Wednesday, May 26, 2010

Education: PPP, profit making and voucher schools

Few excerpts from Prof Jandhyala B.G. Tilak’s article:

  • According to the model finalised by the Planning Commission in consultation with the private sector, these schools will be set up by 2014 and will have the capacity to educate 65 lakh students, of whom 25 lakh will be from the deprived sections. Each school will have about 2,500 students, 1,000 of whom will be from deprived sections and charged a token fee. Fifty per cent of the 1,000 students will be from the Scheduled Castes, the Scheduled Tribes and the Other Backward Classes. They will be required to pay a monthly fee of Rs.25 each. The rest of the children, who will be from other deprived sections — non-income tax paying families — will be required to pay a fee of Rs.50 a month . The remaining costs of these students, estimated to be Rs.1,000 to Rs.1,200 a head per month, will be reimbursed by the Union government to the schools. It is estimated that the government will have to pay Rs.10,500 crore until 2017. The amount is likely to go up with escalating prices, in general, and increasing costs of education, in particular.
  • Over and above this, the schools may get access to relevant funds from the Centre and the State governments under different schemes. The schools will be free to admit anyone to the remaining 1,500 seats and charge any amount of fee.
  • Corporate companies with a minimum net worth of Rs.25 lakh are eligible to set up schools under this model. Each entity should deposit Rs.50 lakh with the government for the first school it proposes to set up, and Rs.25 lakh per additional school. Each can set up as many as 25 schools. Non-profit companies with prior experience in education need to deposit Rs.25 lakh for each school. The schools will need to have the sort of infrastructure available in the best private schools.
  • There are a few important aspects that are clear in this model. One, it involves a massive transfer of resources from the exchequer to private schools. Two, the schools have unlimited freedom in all aspects of governance, including specifically the fees to be charged from the 1,500 students. The model thus allows the so-called non-profit institutions to work for, and actually make, profits. Third, the government has little control over these schools. Except to insist that 1,000 students from the deprived sections be admitted and that they be charged a certain fee, it cannot do much.
  • According to earlier thinking, these schools were to become ‘voucher schools', and totally privatised, after 10 years, when government funding would cease. Secondly, the aided school system has not actually provided scope to make profits, though some schools have made profits by adopting unfair methods. In contrast, the PPP model openly allows for profit-making, as schools are free to fix fee levels and the government has no role with respect to either the fee rates or the expenditure of the schools. After all, it is now recognised that no private company will set up a school unless “a reasonable return on investment” is ensured.

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