FINANCIAL IMPLICATIONS OF GLOBALISATION ON HIGHER

EDUCATION IN INDIA.

India launched an ambitious reforms programme in 1991 following an acute

foreign exchange crisis. The regulated and controlled economy in the absence of
competition, incentives and innovations brought in inefficiency in all spheres of
economic activity. At that time, the country faced innumerable problems such as acute
shortage of forex reserves, high inflationary rate, huge budgetary deficit, low rate of
growth of economy, high interest costs, liquidity in the financial market, low level of
capital formation etc., The industrialists wanted freedom from the license raj and
bureaucratic control for the faster and sustained growth. The entire economy was in a
precarious condition. The situation was so bad that the country had to send gold to
England to tide over serious financial crisis and the collapse of the economy. A poverty
like situation prevailed in the country.

The new economic policy of 1991 with liberalization, privatization and

globalization of economy was ushered in against this background. Thirteen years have
passed since the onset of reforms. Significant changes have taken place during this
period. The forex reserve which was just $ 1 billion, has increased to more than $ 130
billion. The economy is showing signs of significant improvement. The GDP is showing
good growth rate. The inflation is under control. The exports are increasing
substantially. The market has lot of money. The capital market is very much vibrant with
sensex crossing 6500. The Indian corporate sector is happy with the changes. They
have entered global market. In short, globalization of Indian economy has *Reader in
Commerce, Bangalore University, Bangalore.
contributed immensely and some economists and industrialists are
of the opinion that India in next twenty years will be superpower in world economy.

Everything looks find. However, it is necessary to note that though tremendous

changes have taken place in the Indian economy, the results have not percolated to the
lower levels. It is necessary to remember that the economic problems are not restricted to
national level. We have specific problems at different levels of economy. This could be
grouped as poverty prevailing at different levels. At the lowest level we have individual
poverty, then the community poverty, followed by the regional poverty and the national
poverty. We have to examine the implications of the globalization on each level of
poverty which will ultimately lead to assess the implications of globalization on social
infrastructure such as education. Following this financial implications of globalization
on higher education could be assessed.
 Individual poverty refers to lack of basic necessities of life. Even after five
decades of economic planning it is reported that almost 30 percent of the people are
below poverty line. They are finding difficult to get two square meals a day, sufficient
cloths to cover their body and permanent roof over their heads. Does globalization of
economy mean anything to these people? You know the answer better.

Let us turn over attention towards the second level of poverty. The poverty at the
community level/society level. Do we have at village and taluk levels, good
medical/health facilities, primary schools, potable water facility, good and all weather
roads, good transportation facility? The interior villages in our country even today face
the same problems as they were before globalization. Has globalization of Indian
economy contributed anything to make the life move comfortable to these people?
Definitely it is very difficult to answer to this question.

At the third level, we have poverty at regional level or state level. The State
Governments which are expected to provide good roads, transportation, system, adequate
and quality power supply, housing facilities, medical and education facility for all the
citizens are failing to discharge their responsibilities with few exceptions, citing
inadequate funds for developmental activities. In some state, because of the presence of
corporate bodies and software companies, we can see some change and some
improvement in quality of life but is confined to only a small segment of the population.

At the national level, the Government in the process of globalization has brought
about significant changes and called them as reforms. Today we have financial sector
reforms, taxation reforms, insurance sector reforms etc., The Government has changed
industrial licensing policy, export and import policy. It has allowed Foreign Direct
Investment, Foreign Institutional Investors to participate in the Indian capital market,
foreign banks to enter the country. It has allowed MNC’s to establish their subsidiaries in
India. Indian companies have been allowed to raise funds from foreign markets in the
form ;of ADR.GDR and ECB etc., Though tremendous changes have taken place in
production, marketing and financial sector the Government of India has ignored some of
the important segments of the economy. One such is agriculture and another is social
infrastructure like education and health services.

During the last thirteen years, we have not come across anything like agricultural
reforms, educational reforms, reforms in health sector etc., What does it mean? It very
clearly indicates globalization of economy means globalization of production, marketing,
financial activities. Where is globalization of services? Specifically globalization of
social infrastructure? It looks as though our politicians, economists, bureaucrats,
planners have ignored this important sector of the economy.

The Government feels that it has to bestow its attention and resources on primary
education. In 1986 and 1992 the national policy on education and policy of action
respectively guaranteed free and compulsory education to all children upto the age of 14
years. The responsibility of funding higher education in India was considered with
different attitude. Instead of financially supporting the unprecented demand for ;higher
education, the Government has resorted to several measures which are directly in
response to the requirements of World Bank and the WTO on the trade in services.

The Government feels that the institution of higher education should make efforts
to raise their own resources by raising the fee level, encouraging private donations and by
generating revenues through consultancy and other activities. The establishment or
conversion of existing institutions into autonomous institutions was practically no control
over the management, funding linked to mandatory assessment and accreditation and
students loan scheme and some of their decisions taken in order to usher in massive
privatization and commercialization of higher education. The Government feels that
privatization of higher education lies not going to result in commercialization of higher
education. But the fact is higher education sector is considered to be a fertile land for
making huge profits with little capital investment. After the general agreement on trade
in services, the Indian higher education sector is going to be fully explored and exploited
by those countries which want to make huge profits through doing business in higher
education.

It is reported that US is a big votary and supporter of GATs. It wants all the
obstacles and barriers removed so that American corporate sector can enter countries like
India. The corporate sectors are also showing lot of interest in offering higher education
because this sector has lot of potential. The corporate sector considers the students,
teachers, and non-teaching employees to constitute resources for making profit. They
consider students as customer and want to satisfy the customer by offering variety of
money generating courses. It is reported that these organization are not interested in
offering conventional courses like BA., B.Sc., B.Com., They want to offer courses such
as M.S., MBA., MCA., and similar courses which have ready demand and for which the
institution could fix fee which are significantly very high compared to general courses.

It is surprising as well as shocking to note that the report on “A policy frame work
for reforms in education” suggest recovering the entire cost of higher education from the
students and privatization of several segments of higher education. If this suggestion is
accepted, the higher education in India becomes saleable commodity and the supplier of
commodity, the institutions become profit generating organizations, which could charge
any amount of fee in the name market equalization cost. If this suggestion is accepted
what could be fate of poor students hailing from economically and socially poor families.

At present, most of the students enter colleges and universities because of the
subsidy offered by the Government through number of schemes. In spite of this, the
actual number of students seeking higher education is just six percent of the eligible
students under the age group of 17-23 years. Higher education in India has not yet
reached remaining 94 percent. If the system of higher education is further made costly,
there is no doubt that the percentage may further decline which is a serious issue to be
taken cognizance by any Government committee to uplift socially and economically
weaker sectors of the society. The globalization of the economy and globalization of
higher education should not result in creating a big gap between the poor and rich; rural
and urban people and within the country two types of system of higher education – one
supported by the Government with limited funds and facilities and the other established,
supported and managed by corporates with huge funds and modern technology at their
disposal. There is need to ensure all eligible students irrespective of their social and
economic status to have equal opportunity of enjoying higher education in India.

Financial Implications:

The financial implications of globalization of Higher Education in India as to be

discussed under following heads to clearly understand its impact.

a) Why foreign countries are interested to enter Indian Higher Education scene.
b) The impact of their entry on
i. Individuals and society
ii. Existing Institutions
iii. Funding of Higher Education by the Government.

Why foreign countries are interested in entering India:

The answer is obvious. The foreign countries are considering the higher
education to be a fertile land which is unexplored and unexploited. AT the same time
they also know that the public investment in higher e3ducation is declining affecting the
entire system. As against this, they know very well that from present 75 lakh students
strength it is going to increase to almost 1.25 crore in next twenty years. They consider
Higher Education in India to be a potential market for them to enter.

In fact some foreign universities have already made attempts to market their
Higher Education programmes in India. Representatives of several countries have visited
India to market their courses. Some foreign universities have also engaged Indian
agencies and firms to recruit students to study in their universities. Others have started
franchising or commercial presence in India by allowing students to be enrolled in India
and carry out studies for a part of the degree in the institutions abroad. In certain cases
even degree institutions are established for giving foreign degrees. Some have twinning
programmer between Indian and foreign universities. Some offer programs through
distance made, through print, computer, television and electronic mode i.e., the virtual
universities. The courses offered bay them mostly related to hospital, service,
management, medical, IT. Some times concurrent degree programmes i.e., two degrees
in the same period are offered. No conditions of minimum qualification i.e., minimum
marks etc., are insisted upon. The advertisements have come from institutions from
countries like UK, Australia and Canada.

As per a UNESCO report, there were 5.14 lakh foreign students studying in US
during 2000. Of this, more than 54 percent were from Asia. There were 42,000 Indian
students studying in US during 2000. As against this, India attracted only 707
Americans. Day to day, Indian students seeking admission in US Universities is
increasing because of growth of Indian middle class. Indian students seek admission in
anticipation of quality education and with the desire of living and working a foreign
country. The more sought after courses are management and engineering.

In order to avoid foreign students as well as associated problems like

unemployment of local people and offering of national citizenship etc., the foreign
countries like US and UK want to change the scenario and the flow pattern. Instead of
allowing foreign students to come to their countries they want to treat education as a
product and enter foreign countries and offer them products and make profits out of their
venture.

The signing of GATs in the coming days provides them easy access to enter
country like India in a big way. The developed countries after their supremacy in
business world through their MNCs, now want to do business in education. They are not
entering India with philanthropic concepts. It is reported that corporate sectors, pro-
profit, for revenue or non-for-loss institutions are planning to enter India.

To which segment of the population they are going to serve? What is the cost at
which they offer services? What could be Indians expectation? What could be the
Government role? How the existing Higher Education India face the competition? Will
the Higher Education offered by foreign company and institutions help the products of
these institutions to get employment? There are some of the questions which are to be
addressed.

In our country, there are people who argue that Higher Education and employment
should not be linked. According to them education is not a passport for employment.
When parents do not spend huge amount of money on their children’s education, this
argument has validity. However, when parents who opt to use the services of foreign
institutions and pay huge amount, can we expect them to spend without any good
prospects of employment. In fact, today good number of educational institutions in our
country procure their raw materials – the students, offering good market in the form of
placement students enter education institutions which have good track record of
placements. When foreign institutions offer education in India, where are they going to
find placements? It should be only in India. It means, they are going to act as
intermediaries and make use of all resources of country to produce the product and sell
the same to us and make huge profits and repatriate profits. Let us accept this as part ;of
the game in globalized economy. But what will be the impact of this globalization on our
less fortunate citizens.

The foreign education providers are targeting at economically well-to-do group in

the society in order to maximize the profits. This ;may help substantially the private
unaided, unorganized educational institutions in India. The Government institutions will
be definitely be marginised due to use of modern gadgets and facilities. This ultimately
create big gap between their new institutions and existing Higher Education Institutions
in India.
Financial impact on Individuals and Society:

The financial implications of globalization of higher education in India could be

very serious in the case of the students hailing from low and middle income families. As
a case of sample when we consider state of Karnataka, students studying general degree
courses get financial support in the form of grant-in-aid. For the year 2002-03 it
accounted for RS.14,787 per student. We have 924 colleges with 2,88,291 students under
GDC in the State. Of these, the share of Government Colleges i.e, 16.34 percent with
19.85 percent of students; private aided colleges is 31.6 percent with 59.96 percent of
students, private unaided colleges is 51.19 percent with only 17.55 percent. The private
aided colleges which account for only 31.6 percent of GDC serve 59.96 percent of total
students. This reveals that 82 percent of the students are on State Government supported
Institutions.

Will the foreign education institution which want to enter the country be prepared
to venture into this area where clearly private unaided institutions have failed miserably.
Will it be possible for them to offer Higher education particularly GDC? It looks very
bleak. It means they will not try to enter this domain. They would seek green postures
elsewhere. The apprehension is that if the Government feels that entry of foreign
education institutions, it can slick its responsibility and reduce the budgetary support it
will be ruinous and create unimaginable situation which may lead to decline in number of
students seeking admission to higher education.

Financial implications on existing institutions:

The spread of higher education in India particularly in rural areas in mainly due to
private efforts supported by the government. We have institutions established by religious
institutions, minorities and philanthropists and general public and private trusts. These
institutions have been established purely for helping students hailing from poor families.
The capital investment for the physical infrastructure like land and building, laboratory
etc., In many places students are provided free boarding and hostel facilities. The
general administration or management rests with chiefs of the religious groups, or elected
bodies. Yeoman service is rendered by these groups. What happens if there is
globalization of Higher Education? The impact could be tremendous. The students
having finance affordability will automatically switch over to foreign institutions because
of the glamour. This will create an impact on the strength. Already, the general degree
students are shifting to management and other courses offered by many institutions.
Ultimately, if the students strength declines, over a period of time, because of
globalization and if the government reduces grants or stops the grants, it will not only
affect these institutions but also the poor students. In a country like ours, it is necessary
to consider the impact of any change specifically on our poor students. It should not
deprive their chance of continuing their higher education.

This clearly indicates that if the globalization of Higher Education in India takes
place in a large measure due to GATs, the situation will not remain the same. The
implications will be very serious because the very concept of Higher Education in India is
under goes a change and as a result there will be a bid gap between rural and urban,
urban and urban elite; poor and rich regment on the Indian society.

In the case of cities and towns globalization will lead to creating more disparity.
Already there is disparity between government institutions and private institutions. This
will further increase and elite segment of the society will enjoy further benefits and
comforts by entering foreign institutions and the people belonging to low and middle
income will have to make use of existing system which face reduced financial support.

All said and done, it should be noted that globalization of Higher Education could
also result in favourable situations. If the foreign institutions spend huge funds in
supporting the existing institutions and function as collaborators or partners we can
expect wonderful impact. Though there are numbers of apprehensions, it should be noted
that the apprehensions may become meaningless if there is change of attitude and
approach by foreign educational institutions and change of mindset by Indians. The
biggest apprehension . The Government washing off its h ands from Higher Education
should not happen.

Joseph Stigliz, 2001 Noble prize winner in economics has pointed out that
“Globalization has left the poorest people in the developing world poorer still”.

Let us hope this statement does not become true with globalization of Higher
Education in India.