Prime Minister's Council on TRADE & INDUSTRY

Special Subject Group on
Policy Framework for Private Investment in
Education, Health and Rural Development

Report on
A Policy Framework for Reforms in Education


Chapter 1 highlighted the directions for India in education development. Chapter 2 outlined the lessons for India, drawing upon the experience of other countries that lead India in education. Keeping these directions and lessons in mind in the context of the state of education in India, if India has to achieve the vision in education, what is needed is not just reforms but a revolution of sorts.

There has to be a drastic overhaul of the existing education system. Such an overhaul would have to embrace the following agenda:

6.1 Primary Education

Compulsory and free primary education must be on top of our education agenda. There is no getting away from enforcing the Constitutional commitment to compulsory education till the age of fourteen years, provided by Article 45 and reinforced by a historical Supreme court judgement declaring education as a fundamental right.

Compulsory and free primary education is feasible only through active involvement of local bodies at the panchayat and municipal levels.

In our endeavour to enforce compulsory education, it must be recognised that an important reason for drop out, apart from economic factors, is that children feel inferior. In many cases parents feel inferior as well and consequently do not send children to school. If enrolment levels are to go up, every child has to see a school as unthreatening and stimulating.

Compulsory and free primary education will entail increased spending on education. This has to be met by restructuring of inter-sectoral allocations and divestment of loss making public sector companies. For example, the average annual plan expenditure on education (1992-97 plan) was Rs.3,920 crores and the annual losses of all state electricity boards (1997-98) was Rs.10,684 crores which is 2.72 times the average annual plan expenditure on education. There must be a political will and a conviction that compulsory and free primary education is an investment in India’s future.

Equally, there is a case for free secondary education. However, this can be taken up once the primary education aspect is addressed and when primary level enrolments reach 95%, say by the year 2005, which is feasible.

6.2 Teaching

In the current system of education, the lack of opportunities for creativity for teachers as well as students is stifling. Preoccupation with textbooks and external examinations, to the exclusion of the process of education, is partly responsible for this. Whole generations of teachers have not known any other system and changes in the present system will meet with resistance. There is also an inertia in the system to upgrading educational material given cosy relationships between textbook writers, education administrators and publishers. The government spends 90 to 97% of our total educational budget at primary and secondary levels on staff salaries. Studies undertaken by the National Teachers’ Commission indicate that a majority of teachers are ill-prepared, do not keep abreast of developments in their disciplines and take private tutions at the cost of institutional work.

Training of teachers to infuse commitment, sensory learning, experiential learning, computer-aided teaching and technology led learning has to be the second item on the agenda for reforms. The Government of India and State Governments have to facilitate this process by bringing about regulations for continuous teacher quality upgradation.

A system of evaluation of teachers by students, at least in higher education, is due. At the primary and secondary levels, teachers must be made accountable for retention of children. These are revolutionary concepts in our current mindset and are bound to meet with stiff resistance. However, it has the potential to bring about high teaching standards.

Currently, undergraduate and postgraduate teaching have been put on par. This is disastrous. There must be a differentiation in teachers’ education and experience based on levels of teaching.

6.3 Technology

The use of technology in the process of education comes third on the agenda. India has a unique opportunity to leapfrog in the use of technology in education. Our vast and growing resources in information technology and the social awareness of the benefits of information technology must be leveraged to bring about smart schools that integrate computers, networks and content.

Computers are becoming ubiquitous and computer literacy will be as important as literacy. In India, Internet made its debut in the mid-eighties as an educational and research network called ERNET. However, the early advantage was never capitalised. Computer education has to be an integral part of the curriculum from the school level.

The ‘Class 2000’ initiative of the Education Department to impart ‘computer based’ education in 100 smart schools, ‘computer aided education’ in 1000 schools and ‘general computer literacy’ in 10,000 schools is laudable. However, the effort has to be on a much larger scale. It has to be in the nature of a National Mission.

There should be at least one smart school in each district of India, which is completely networked. This should be implemented to cover all schools over the next five years. Private sector should be encouraged through tax benefits to invest heavily in this mission.

The use of satellite communication technology presents another great opportunity for primary education. India had an early start in the seventies and eighties in delivering higher level education to directly to homes, thanks to the work done by ISRO, UGC and Doordarshan. However, the low penetration of television could not bring about a revolution in distance education. Today, with the widespread use of television and the envisaged spread of high band optic fibre networks, the opportunity to use communications technology in education could have never been more appealing.

A concerted effort in supporting primary and secondary education through communications technology is an imperative. This has the benefit of cutting through the maze and inertia in the existing education system - ranging from poor access to facilities to absence of paid teachers in classrooms in rural schools.

6.4 Sensory Learning

The current education system in India is oriented to teaching. There is an emphasis on learning by rote from a very young age. Pre-school and primary education is obsessed with learning by reading and writing. These are relatively less developed faculties in children in the age group three to six. Ironically, learning by hearing and feeling, which are better developed faculties, are not given prominence. Child psychologists have repeatedly pointed out to this basic lacuna in primary education. The emphasis on reading and writing from a very young age is also not conducive to creativity. The latent curiosity in children is not tapped.

Thus, an important agenda for reforms is to migrate from teaching to ‘sensory learning’ in order to provoke curiosity. Pre-school learning should not be allowed to degenerate into a formal learning. The accent must be on fostering creative joy and healthy psychological development. In the process, a strong foundation for an innovative society would be created.

6.5 Learning to Learn

The current system of book-based and theory-oriented teaching does not inculcate independent thinking. It should be changed to make the students learn by practice and experience. This should be initiated from the primary level of education.

In the information age, information would be available in multiple forms and through multiple media. Learning to learn from a vast array of information, instead of being taught, would be critical. The teacher’s role has to transform to one of a facilitator. Such a shift from teaching to learning to learn would encourage the students to develop an innovative mindset from the very beginning, which is important in building a knowledge society.

At the same time, it must be ensured that cognitive and language skills, for which the Indian education system is recognised, is not diluted.

6.6 Vocational Education

Vocational education in India has unfortunately still not become socially acceptable. Academic courses have tended to ignore practical aspects. Vocational courses are perceived as courses meant for the less bright students.

Vocational training and skill development to inculcate a sense of pride in doing by one’s own hands and to induce a respect for dignity of labour has to receive sufficient focus. Vocational training has to be compulsorily given in an intensive manner at the secondary level.

6.7 Distance Education

The potential for distance education in India has been largely untapped. World wide, there has been a strong component of technology in the spread of distance education. Distance education is cost effective, has reach and is a challenging process by itself. Distance education must be promoted not as a correspondence course, but as an alternative system of education on par with the formal system of education.

6.8 Value Systems

It is internationally accepted that education must inculcate values in children, leading them to be good citizens. Value education is the very definition of education. Unfortunately, training of young minds on values has taken a backseat in Indian society, given its obsession with material pursuits. Compounding this is the fact that there are hardly any role models in public life. Today there is a crisis of character in Indian society.

To build a society with good character and citizenship, it is important that value education is introduced in pre-school and reinforced in primary, secondary and higher education. At the same time, there have to be safeguards against advertent or inadvertent creeping in of various ‘isms’.

6.9 Common National Content

A centralised system for curriculum, examinations and funding has brought about gross inadequacies in the learning process, infrastructure, facilities, effectiveness of expenditure and innovation at the institutional level.

As of now there are different boards of studies for primary and secondary school education. The State Boards, the Central Board of Secondary Education and the Indian Certificate for Secondary Education have varying content, standards and acceptance.

A common national system for educational content at the school level is necessary to bring about better standards. At the same time, there must be provision to accommodate regional and local variations and perspectives, especially with respect to languages, history and culture.

However, at the college, institution and university levels, the endeavour has to be to encourage innovation and creativity in content and process, within a broadly defined national framework.

A common national system looks difficult in the context of education being in the concurrent list of the Constitution. However, the challenge is worth taking in the interest of the future of our younger generation.

6.10 Decentralisation of Management

Education management, on the contrary, must be decentralised. Financing and management of education at the primary and secondary level as well as literacy programmes must devolve down to Panchayat levels. Panchayats must be encouraged to seek funding from the local community to supplement state funding. Central and state assistance should not be seen as largesse but linked to those who can help themselves. There are, of course, exceptions in the form of poor and backward areas.

Decentralised management can help bring about better accountability, better utilisation of resources and greater people participation in the future of their children.

6.11 Common Admission Tests

Students seeking admission to higher education and professional courses are required to undergo a number of examinations in order to qualify. This is simply an utter callousness of the existing system and is largely wasteful.

A common system for admissions to professional courses needs to be instituted based on national level standardised tests on the lines of SAT, GRE and GMAT. Students can write these tests as many times as they want, and the best score would be considered. Each test score would have a validity of three years. These test scores would form the basis for admission purposes.

Concurrently, the system of migration certificates should be abolished and students should be free to move from one institution to another based on a system of transfer of professional credits.

6.12 Market Oriented Education

An important objective of education is to enhance one’s standing in society and create economic value. The simplest measurement is the earning potential of the graduating student.

The Indian education system is not market oriented. The failure of the system to realise the potential of the information technology requirements has led to a large non-formal education system of creating quality software professionals. These private institutions enjoy brand equity and large market capitalisation. The formal education system is not awake to the needs of society. Hence non-formal systems fill the need.

Schools of learning must be encouraged to constantly upgrade content and facilities in order to make them more market oriented. An independent rating system would also need to factor market valuation of products from schools of learning.

At the same time, one must recognise that the market may not support education in such areas as oriental languages, archaeology, palaeontology, religion and philosophy. These educational programmes are important and necessary. It is here that the state will have to play an active role and support the pursuit of disciplines whose scholars do not command a market.

6.13 Education Infrastructure – Hardware

Just as economic infrastructure is seen as critical to an industrial society, the development of educational infrastructure must be seen as critical to a knowledge society.

Infrastructure for schools – buildings, telecom networks, and computers - have to be funded on a priority basis. The government can progressively reduce the funding for universities to achieve this. These universities should take the path of self-sufficiency through higher students’ fees, donations and endowments, alumni contributions, linkages with corporate establishments for research, royalties on books and research output etc. Thus UGC’s role as a funding entity will no longer exist except to those areas of education involving liberal arts and performing arts.

6.14 Education Infrastructure – Content Development

Curricula in Indian schools of learning seldom reflect changing trends in the world. Periodic reviews undertaken show a lack of progressive thinking. A conservative approach is employed in development of curriculum. The result is that the students are ill prepared for the real world and require training on the job.

The stress should be on content development that will reflect latest advances in the subject. The Internet revolution has made it possible for information to be disseminated in real-time. This needs to be fully utilised to develop content that will be contemporary. This would involve fully utilising the ERNET and if necessary, expanding its reach.

Higher education should incorporate courses in the emerging technologies in areas such as telecommunication, robotics, automation and biotechnology and constantly seek to embrace new and emerging disciplines. In the traditional courses, the focus should be on cutting edge technologies and courses. For instance, in Civil Engineering the cutting edge technology would involve constructing intelligent buildings and intelligent roads.

6.15 Government Role

Given sustained large fiscal deficits of the Government of India and state Governments, the outlays on social sectors have been low. Most of the outlays are spent on salaries and wages. Given this situation, the tax payer’s money is better spent on improving literacy, primary education, secondary education and education that is not market oriented while private sector money needs to be attracted for institutions of higher learning.

The responsibility of the Government must be confined only to

funding and ensuring that primary education is compulsory and free,

funding and ensuring that secondary education is compulsory,

funding and bringing about 100% literacy,

supporting disciplines that have no market orientation,

selectively supporting and part funding centres of higher learning,

providing financial guarantees for student loans,

ensuring uniformity in content and quality, and


In succeeding levels of education, the Government should play the role of a facilitator. Government must exercise its regulatory role to streamline higher education to ensure that it is meaningful, purposeful and cost effective. In essence, the Government’s role should be maximum at the primary stage and minimum at the higher education stage.

6.16 Government Controls

The education sector in India is probably the most controlled sector in India. The whole mindset is on grants and aids. Arising out of this mindset is a plethora of rules and regulations. There are far too many bodies managing education. Rules and regulations govern virtually everything from location, student intake, course content, fees and fee structure, appointments, compensation for faculty and so on.

This is the equivalent of government imposing controls on an industrial unit’s location, capacity, raw material intake, technology, compensation package, product prices, recruitment etc. on the back of subsidies and grants.

Consequently, institutions of learning have become rigid. There is little freedom for creativity and innovation. The compensation system is unable to attract good quality faculty. Research initiatives are constrained and linkages with private sector are poor.

The whole system needs to be overhauled. Institutions that do not depend on the government for funding or have low levels of funding must have operational freedom and the flexibility to innovate. Management of education must be decentralised.

6.17 Private Universities

A redefinition of government role in higher education would call for a major privatisation of the university education system in India. A Private University bill should be legislated to encourage establishment of new private universities in the fields of science and technology, management, economics, financial management and other critical areas with commercial application.

These new private universities should offer courses in emerging areas of science and technology and respective areas. They must be encouraged to aim for world class standards that would revolve around research based learning, an open environment, people based competencies, best in class facilities, market oriented curriculum, attractive performance based compensation packages and an unfailing accent on quality.

Business and industry have a vital role to play in establishing world class institutes of higher learning. Leading business houses must be encouraged to establish such institutes and universities.

6.18 Rating System

The quality of education imparted in India is diverse. For example, in technical education the quality ranges from the globally recognised Indian Institutes of Technology to fly-by-night engineering colleges. Educational institutions in India are neither rated nor benchmarked. There is no demand on teachers to constantly upgrade skills. While institutions exhort students to be competitive, they themselves have no motivation to be competitive as schools of learning. The employment market has created a non-formal assessment of institutions but there is no formal system in place.

There are anomalies as well. The University Grants Commission is responsible for quality of universities. However the Indira Gandhi National Open University and the All India Council of Technical Education are outside its purview.

All educational institutions in India – schools, colleges, institutions and universities- must be rated by independent agencies analogous to a Standard and Poor’s or CRISIL in the financial sector. There should be an annual review by the rating agency. Rating should mandatorily cover some important issues such as emphasis on girls’ education, value education, social service, physical education and games. This rating should be mentioned in the prospectus as well as all important communications. Initially, higher educational institutions should comply with rating requirements. After a defined period of time, the rating system should be extended to schools as well.

Funding to educational institutions must be linked to rating. Institutions with a lower than the minimum specified rating should not be allowed to operate.

An independent rating system will bring about accountability in the education system in India. It will motivate schools of learning to be performance oriented and competitive. It will push teachers and faculty to be contemporary. Based on ratings, a differential fee structure could emerge. On the whole, a system that continuously seeks higher standards of performance would emerge. This is important for Indian society to progress in a far more intensively competitive world.

6.19 Foreign Direct Investment

Almost all sectors in India, save such sectors as defence, atomic energy and education, are open to foreign direct investment. In the education sector, such investments are cleared on a case to case basis and there are very few instances.

Foreign direct investment in education will have the benefit of improving standards and quality of education. It can facilitate global integration of the Indian education which, even to date, is not accepted in many professional disciplines such as medicine and accounting.

The Government should allow foreign direct investment in education. To begin with, this can be limited to education in science and technology. In other areas, there could be a possibility of external cultural influences coming in through foreign direct investment and hence may not be allowed.

6.20 Financing

The massive investment in education involved in creating a knowledge society needs to be financed.

An education development fund needs to be set up for primary and literacy education. Donations to this fund to be fully exempt for income tax purposes.

The Government of India should utilise this fund for primary and secondary education, development of disciplines that the market cannot support, higher education on a selective basis and for creating the required infrastructure for education.

Privatisation of higher and professional education can relieve government funding from these areas which can be used for primary education and improving literacy. Subsidies for higher education should be gradually withdrawn through higher fees and changes in fee structure.

Concurrently, a credit market for education needs to be developed to support financing the higher costs. Financial institutions should be encouraged to offer assistance in the form of loans to students in higher education and professional streams. Introducing loans improves resource allocation since students will enrol in courses with better returns. It will also attract resources to the education sector as it is linked to graduates’ future earnings. Since sufficient collateral cannot be provided by students, a scheme for government guarantees coupled with an independent recovery authority needs to be institutionalised.

6.21 Marketing Indian Education Abroad

India is currently being seen by foreign universities from UK, USA, Canada and Australia as a huge market for their educational services. The quality of educational services rendered by some of these universities is questionable, but such concerns get clouded in our society’s blind charm for foreign labels and degrees.

This process has to be reversed. Indian institutions and universities must be able to attract overseas students. There is a good market for Indian education in Asia, Africa, South America and East Europe. Our cost levels will easily be less than one fourth of those in the developed world with comparable quality.

The Indian education system, once reformed, will have the ability to attract a large number of foreign students. This will have to be encouraged in order to generate additional finances and earn goodwill. To begin with the establishment of international schools in all our existing centres of excellence, which have international reputation, can be started.

6.22 Politicisation

Our universities have become hot beds of politics. The teacher turned politicians in universities are largely responsible for falling standards and commitment. University unions are seen as nurseries for political careers.

To remedy this serious malady it is important that all political parties come to an understanding that they will keep away from universities and educational institutions. This may seem to be an utopian idea. However a beginning in this direction is overdue. It is also important to bring about legislation banning any form of political activity on campuses of universities and educational institutions.

6.23 Education and Economic Freedom

Education is not the only input for creating a knowledge based society. Economic opportunities are equally important. Education is necessary but not enough. Opportunities to harness education and knowledge need to be created. This would necessitate an economy free from controls that fosters new opportunities. These new opportunities, in turn, place new demands on education. They also help reverse the process of brain drain. In this sense, reforms in education and in the economy are mutually reinforcing.

6.24 Research in Education

Research in India is largely an elitist concept. Research at all levels starting from the Undergraduate level in the science and technology fields should be encouraged. Even the infrastructure available for research and development is poor and archaic.

The industrial growth is estimated to be around 12 to 15 % in the coming years. This would mean not only a large requirement of trained graduates but also providing continuing education for upgrading the skill and knowledge of technical personnel working in industry and service sectors. There are meagre efforts to address this large segment. This could be a potential money-spinner for the educational institution. Universities and institutions should establish separate administrative department to focus on this segment. The faculty should be drawn from those teaching the regular classes. The faculty will also benefit from interaction with the industry personnel.

6.25 Physical Education

There is no emphasis on physical development in our school curriculum. There is a need to encourage sports activities by providing the necessary infrastructure. The existing resources of Sports Authority of India and other sports bodies in the country should be utilised for this critical area.

6.26 Extra-curricular Activities

One day per week (preferably Saturday) has to be compulsorily set aside for extra-curricular activities such as games, study trips, arts and crafts and similar activities at the primary school and secondary school level.

6.27 Upgrading RECs and ITIs

The Regional Engineering Colleges can be upgraded by allowing them more autonomy to raise additional resources for upgradation of their resources. This has to be taken up on priority to ensure that the quality of RECs are comparable to the existing IITs.

Industrial Training Institutes (ITI) established in the late sixties provided a large number of skilled and semi-skilled manpower for both Indian and Persian Gulf companies. However, over the years, they have gradually lost their position due to non-upgradation of their curriculum and infrastructure. India’s growth aspirations would need a large number of skilled manpower and these ITI can meet these requirements. Urgent steps should be taken to upgrade the infrastructure, resources and curriculum of these ITI s.