Debate – Privatization Vs Non Privatization of Management Education in India

1)      “Every time you stop a school, you will have to build a jail.  What you gain at one end you lose at the other.  It’s like feeding a dog on his own tail.  It won’t fatten the dog.”

With these lines by Mark Twain, I Arpit Srivastava from Balaji Institute of International Business, wish everyone over here a very warm good morning.

2)     The topic – Privatization Vs Non Privatization of Management Education in India is something on which I always wanted to have a say and I strongly agree that privatization of Management Education is the need of the hour.

3)     Privatization, a method of reallocating assets and functions from the public sector to the private sector, appears to be a factor that could play a serious role in the growth of an economy.

The idea of privatization as an economic policy was pursued for the first time by the Federal Republic of Germany in 1957, when the government eventually sold majority stake of Volkswagen to private investors.  The next big move in privatization came in the 1980s with privatization of Britain Telecom and privatization of large banks in France. But this is not where I want you to focus. I want you to note the countries who were the pioneers of privatization – Germany, Britain and France – All of them superpowers now.

4)     I see privatization in education as an extension of democracy. It’s actually a combination of two Fundamental Rights in our Constitution – Right to Freedom and Right to Education. Privatization is advantageous to parents, who are given more freedom and choice when deciding on schools for their children.

5)     Let us focus on Management education specifically.

Few days I ago I attended a seminar by Mr. Ram Kumar, Executive Director, ICICI Bank in this very auditorium and one point that struck me and many of you who might recall was – The mistake which we think were the biggest mistakes in early days are not really what counts. I am referring to the 99% of the students who don’t make to the top notch B-schools of the country like IIMs…..not because they were not capable but because someone else was slightly better… Private management education leads a way and ensures that there is a life beyond IIMs…. This 99% talent of the country remains untapped in absence of privatized management education in the country…and it is a loss to the nation…

6)    India is now a global hub of man power for countries all over the world. With numerous firms demanding man power with specific training … the role of privatized management education increases many folds. Government institutes take time to change and implement the required alterations because of a large number of red tapes in the system. Here I would like to quote a saying from Peter Drucker who said “When a subject becomes totally obsolete we make it a required course”

7)     India ranks 88^th on the Legatum Prosperity Index and ranks 89^th when it comes to Education.

Net primary enrolment is below average at 90%, gross secondary enrolment is low at 57%, and gross tertiary enrolment is at 13%. India ranks in bottom third of the Index on all three variables.

There is an opportunity to increase the tertiary enrolment which is just 13% to much more. Now many of my friends would say that why not try to increase this via government education. The only source of revenue for the government is taxes. For government to suddenly try to rise up the infrastructure to cater the entire mass, the tax on common man has to be increased. A huge segment of the population who is not even benefitted by the cause also needs to pay for it consequently leads to unrest among the masses.

Also the government is only for a short span of 5 yrs while the planning for education is a long term process. The new government might not take forward the plans with the same zeal as the previous one.

Not privatizing management education is like not capitalizing the resources within the country. With a literacy rate of just 63 % I would only say that Beggars are not choosers. Privatization of higher education is the only way to raise the living standards in the country. It not only increases the knowledge of the individual but also increases the percentage of youth capable of taking global jobs.

8)     India is on a verge of becoming a leader in global knowledge economy. It enjoys unique advantages in having a large pool of English-speaking professionals with degrees in engineering, science or mathematics, who are capable and flexible to learn new skills. Not providing sufficient opportunities in management education to them is again a loss for them as well as for the country as these individuals are capable of taking high positions globally.

9)     Even if we stop privatization of management education we cannot eventually kill the demand of differentiated education in the

society. Consequently it would lead to people moving out of country to pursue specialized courses and a large percentage stay back in the foreign country. This not only leads to loss of foreign exchange but also brain drain in the country. On the other hand, with the help of privatization we can come up with institutes of global standards which can attract students all round the globe and thus build up a reputation of the country and attract foreign exchange.

10) A large number of private institutions have gained worldwide reputation – MIT, Harvard, Stanford, Boston University, and Princeton all are privately run without government interventions. Even in India XLRI, MDI & S.P. Jain has gained national importance.

11) Finally, I would like to wrap up by stating that ceasing privatization is not a solution. It only reflects the inefficiency of the government to regulate and keep a check on the standards. Therefore one should concentrate on establishing a strong regulatory body rather than avoiding privatization.

Thank you.