Development of this sector which is inherently economically viable, and socially as much desirable has not acquired the much needed attention of state government. This is quite evident in the huge capital outflow for higher education happening to other states from Bihar. Creation of necessary higher education infrastructure locally would have helped check such large capital outflow. This will also help enrich local availability of highly skilled human resources for supporting socio economic developmental needs of the state. Yet, state dispensation has been found wanting on this front. Seven years should be long enough for ushering in this much needed reform. This observed delay is inexplicable.
Given that institutions of higher education set up completely on the initiative of private sector in other states have been playing havoc with the quality of education, state intervention is desirable. If I may say so, it is absolutely imperative. Therefore, an initiative must come from the state government in facilitating setting up of such institutions. Is this possible given the meager resources available in the hands of state government? Of course, yes! Such institutes prima facie appear economically viable given the observed propensity of people in the state to invest heavily in higher education of their wards. Only that state intervention is required to play a role of organizer and facilitator in setting up of such institutions.
Given the number of Bihari
students vying for admission in engineering, medical and MBA colleges
in other states, Bihar is required to have around 40 engineering
colleges and 20 medical colleges at graduate level. Of these, around
ten engineering colleges and ten medical colleges should have PG level
education as well. Similarly, ten MBA institutes would also be
required to meet the persistent demand for the same. With an intake
capacity of around 500 students in engineering and 200 in medical
institutes, Bihar should add around 20,000 engineering seats and 4000
Medical seats at graduate level. PG level student intake can be around
120 in each of these institutes. This will imply 1200 intake capacity
at PG level in each category of institution. However, setting up such a
large number of institutes would require around 20,000 crores. At
the face of it, managing such a large capex will be difficult for a
state like Bihar.
Fortunately, there is a way
for meeting such huge investment requirements assuming the inherent
economic viability of such institutions. State government will not have
to invest a single penny if it is not in position to spare resources
for the same. These institutions can still become a reality. These
should be set up by securitizing the future revenue, that is,
receivables in the form of fees. Assumption inherent here is that
these institutions would be allowed to charge necessary fees for
running them as economically viable units. Banks which are failing to
meet the CD ratio on alibi of not having enough bankable projects can
be made to invest in these projects of proven viability. Government can
consider providing limited recourse to its exchequer for any shortfall
in the projected receivables to enhance the credit worthiness of
these projects.
However, such a structure
will require a legislative banking. With Aryabhat Knowledge
University(AKU) being functional now, regulation of such institutions
can be undertaken by it. Besides, AKU should also implement a scheme
of rating the proposed institutions at least annually. An autonomous
fee advisory authority should also be set up with necessary
legislative mandates to undertake fee regulation of such institutions
in a fair and transparent manner. This authority should prescribe the
fee ranges linked to the rating scales as prescribed by AKU. Autonomy
of institutions in undertaking infrastructure development, faculty
recruitments and in structuring academic operations should however be
protected in prescribing such fees. Fee should be commensurate with
quality of institution without placing any unnecessary limitations in
this regard. Attracting quality faculty should be a major
consideration in designing the compensation structure and hence fees.
Aforesaid public educational
institutions will be quite different from the current breed of state
institutions. If state government so wishes, it can also migrate the
current set of higher institutions to the proposed regime. This does
not mean that poor students cannot get education in such institutions.
State can still undertake to fund education of poor students by way
of appropriately designed scholarships. Alternatively, state can buy
certain number of seats in such institutes based on the resources
availability with it for the purpose. Government can multiply its
resources even further by using the available resources to guarantee
students loan to be funded by Bank. Moral hazard of such loan not
being paid by the student’s post their employment can be minimized by
making it imperatives for banks to report such cases of fee defaults
to CIBIL. This will ensure that willful defaults are discouraged.
Further, all these funding should be at arm’s length as per the fee
structure determined by fee regulatory authority.
State government should
realize that it is not limited by lack of resources but by its
willingness to adopt path breaking efficient measures. Like failsafe
engineering design it can have self sustaining, self disciplining
financing structure for various projects, especially the project for
such institutions. State can unlock large amount of financial
resources from its existing assets by resorting to securitization.
Such an action will not only make available precious resources but
will also help with instilling operational discipline due to its very
design. Given the gravity of challenges, it is all the more necessary to
move expeditiously in this direction.
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