The exhortation by HRD Minister Kapil Sibal that the education sector needs priority lending is very timely. Almost two decades ago one of Indias private technical universities later to become an IIT was invited by a sheikhdom to set up an affiliate there. I was then in the Planning Commission,and I sponsored their case arguing that knowledge is a resource and should be a case for proactive financing. In this case it was for export,making it doubly good. It came through and I thought we had crossed a Rubicon. But I rejoiced too early. A later government,I was told,did not think that was a good idea since educational institutes are charities and the collateral from the very sound trust backing up the proposal was of no consequence. Those early pilgrims abroad were left high and dry.
Now of course there is urgency behind all this,reflected in the four education bills discussed in Parliament this week. We have built a much-desired legal structure for foreign universities to set up shop in India. I recently had an exchange with a policy-maker in which I asked him if we in India would get the same funding opportunities foreign universities do. He looked at me pityingly and said we are operating a level playing field: neither the foreigners nor locals get access to long-term lending as charities are not entitled to that. I asked him innocently if there was a level playing field when in the foreign universitys country of origin it had access to long-term funding because those countries believe that knowledge is wealth and therefore eligible for investment? He told me I was confusing things.
Under the Trusts Act and the Societies Registration Act (of 1868) private educational institutions are allowed to borrow from banks but not from long-term funding institutions,since they are charities. In India the long-term lending system was for many years state-controlled; and so IDBI,IIFC and so on were out. Now,anyway,they are banks. But the infrastructure lending corporations now set up should be allowed to lend to educational institutions. Just as for any infrastructure project they would do their due diligence,as professional lending agencies. No further control is needed.
The minister can have his little educational parastatal in his ministry that he wants if for no other reason then to let his senior bureaucracy wet its feet in matters financial but the big thing is to change the rules to let universities,private,and I would also say public,creatively borrow like anybody else. They will soon learn to do balance sheet and profit and loss accounting,cash flows and internal rates of return,rather than their income and expenditure statements,which will be all to the good.
At one level good education is about values,but having ensured that,it is about professional teachers who,like anybody else,pay their income tax and dont beat their wives. It is also about buildings,libraries,wi-fi and research facilities and many other small things that need to be run efficiently. The late Rajiv Gandhi in designing his reform was always very concerned about the details of the organisation and financing of the new set-up. He knew that the existing system has a legal and financial back-up centuries old and the new one did not have a chance if not designed and established from the beginning. His design of Panchayati Raj endures. As the HRD minister said,it is never too late for education.
The writer,a former Union minister,is chairman,Institute of Rural management,Anand
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