Technical Higher Education Market Dissected

In India, the technical higher education sector – dominated by private players – can be understood only in the context of the market: whether it is the exponential growth in institutions or in enrollment as well as the dynamism of decisions made by regulatory bodies. It is no coincidence that most of the growth in technical higher education happened after 1991, when the All India Council for Technical Education (AICTE) was functioning in its present form.

supply exceeds demand

During the three decades just before the present (1961 to 1991), the number of technical higher education institutions increased from 53 to 277. During the same period, enrollment in technical higher education had increased six times – 0.37 lakh to 2.16 lakh. Importantly, most of the development has happened in the government sector. Institutes have grown 40 times (at 10,990) during the last three decades (1991-2020), with intake capacity increasing 15 times to 32.85 lakh. Much of this expansion has been in the private sector.

As per the number of students appearing for the Joint Entrance Examination and other entrance examinations conducted by various agencies and various higher educational institutions, the total demand for technical higher education does not seem to exceed 20 lakhs. Clearly, the supply far exceeds the demand for technical higher education, perhaps in the hope that the supply will create its own demand.

It is no surprise that a large number of technical institutes have drowned due to their inability to fill the sanctioned seats. Their capacity utilization has long fallen to 53.53% in 2020-21 as compared to 62.32% in 2012-13. Despite declining demand, these institutions are adding more capacity, although there have been some market corrections during the past few years. The number of institutions and the intake capacity have gone up to 8,997 and 30.87 lakh respectively in 2021-22.

student-teacher ratio

AICTE sets a minimum Specific Student-Teacher Ratio (STR) from 7.5 to 20 depending on the type and level of programs and subjects under its domain. Since most of the institutes are unable to admit students according to their capacity, their STR, at least on paper, has come down from 5.5 in 2012-13 to 3.0 in 2020-21.

Lower STR may mean better quality but in their case, it only means higher cost adversely affecting their economic stability. Their revenue model is adversely affected, they are unable to create quality infrastructure and human resources and get caught in a vicious cycle of mediocrity. In the context of the market, they are value takers and must be ready to offer their products and services at the lowest possible prices.

In a typical market structure, such businesses will either improve their quality or reduce their prices in order to survive. Obviously, this does not happen in the higher education market, except in the past two years when the number and intake capacity of institutions have declined by 18.3 per cent and 6.01 per cent, respectively, due to market reforms.

appeal to the regulator

Instead, they prefer regulators coming to their rescue. In the past he urged the school board to do away with the requirements of a certain percentage of marks. More recently, they could persuade the regulator to do away with the requirement of studying science and mathematics at the senior secondary/intermediate level in schools, though AICTE quickly retracted the decision. Clearly the purpose of such charges is to widen the catchment area for entry. For example, increasing the STR from 15 to 20 in an undergraduate program in engineering has helped institutions as well.

Veblen effect

In addition, technical higher educational institutions are differentiated and highly rated. Indian Institute of Technology, National Institute of Technology, Indian Institute of Information Technology, School of Planning and Architecture, National Institute of Design, National Institute of Pharmaceutical Education and Research and select universities are some of the most sought after. , In all, they can admit a maximum of 40,000 students. A similar number of seats may be available in high quality private institutions.

Being highly selective, they are value makers. Left to market forces, they may resort to an exploitative pricing policy. They generally resist capacity expansion for fear of dilution in quality. The artificial scarcity seems fine to them and sometimes enables them to use high fees as a brand building strategy. After all, the Veblen effect (what is expensive is considered excellent), applies as much to higher education as it is to luxury.

Such institutions despise pricing rules that limit their ability to charge as much as they want. They are naturally disappointed with the news that AICTE is contemplating fixing a ceiling on fees that these institutions can charge their students. Many poor quality institutions are happy with the prospect of making a certain minimum level of fees mandatory.

Steps for AICTE

Technically, AICTE reserves the right to take all such steps as it deems fit for coordinated and integrated development and maintenance of standards. In particular, it may also lay down “norms and guidelines for charging tuition and other charges”. But would it be appropriate to set a specific amount to be compulsorily charged from the students? Wouldn’t this move be considered as helping the institutions to improve their balance sheet instead of protecting the interest of the students. Ultimately, the AICTE Act mandates it “to take necessary steps to prevent commercialization of technical education”.

Lastly, would it be appropriate for AICTE to fix fees for all technical higher education institutions spread across the country? May it not provide a comprehensive framework and guidelines for determining an acceptable level of fees? The rest can be left to the State Level Fee Fixation Committees. This would be in the true spirit of federalism which expects the states to be a responsible participant in this process.

Furqan Qamar is a former Advisor (Education) in the Planning Commission of India. Views expressed are personal