The scarcity mindset

The employment market in India resembles in some ways the product markets of old, when there were artificial shortages of scooters, gas connections, telephones et al. If the country now faces a shortage of educated manpower (reflected in skyrocketing salaries in many sectors), the reason is the same: the supply side (educational and training institutions) functions in a licence permit raj that strangles its growth. The health care sector, for instance, faces a man-made scarcity of doctors and nurses. The noted surgeon, Devi Shetty, has talked about the problem in several forums, and pointed out that the country gets 18,000 doctors every year against the requirement of one lakh doctors.

According to the United Nations Development Programme (UNDP), the most important prerequisite for a developing country to grow rapidly is human resources, easily outweighing both natural resources and physical infrastructure. While nominally recognising this, the government's response has been to take the high moral ground that it is the state's duty to either provide the education, or to control and direct it when provided by non-profit organisations (making profits out of education is banned). While this may have been well-intentioned, what it has created is under-investment and supply scarcity. This has now resulted in the clamour for more seat reservations, court supervision of school admission systems in Delhi and other palliatives when the systemic correction required is to put an end to the shortage and to allow supply to grow and meet demand.

A government-sponsored Public Report on Basic Education in India, for example, has disclosed that teaching goes on in only 53 per cent of government schools in the villages of MP, Bihar, UP and Rajasthan. Teachers were found absent in one-third of the schools; many were found to have brazenly closed their schools and were busy running shops. Yet, governments continue to be hostile to the idea of private institutions, of public-private partnership, and of a suitable incentive system to make the public education system work better. Some state governments in the southern cone have taken the attitude that private educational institutes should be liberally allowed; this explains the sharp increase in supply of engineers in the south, though all the privately-run institutions cannot lay claim to providing quality education. Indeed, some of them already face a shortage of students, but this situation has the virtue of being a problem of excess supply and therefore student choice. In most places, however, it is still a case of supply shortage.

Take, for example, the accreditation system. There are only two agencies, the University Grants Commission (UGC) and the All-India Council for Technical Education (AICTE), to do the job for 300 universities and 15,000-18,000 colleges, which need constant monitoring. This system is both inadequate and dysfunctional, if one is to go by the (still to be released) findings of the UR Rao Committee, which went into the issue; as everyone knows, well over half the business schools certified by the AICTE have questionable credentials and the same can probably be said about many of the private engineering institutes that have sprung up in the south. Moreover, as the Education Promotion Society of India has said, you can't have an accreditation agency which is also an arm of the regulator. It is no surprise that a few institutions that have chosen not to get AICTE approval, like the Indian School of Business in Hyderabad, have superior faculty and facilities when compared to many AICTE-approved institutions.

The way forward was demonstrated by Karnataka a few years ago when it dealt with the shortage of nurses. The state government gave permission for 500 nursing schools in one year. As a result, the capitation fee for nursing admissions disappeared and the fee for nursing education came down so that affordability ceased to be an issue. There are lessons to be learnt from this, if the government wants to fix the problem.