Education: T he role of mar kets

In some of the western universities, students pay a fee for every

lecture that they attend. The comparative valuation of teachers and
their curricula is accomplished in monetary terms by the choice of
students. Back home, the same phenomenon is observed in the
students’ choice of tuition classes, coaching centres etc. However,
there is a fundamental difference. While the education market in the
West is providing state-of-the-art knowledge, our markets are only
peddling mechanisms for securing seats in limited, hence coveted,
institutions.
In India, education is considered a State duty and a elaborate
machinery has been created for the purpose. The State and Central
Boards for secondary and higher secondary examinations not only
monopolise the standards of education at crucial levels, but also
provide a straight-jacket for most of what is taught in the schools.
The limited number of institutions of higher education also lead to a
mad scramble at the entrance level. Admittedly then, much of the
present markets in the education sector are completely subservient
to the conformist tyranny of select, highly bureaucratised
institutions.
Recognising the present market distortions

The State endeavours to subsidise education by creating and

operating facilities at all levels. Managing these behemoths
obviously lead to the creation of bureaucratic structures and a
steady move towards standardisation of norms and practices. We,
therefore, have centralised systems of recruitment of faculty, a
system of perks, privileges and promotions for teachers that has
nothing to do with merit and an all-important certification regime for
the students that is certainly not the best evaluation of either the
teacher or the pupil’s merit.
The position of a teacher, thus, becomes an unenviable one and the
dark side of the market moves in. It is common knowledge that the
post of a government high-school teacher in many areas is "sold" at
a very high cost. However, people who pay this sum also device
means to recover the same pretty quickly – primarily through a
system of special paid coaching sessions for the same students,
who have little choice because nothing worthwhile is taught by this
teacher in school. In many private schools, teachers are recruited at

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DR.SOMNATH BANDYOPADHYAY
VADODARA, GUJARAT
paltry salaries with an understanding that the authorities will turn a
blind eye towards their tuition and coaching classes.
While there are strong incentives for a teacher to gain through
questionable means, the students really do not have a choice but to
pay at every level for everything but education. In primary school,
they pay handsome “donations” to get an entry to a decent school.
In college, they are more likely to pay a “capitation fee” in a private
institutions or some kind of a “goodwill fee” to the student’s union of
a government college, particularly if the marks obtained are
“average”. While such “entry fees” may not be directly related to the
education of the pupils, it does, however, provide a kind of distorted
valuation of these institutions.
The institutions of higher learning are predominantly State and
Central colleges for engineering, medicine, science, agriculture,
management etc. The certificates obtained from these institutes
form the basic passport required for consideration in appointments
for most of the jobs that are available. These jobs, in turn, are
normally secure for life and not linked to any pressures to perform.
This has naturally resulted in ever-increasing competition for
entering these institutions and, by extension of this logic, for
ultimately obtaining a piece of paper certification rather than quality
education.
This system of certification also gets linked with the curricula and
the course material which, rather than enhancing the understanding
of any particular subject, serve to “guide” the students through
various examinations. One need to just browse through a popular
bookstore near any educational institution and note the number of
guide books and other material promising to help in the examination
as opposed to the text books. In fact, most students will find
standard international textbooks extremely difficult to both buy and
comprehend.
In fact, an elaborate market has emerged to cater to the aspirations
of young students desirous of obtaining either a particular certificate
or clearing a particularly lucrative competitive examination. Stiff
competition at the entry level often proves to be disastrous both for
those who make it and also those who don't.
Students usually pay only a paltry sum as fees for education,
particularly at the higher levels, given the nature of government
policies of controls and subsidies. However, they do shell out
sizeable amounts for various tuition and coaching classes that
promise to help them get admission to a desired institution. Thus,
education get defined very narrowly as a one-time, all-important

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DR.SOMNATH BANDYOPADHYAY
VADODARA, GUJARAT
 certificate which make a major difference to an individual's life
thereafter. Absence of any mechanism for continuous and regular
assessment of knowledge has led to strange regimentation of
society that provides for low mobility, entrenched group interests,
low productivity and high frustration. In sum, this is a market that
caters to a certification regime, but contributes little to the
generation, penetration or the use of knowledge.
Recognising the emerging correctives

We are proud that India has moved up recently from 128 to 115 in
its global ranking for human development. We are also told that
knowledge-based IT industry is the reason. This dramatic increase
in knowledge base, so much so that our professionals are suddenly
the most sought after in the developed world, is not a result of any
education scheme prepared by the government. Rather, this is
related to the mushrooming of the computer education “shops” run
by NIIT, Aptech, Lakhotia etc. in the knowledge market of the ‘80s.
A large section of the educated elite spurned these “shops” for
linking education with business and profit, the section that had
obviously been the largest beneficiary of the subsidies provided by
the State education systems. The outrage was muted, however,
because it did not conflict with the job opportunities provided by the
State which essentially relied on the certification provided by its own
system.
The job reservation policies of the late ‘80s and the end to the
license regime in the early ‘90s together led a dramatic shift in
recruitment patterns, particularly in the higher end of the knowledge
spectrum. Increasing globalisation of the Indian economy, coupled
with the rapid growth in the IT sector in the late ‘90s provided
fabulous opportunities and remuneration to people with the right
aptitude for knowledge. Persons trained in IITs and other technical
institutes run by the State did take most of the top slots, but the
“shops” in the market provided the sheer bulk of trained manpower.
Educated, but frustrated youth, who often spearheaded violent
political movements in the 70's, suddenly found a new avenue for
growth and freedom.
School education is another area where the market has moved in
significantly. From the convents and public schools of the ‘60s to
the Doon schools and the ubiquitous play centres in the
neighbourhoods during the ‘90s, the education markets are
increasingly exploiting the willingness of guardians to pay for quality
education of their wards. However, the quality of school education is

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DR.SOMNATH BANDYOPADHYAY
VADODARA, GUJARAT
 ultimately at the mercy of either the Central Board or the State
Boards, where there are no incentives to improve either the course
content or the system of examination.
A similar situation is witnessed even in the higher education sphere,
where the private colleges providing better quality education is
ultimately at the mercy of inefficient universities for certification of
their standards. It is interesting to note that many of our degrees
and diplomas, particularly the professional ones, are either not
recognised in the developed countries or else downgraded for the
purpose of comparative global evaluation.
A very significant step is being discussed presently by the Ministry
for Human Resource Development which involves granting the
status of "deemed University" to more than 50 institutions of higher
learning that are not controlled by the Government.
Recognising the potential of markets in knowledge enhancement

An interesting economic fact about knowledge is that the costs are

phenomenally high at the level of generation. Depending on the
commercial utility of this knowledge, its acquisition remains costly
for a brief period of time, after which it becomes very cheap. It has
been estimated that the total volume of the world's codified
knowledge, which used to double every 30 years at the turn of the
twentieth century, will double every 11 hours, by the year 2001.
Knowledge will thus become quickly available, as its value will tend
to decline rapidly. This holds a great potential for penetrating higher
education at a massive scale and at very low costs, by allowing the
mushrooming of knowledge centres that are driven by market
forces. In a populous country like ours, which is clueless in its
approach for providing higher education to an ever-increasing
aspiring lot, this seems to be a very desirable method.
Furthermore, by linking research with the beneficiaries and
stakeholder institutions, a new system of accountability can be
established which will break the ivory towers created by the present
system that perpetuate inbreeding, leading to eventual degradation
in quality.
Knowledge linked to livelihood has a far greater chance of
reinforcing itself through a cycle of innovations, rewards and quest
for further knowledge. A demand is then created for training
programmes aimed towards imparting particular skills that are
valued economically. Such forms of demand generation is likely to
set in motion a wide range of educational courses, curricula and

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DR.SOMNATH BANDYOPADHYAY
VADODARA, GUJARAT
 institutions for administering these, something that goes beyond the
comprehension, much less the plans, of the present systems of
centralised education administration.
A programme for mass literacy mission itself may not qualify as a
market instrument, but a system of performance based incentives is
likely to result in a more efficient implementation of the programme.
However, for this purpose, independent evaluators need to be
engaged for documenting benchmarks, developing proper
indicators and relating these with the generation of demand for
education as a function of their increased willingness to pay.
Correcting the knowledge market to generate greater value

Harnessing the potentials of the market mechanism to generate

greater value in our education systems will require some
fundamental shifts in our policies and approach.
Competitive certification

Obviously, the prime task is to restructure the certification

mechanism at all levels, chiefly by introducing competition. Colleges
should be free to choose any university for affiliation rather than
being tied down by regional and local considerations. The private
sector could be encouraged to set up and manage universities,
conduct examinations at various levels and provide periodic ratings
for institutions of higher education.
Allowing educational institutions to opt for global certification
systems will be an important step. That will force institutions to
adopt a certain level of quality and the local certification systems to
ignore improvements only at the cost of their elimination.
Certification of computer education by some of the global corporate
bodies is already proving to be a powerful and useful mechanism in
knowledge enhancement in this sphere.
Removal of subsidies

Government subsidies not only impede the growth and

development of markets, they also contribute to a gradual reduction
in the value of education per se in the long run. A complete
withdrawal of subsidies, rather than a phase out, will lead to the
establishment of a market quickly.
The world-wide web will be a major tool in integrating the global
knowledge systems since transaction of both educational material
as well as payments can be made easily and quickly. Virtual

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DR.SOMNATH BANDYOPADHYAY
VADODARA, GUJARAT
 classrooms will begin to mushroom, selling state-of-the-art
knowledge in ever-so-easily comprehensible, innovative formats at
very competitive rates.
Business of knowledge

However, the creation of knowledge, what we term as research and

development (R&D), will remain an increasingly costly affair and
serious resource crunch is likely to be a key consideration. This can
be dealt with at two levels: firstly, by explicitly stating the priority
areas for funding by the government, and secondly, by encouraging
corporate sectors to take up relevant research in a big way. Some
sort of prioritisation does take place in government funding for
research in areas such as agriculture, space, defence etc. However,
there is a major scope for reviewing and linking this with the
beneficiaries directly.
Establishing these vital linkages is even more important in
sustaining and improving the knowledge base at the more mundane
levels. Internships at various jobs, whether at the garage or at the
grocers’ will provide more relevant knowledge inputs necessary for
enhancing efficiency of services. Diversification and deep
penetration of affordable vocational training of high quality will be
the key to sustaining economic growth in this century.
Mass literacy projects

What is proposed above will not only improve the quality of higher
education at affordable costs, it will free up much-needed resources
of the State for providing improved quality of primary education to
people who neither value formal education nor have the means to
pursue it meaningfully. A relentless effort, like an improved literacy
mission, is required to take the illiterate millions of this country to a
threshold level at which the acquisition and enhancement of
knowledge gets linked to their economic well-being.
The market forces could also be harnessed for efficient
implementation of these projects. Clear identification of objectives,
outputs and indicators will enable competitive bidding and
comparative evaluation of performance.
Conclusions

Education is a continuous quest for knowledge and markets are all

about freedom of choice and right valuation - ingredients that work
best towards the promotion of knowledge. Any effort to prescribe a
certain type of education or promote a certain quality of trained

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DR.SOMNATH BANDYOPADHYAY
VADODARA, GUJARAT
manpower works against the basic market principles, although they
are well intended. Over a period of time inbreeding sets in resulting
in a rapid decline in quality education.
Markets, like life itself, are enormously resilient and responsive
systems, which somehow find a way to break free. This is
happening today in our country in the form of a knowledge boom,
the potential of which is slowly being recognised. We need to
respond positively to these developments, rather than trying to bring
it back under the archaic bureaucratic systems that are in operation
today. This will require courage, conviction and leadership.
The 21st century is not of the meek; it will be an era of global
civilisation. An era in which knowledge will be generated at
lightening speed and our younger generations need to cope. If we
have not been able to provide education to our millions for over half
a century of independent rule through our "efforts", we might as well
explore the other option of markets. We have nothing to lose except
our bonds of ignorance.

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DR.SOMNATH BANDYOPADHYAY
VADODARA, GUJARAT