those who opt for a PhD and are able to publish in the top academic journals in their field — the talent pool that would interest leading foreign universities — are in demand in a global labour market that enables them to work anywhere in the world. Attracting them or their peers from other countries to campuses in India would mean paying competitive salaries that would erase India’s cost advantage. There is a large pool of highly talented Indian-born academics scattered in top universities around the world who may be interested in returning to India,but attracting many of them back will require offering comparable conditions — in terms of living conditions and opportunities for research — to what they have elsewhere.

Will take too much time

Creating any new institution,whether domestic or foreign-run,is time-consuming. It would be especially so to create a large number of high-quality new universities,particularly for institutions not already deeply familiar with the Indian context. And the difficulty is that,with 550 million people under the age of 25,it is not clear this is an approach that will be able to meet a very high percentage of the growing demand for a college education.

Attract the wrong players

The combined effect of the above factors is that those institutions which are most likely to be attracted to the Indian market are those that the Indian government least wants: the lower-quality providers that treat higher education as a way to make money,rather than focusing on world-class research and the quality of the learning experience. It is predominantly this type of private domestic college that has grown in the last decade to fill the growing demand for higher education,offering a low-quality product that risks undermining India’s global reputation for producing well-qualified graduates.

Possible exception: Indian philanthropists

One attractive option for a few of the leading foreign universities might be the endowment of an Indian campus by a wealthy individual (perhaps one of their alumni) and/or corporation. This was the way in which many of India’s most respected private higher education institutions were first created — i.e. the Tata Institutes in different disciplines and The Indian School of Business — and how many of the leading private US universities (Stanford,Carnegie Mellon,University of Chicago,Duke) came into being. A key element that enabled these institutions to become and remain world-class,however,was that the founding individual/family gave the resources with relatively few strings attached,and allowed the university to govern itself,rather than the much more hands-on approach of many of the universities created more recently by Indian industrialists.

A better way


It is clear that there are many obstacles to attracting more than a handful of top global universities to establish campuses in India. However,an alternative strategy is already working. It promises to expand the quality and quantity of Indian higher education and provide greater benefits to the foreign universities. This strategy encourages the formation of more dual- or joint-degree partnerships between Indian and foreign institutions. Part II of this article will explore the advantages of this approach in more detail.

The writer is dean of the School of Management and Labor Relations at Rutgers University. He and colleagues are conducting research for a book on “Developing the Skills of the 21st Century Workforce: Comparing the Education and Training Systems of India and China.” This is exclusive to The Indian Express

(To be continued)

First published on: 02-04-2010 at 02:09:13 am
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