Micromanaging School Fees Will Disincentivise Edupreneurs; India Can’t Afford That

The Supreme Court ruling reiterating that private unaided schools in Delhi built on land provided by the government must take permission for fee hike has been met with sharply polarised reactions.

On one side are the Delhi government, the community of parents and those who are not in favour of free markets, who see the order as a victory. On the other side is the community of private schools, which sees the order as an attack on its autonomy; it is not prepared to concede defeat and insists there are still legal options open.

But the over-the-top rejoicing is a tad misplaced. The order does not mean that all unaided private schools in Delhi will have to take permission from the Delhi government for fee hikes. Of the 2,000-odd private schools in Delhi, only around 400 have got land from the government at institutional rates (which are lower than the market rate). Of these 400, says S K Bhattacharya, chairperson of the Action Committee of Unaided Recognised Private Schools, only 295 have got the land along with the stipulation about taking government permission before fee increases. So these schools do not have the right to complain; if they had agreed to the condition when they got the land, they have to abide by it now. Contractual obligations have to be met; the Supreme Court and, before that, the Delhi High Court were only reiterating this point.

The remaining 105 unaided private schools which have got land at institutional rates but without this stipulation as well as the nearly 1,600 schools which have been set up on private land – either owned by the founders or bought at market rates – are not legally bound to get a government go ahead for fee hikes. The court order does not apply to them.

What could apply to all private unaided schools in Delhi is the Delhi School (Verification of Accounts and Refund of Excess Fee) Act enacted in December 2015. But the Act has not got presidential assent, so right now only 295 unaided private schools are affected.

But this isn’t just about Delhi alone. The order feeds into the entrenched mindset that education should not be about business at all and that most private schools are teaching shops that need to be kept in line by a big stick-wielding government. This is a flawed attitude that needs to change.

Those who rail against commercialisation of education limit their rants to schools, but quietly pay up to private tutors and tuition agencies which can be as exploitative as private schools. There is no lament about commercialisation when school teachers openly solicit their own students for after-school private tuitions, no calls for the government to regulate tuition centres. This contradictory attitude just doesn’t strike them.

This is not the first time that the courts have come down against fee hikes. In 2004, in the Modern School vs Union of India case, the Supreme Court held that the Delhi government had the right to regulate tuition fees charged by private unaided schools. As this article by Dilip Thakore points out, it went a step further and even put conditions on schools with more than one branch transferring funds from one branch to another.

What accompanies such orders as well as most discussion on fees charged by private schools are homilies about education being a noble vocation which should not be tainted by money. Even when courts have been realistic at times, there is a quick reverting to entrenched attitudes. In 2002, the Supreme Court had, in the T.M.A. Pai vs the State of Karnataka case held that educational institutions are entitled to a reasonable surplus. But, Thakore’s article points out, the judge delivering the verdict in the Modern School case two years later noted that earlier judgements had not defined what `reasonable surplus’ is and empowered the director of education to examine the books of account of private schools to ensure that the surplus is, indeed, reasonable.

Some state governments now have laws to regulate school fees. Tamil Nadu set the ball rolling in 2009 and Maharashtra, Rajasthan and Karnataka followed, though the models differ. The latest to join the bandwagon (apart from the Delhi government, whose fee regulation law is in a limbo) is Punjab which promulgated an ordinance in December 2016.

It is true that many private schools tend to exploit the growing demand for them by ripping off parents through steep fee hikes and levying of hefty charges under various heads (uniforms, books, extra curricular activities, to name just a few). Even reasonably well-off middle class families feel the pinch, even if they have just one child. Whether the education that is imparted justifies the huge fees charged is debatable, with parents often having to invest in extra private tuition as well.

But is government micro-management of schools the way to go about it? The root cause of the problem is the lack of good schools and the supply-demand mismatch. Fee regulation laws do not address this. Instead by criminalising and penalising schools, they only further limit the supply. Besides, can a bunch of bureaucrats really sit in judgement over the economics of running a school? What this fosters is only corruption.

How, then, should the government protect parents from being exploited? The Delhi-based Centre for Civil Society had recommended to the Delhi government that the role of the state should be limited to asking private schools make their fee structure public at the start of an academic year. The government should publish this information on a public portal. This is a sensible idea and perhaps it can be accompanied by a stipulation that arbitrary hikes in the course of the academic year will not be allowed.

Along with this, and more importantly, it needs to let the market expand so that people have more choices. More private schools should be encouraged to come up and if the government wants to offer more affordable choices, then let it improve the quality of education in government schools. The Rajasthan and Delhi governments are taking initial steps towards this, but how these efforts pan out remains to be seen.

Make it easier also for students to shift schools. Schools should not be allowed to delay or hold up transfer certificates, if students want to shift to a more affordable school.

If governments want schools to put a lid on fees, are they ready to stop dictating terms to them and give them concessions?

Schools are also required to pay teachers salaries equivalent to that of government teachers if they want recognition. Schools use this as an excuse for their steep fee hikes. Why should the government get into private teachers’ salaries? Not only is this micro-management, it also encourages corruption.

Private unaided schools in Delhi complain that even if they get land at institutional rates, they are charged commercial rates for power, water and property tax. If the government wants us to lower our fees, they argue, why not give us concessional rates? This is a fair point. Yes, it is possible that school managements can misuse this; fake schools can come up just to avail these concessions. The answer, then, is for the government to refrain from ill-thought of fee regulation measures.

But for all these issues to be addressed, there has to be a mindset shift in the government and the judiciary. There has to be acceptance that education is a business and over-regulation will only make genuine players unwilling to enter the market or stay in it once they are in. India needs a good education system to tap into its demographic potential. Regulation should be confined to broad standards of teaching and academics, not interfering in the way schools are financially managed.