The business leaders will invest either in their individual capacities or through their companies. The campus will include four centres—for healthcare management, public policy , manufacturing sciences and infrastructure . The healthcare management centre will be named after Max India, public policy centre after the Bharti Group, manufacturing centre after the Hero Group and infrastructure centre after Punj Lloyd.[link]

With corporatization of hospital sector picking up pace, India will need more healthcare managers in future.

The need for government regulation of higher education is the subject of an interesting debate between Abi and Ravikiran Rao. Abi calls for changes in the regulatory structure to keep out ”crooks, politicians, and thugs” and facilitate the entry of large philanthropic institutions. Ravikiran’s response is to point to blogs: Without an external regulator, readers are able to differentiate between ”good” and ”bad” blogs as technology permits readers to avoid blogs which they may find uninteresting. Abi points out, quite persuasively, that the example of blogs would not be applicable to higher education: Students cannot sample different institutions and then decide which one may best fit their interests–the opportunity cost is simply too high. 

Before dealing with the larger debate, what also must be clearly understood here is that it is immaterial if the motivation for private investment in higher education is purely profit. It is perfectly possible to subscribe to profit motive and yet deliver high quality of education. Indeed, it is how modern marketplaces function. Market forces as represented by free consumer choices forces producers to deliver high quality products. Otherwise, they risk loss of market share negatively impacting their bottomline. Apart from an ideological belief that education must be treated differently, there is little reason why the same paradigm is inapplicable to higher education. Rather than worrying over motives of education entrepenuers, an appropriate policy response would be to incentivize investment in higher quality by making it a pre-requiste for profit maximization. 

The lack of accountability in the state owned educational facilities and failure to incentivize quality in the private sector are the key failings of India’s education regulators. The state’s stranglehold on higher education has created an artificial shortage leading to an acute supply-demand mismatch. Politicians and bureaucrats who have designed the regulatory structure directly benefit from it. The process of regulating higher education has become entirely politicised; no wonder, most private professional colleges are owned by politicians or well-connected business houses. The poor quality of such educational institutions is used to justify even more government regulation completely missing ignoring the fact that the high entry barriers erected by regulators ostensibly concerned over quality had allowed these institutions to thrive in the first place.  A particularly perverse application of this regulatory power has been the successful move by Arjun Singh led Human Resources Development ministry to prevent the entry of foreign universities in India. Concerns over quality, it must be recognized, have only served as smokescreen to promote monopolies. It has not served the interest of any of the important public policy considerations: Access, quality, and equity.  

As the government it self has recognized, a massive expansion of higher education has become imperative if India has to thrive in the knowledge economy.  The government can no longer be the key driver of this change. The onus of expanding higher education is clearly on the private sector with the state playing the role of a facilitator. Does it mean there is no justification for state regulation of higher education? 

External regulation of a consumer good may be justified in case of information asymmetry.  Quite clearly, such a situation exists in higher education: Prospective consumers–students–don’t know as much about educational facilities as institutions themselves. The institutions have an incentive to restrict the information flow or limit it to a form which benefits them.  More importantly, the opportunities for consumers to correct their mistakes are severely limited; a wrong initial choice may adversely impact a student’s entire carrer and indeed, his life. The limited supply of higher education further restricts the student’s ability to make appropriate decisions. 

Government regulation of higher education seeks to remove some of the uncertainty associated with selecting an education facility by guaranteeing–at least theoretically–a minimum standard of education. Government regulatory bodies like the University Grant Commission(UGC), Medical Council of India(MCI), and All India Council for Technical Education(AICTE) apart guarding the portals of higher education, are  entrusted with the responsibility of ensuring adherence to minimum guidelines by existing institutions. However, as explained above, such regulations are not costless.

Is there a better alternative?

(To be continued) 

All this is widely known. What is not talked about is the impact that these subsidies are having on demand for oil. As it is, developing Asia accounts for only about 20 percent of global oil consumption. But the more important statistic is that Asian countries account for about two thirds of the annual increase in global oil demand and an even higher percentage of the increase in imports. Most of the rest of the increase comes from oil exporters like Russia and the Middle East, where prices are low and economies booming. Oil consumption in the developed world is declining slowly.

With developing Asia now consuming about 17 million barrels a day - and that figure rising by about 1 million ever year - the key question is: How much additional demand has been created by these oil subsidies?

There is no accurate way to measure how sensitive demand is to rising oil prices across this diverse group of countries. But the difference between oil at $65 a barrel and oil at $130 a barrel could well limit demand by at least 1.5 million barrels a day.

As far as India is concerned, two points would be in order: a) It is only in the least couple of years or so that government is subsidizing petrol. Otherwise, high petrol prices had helped subsidize kerosene and Diesel in the name of helping the poor. Second, in direct comparison–forget purchasing parity–petrol is still expensive in India compared to United States. (On average $1.50 a liter compared to roughly $1 in United States.) Indian government may subsidize oil but it imposes a host of taxes too. 

On a side note, how to beat the high oil prices…

A letter in the Lancet which holds obesity as a contributory factor for global warming has sparked off a controversy

Compared with the normal weight population, the obese population consumes 18% more food energy. Additionally, more transportation fuel energy will be used to transport the increased mass of the obese population, which will increase even further if, as is likely, the overweight people in response to their increased body mass choose to walk less and drive more[link]

Here is an ABC article on the letter in which one critic points out that far more food is wasted compared to the extra consumed by the obese. However, it must be pointed out that obesity as incidental to their primary argument that a coherent urban transport policy is a must. 

A new survey conducted in a Delhi slum shows exactly that,

The study, conducted by doctors from the All India Institute of Medical Sciences (AIIMS) during 2004-08 in a South Delhi slum, found that of the 207 households, only two preferred to visit the government dispensary located four kilometres from the settlement. The others felt that non-qualified medical practitioners are more humane, more communicative and offer more payment options for daily wage workers[link] (emphasis added)

This is the state of affairs in South Delhi where apart from numerous government dispensaries, two of India’s premier medical facilities, All India institute of Medical Sciences (A.I.I.M.S0 and Safdarjung Hospital are located. The service delivery mechanism in case of quacks is simply more attuned to local needs.

The need of the hour is not give in to pressure of organized medicine and ban quacks–rather, attempts should be made to co-opt them into the primary health system by means of proper training and constant monitoring and education.

Gujarat government has launched a new tele-medicine scheme to provide healthcare in villages,

“Through video conferencing, doctors at a distant hospital will be able to diagnose the villagers for basic ailments and prescribe medicines online. The printout of the prescription will be available at the community service centres set up by the department,” said Vyas.

[link]

With broadband connectivity slated to reach every village in Gujarat within the next two years, this wonderful initiative can help address one of the most important public health problems in India: Addressing shortage of trained physicians in rural India.

A new report by Save the Children has placed India alongside Ghana in providing healthcare to the children, with more than half of children lacking access to basic healthcare.

More than half of Indian children under the age of five do not get the health care they need, according to a report by Save the Children.

It ranks India alongside Ghana when it comes to providing basic health care to its children under five years of age.

The full report (PDF) has two interesting conclusions,

a) Maternal health is intrinsically linked with child mortality rates. India has the dubious distinction of topping the numbers for both under five mortality as well as maternal mortality.

b) Most of the deaths are preventable by low cost solutions like measles vaccines, deliveries by trained professionals e.t.c.

At the risk of making an obvious point, it is not shiny new A.I.IM.S which India or at least her poor need but investment in public health.

Based on the Conditional Cash Transfer model, a new anti-AIDS program in Tanzania will offer people money to practice safe sex,

The $1.8m trial – to be launched this year – will counsel 3,000 men and women aged 15-30 in southern rural Tanzania over three years, paying them on condition that periodic laboratory test results prove they have not contracted sexually transmitted infections.

[link]

Will it work? Possibly but a lot will depend upon the adequacy of laboratory facilities for periodic testing and training of staff e.t.c. It is also essential that an educational component be part of the entire program.

Reality check has criticized the decision of the Indian Institute of Management (A) to raise its tuitions. He calls it an ”outrageous move” and goes as far as to suggest that IIMs should actually decrease their tuition to ”make quality management education accessible to Indians”. This argument has little merit.

First, despite the increase, IIMs are merely recovering the amount they spend on each student. In light of the sixth pay commission recommendations, and in order to compete with other management schools, they need more resources. Inflation has impacted the price of almost every good–why should education be exempt from it?

Reality Check further argues that IIM have repudiated their original agenda–after all, they are ”government aided institution in a developing country.” But that is precisely why this increase is justified. Why should the taxpayer, in a poor developing country, where millions have no access to primary education, fund the expensive education of a few hundred? That they are government owned is immaterial; the correct response in that case would be to free them from stifling government control and force them to generate their own resources. Their dependence on the government funding has only meant constant political interference.

If the argument is that IIMs are benefiting from the non-competitive nature of management education, then the government should be asked to permit entry of more players–especially foreign universities. Let the students decide if IIMs fees are appropriate or not; if they feel the value of education is not worth the cost, the students will choose institutions which offer better value for money. It would illustrative to remember that there has been absolutely no protest in any of the IIMs–perhaps, the students realize that they will recover their investment in a few months.

Admittedly, the question of affordability for students belonging to the poorer sections of the society is an important one. The IIMs have responded to such concerns by increasing the money available for financial aid twenty times and increasing the eligibility criterion for aid from Rs 2L to 6 Lakh. Reality check believes that it is not enough and every student should be guaranteed financial aid with nominal interest rates. Sure, the procedures may require simplification and in case of poor students, the government may guarantee the loans. However, it is not quite clear as to what obligation does the tax payer have of funding the interest bill of IIM students and that too without any means testing at all. An offhand chance that deserving students may be denied financial aid due to extraneous considerations or students may feel ‘’streesed” by the process can not be a justification for a free lunch.

Reality Check has been a tireless critic of government’s reservation policies. Yet, he fails to understand that such political maneuvering would only stop if the government interference in higher education was minimized. Yet, he thinks that the state should actually fund management education! As this blogger has written on the prevailing confusion within middle class India,

The answer strangely enough is paradoxical. At one level, the middle class is deeply suspicious of the government and yet it thinks by closing its eyes, it can eclipse the all pervasive influence of the state. On the other hand, it stills craves for state largesses unable to cut the Gordian knot which ties it to the government.[link]

In a welcome gesture, India’s premier management institute, IIM Ahmadabad, has hiked its tuitions,

The Indian Institute of Management, Ahmedabad (IIM-A) on Saturday decided to effect a sharp hike in fees for its post graduate programme from next year.

The fees for post graduate programme have been increased to Rs 5.50 lakh for the first year and Rs 6 lakh for the second year of the two year post-graduate programme for the batch joining in June 2008.[link]

IIMA is merely following the lead of other IIMs who have all hiked their tuitions in recent months. Considering that placement in high paying jobs is virtually guaranteed for IIM graduates, there can be absolutely no justification for any subsidies. The IIMs must charge the full price for education from every student with loans extended to financially indigent.

Interestingly enough, the move was opposed by the government nominees in the IIMA board of governors. The essential issue here is of autonomy: As long as the educational institutions remain dependent on the government for money, true autonomy is virtually impossible. That the Board of Governors went ahead with its decision despite government opposition is heartening indeed.