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The shortage of skilled man-power is a cause for concern in most sectors in India. Experts acknowledge that the present higher education system in India is not equipped to address this problem without some changes in the basic structure. Official records show that the gross enrollment ratio in higher education is only 11 per cent while the National Knowledge Commission says only seven per cent of the population between the age group of 18-24 enters higher education. Even those who have access are not ensured of quality. Despite having over 300 universities, not a single Indian university is listed in the top 100 universities of the world. Present Regulatory framework The present system of higher education is governed by the University Grants Commission (UGC), which is the apex body responsible for coordination, determination and maintenance of standards, and release of grants. Various professional councils are responsible for recognition of courses, promotion of professional institutions and providing grants to undergraduate programmes. Some of the prominent councils include All India Council for Technical Education (AICTE), Medical Council of India (MCI) and the Bar Council of India (BCI). The Central Advisory Board of Education coordinates between the centre and the states. Universities in India can be established by an Act of Parliament or state legislatures such as Delhi University, Calcutta University and Himachal Pradesh University. Both government-aided and unaided colleges are affiliated with a university. The central government can also declare an institution to be a deemed university based on recommendation of the University Grants Commission. There are about 130 deemed universities and includes universities such as Indian Institute of Foreign Trade and Birla Institute of Technology. Such universities are allowed to set their own syllabus, admission criteria and fees. Some prominent institutions are also classified as institutions of national importance. Reforms in Higher Education There have been calls to revamp the regulatory structure, make efforts to attract talented faculty, and increase spending on education from about 4% of the Gross Domestic Product (GDP) to about 6%. Presently, the allocation for higher education is at a measly 0.7% of GDP. From time to time government appointed various expert bodies to suggest reforms in the education sector. The two most recent recommendations were made by the National Knowledge Commission (NKC) formed in 2005 under the chairmanship of Mr Sam Pitroda and the Committee to Advise on Renovation and Rejuvenation of Higher Education, formed in 2008 under the chairmanship of Shri Yashpal.
| Key Recommendations of NKC | Key Recommendations of Yashpal Committee |
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| Sources: The Report to the Nation, 2006-09, NKC; Yashpal Committee Report, 2009; PRS | |
The Draft NCHER Bill, 2010 In response to the reports, the government drafted a Bill on higher education and put it in the public domain. The draft National Commission for Higher Education and Research Bill, 2010 seeks to establish the National Commission for Higher Education and Research whose members shall be appointed by the President on the recommendation of the selection committee (include Prime Minister, Leader of the Opposition in Lok Sabha, Speaker). The Commission shall take measures to promote autonomy of higher education and for facilitating access, inclusion and opportunities to all. It may specify norms for grant of authorisation to a university, develop a national curriculum framework, specify requirement of academic quality for awarding a degree, specify minimum eligibility conditions for appointment of Vice Chancellors, maintain a national registry, and encourage universities to become self regulatory. Vice Chancellors shall be appointed on the recommendation of a collegium of eminent personalities. The national registry shall be maintained with the names of persons eligible for appointment as Vice Chancellor or head of institution of national importance. Any person can appeal a decision of the Commission to the National Educational Tribunal. (For opinions by some experts on the Bill, click here and here.) Other Bills that are in the pipeline include The Foreign Educational Institutions (Regulation of Entry and Operation) Bill, 2010; the Central Educational Institutions (Reservation in Admission) (Amendment) Bill, 2010; and the Innovation Universities Bill, 2010.
Last month, the Pension Fund Regulatory and Development Authority (PFRDA) issued revised guidelines for the registration of the Pension Fund Managers (PFMs). These guidelines are for the PFMs to manage the National Pension System (NPS) in the non-governmental and private sector. See here. The NPS was implemented in 2004 for all government employees and later extended to the private sector in 2009. The guidelines bring about the following changes in the NPS:
Although NPS was made accessible on a voluntary basis to non-government employees and those working in the private sector since 2009, the subscription to the schemes under NPS was lower than expected. In August 2010, a committee was set up under the chairmanship of Mr. G.N. Bajpai to review the implementation of NPS in the informal sector. The Committee noted that since NPS was opened to the general public there were only 50,000 private sector subscribers until May 2011. According to the Committee, the low subscription was due to the low-to-negligible distribution incentive to the PFMs to distribute the different schemes to the subscribers to invest their funds. The Committee thus recommended that PFRDA should consider revising the structure of the NPS so as to increase subscription. It suggested making the fee structure dynamic for PFMs. The Committee had also suggested that there should be some revision in the bidding as well as the selection process for the PFMs to increase competition and thereby incentivise them to distribute the schemes. These changes, as suggested by the Bajpai Committee and now notified by the PFRDA, are different from the original design of the NPS. The Old Age Social and Income Security (OASIS) Report of 2000, which had initially suggested the establishment of pension system for the unorganised sector in the country, had recommended a low-cost structure for the pension system. The Report had stated that the choice of PFMs should be based on a bidding process where the lowest bidder should be made a PFM under the NPS. The rationale for the auction base for the PFMs was that it would provide a system to the subscribers whereby they could make investments for their old age by paying a minimal fee. A set uniform fee was meant to eliminate the large marketing expenses which would ultimately get passed on to the subscibers. In addition, the intent behind keeping the fund managers from the distribution and marketing of the schemes was to prevent any mis-selling (misleading an investor about the characteristics of a product) that may happen. Recent newspaper reports have raised doubt if these new rules would help in increasing the penetration of the NPS in the markets. However, the chairman of PFRDA, Mr. Yogesh Agarwal, in a recent interview explained that it was important to bring about changes in the structure of the NPS. According to him a scheme which was mandatory for the government sector could not be expected to perform as well in the private sector (where it is voluntary) without any changes made to its structure. He also stated that the NPS should be able to compete with other financial products such as insurance and mutual funds in the market. See here for the PRS Legislative Brief on the PFRDA Bill, 2011. Notes: The seven PFMs are LIC Pension Fund Ltd., UTI Retirement Solutions Ltd., SBI Pension Funds Pvt. Ltd., IDFC Pension Fund Management Co. Ltd., ICICI Prudential Pension Funds Management Co. Ltd., Kotak Mahindra Pension funds Ltd., and Reliance Capital Pension Fund Ltd..
