Regulatory Regime Nightmare And Waking Up To Better Education System

A couple of years ago, a close friend of mine, an IIT-IIM graduate, fanatically committed to education, decided to start a school. In a country where schools, especially quality schools are in serious short supply, he should have been welcomed and feted. What he learnt and shared with me is a depressing story. And that story must be told. It is a story that exemplifies the rot in our system of education, a system that is beyond reform, a system that needs to be blown up to start afresh.

India as a nation has the largest group of young people in the history of humankind. And they have to be educated. 35 to 60 million school age kids are not in school and many of those who are in school are hardly any better off. So who will school these millions?

We have the rickety government school system with crumbling buildings, lack of toilets, no access to drinking water, absentee teachers and under qualified teachers. No wonder that almost any parent who can afford moves their child to a private school.

Caution: School area. No Evil Corporates & Entrepreneurs allowed.

Given that schooling is essential and Government hasn’t delivered, do we then accept private schools as much needed service providers. Not really.

We expect that the vast majority of Indian children will be taught as a charity. Because, schools in India can only be run as ‘Charitable Trusts/Societies’ or in some cases non profit ‘Section Eight companies’. So if Indians don’t feel charitable enough, our children won’t get educated.

Since, all demand finds a supply, this demand for school education is met through “on paper” charitable schools or downright illegal schools. Please pay attention, the implications are critical. This is a large board, which says

“No Corporate investment, No Venture Funds, No honest entrepreneurs Allowed”

Ease Of Doing Charity Index

Lets leave entrepreneurship to important things like selling stuff online. So whom do we get running our schools, people who run charitable trusts and siphon money out in other ways? We get people who are connected, people who can ‘manage’ regulatory bodies, but more about that later.

Let us say we find someone who is willing to run a school as a non profit. He/She forms a trust or a society. What he/she now has to face is the ‘Real Estate conundrum’.

The Real Estate conundrum

To run a “recognized” school, you need one to three acres of land, for buildings and playgrounds. No starting small, no bootstrap start up possible. Buy the land, or lease it for 30 years, build the school and then seek necessary permissions. In any metro city, that will cost upwards of ten crore rupees. At a cost of capital of 15 percent, it entails 1.5 crore rupees of debt servicing from year one. So any chances of a affordable school for lower middle or poor students is ruled out from the beginning.

Then comes the plethora of approvals required. Building stability certificate, sanitation certificate and fire safety certificate etc. None of them add any great value, all of them eat up time and are necessarily dealt with by ‘under the table’ transactions. Add all these up and go to the Tehsildar to get a ‘D’ License.

And then you go the District Education officer to get an No Objection Certificate (NOC). This is followed by more running around government officers and ‘consultants’. And then you get ‘recognition’ from state government’s ‘Department of Education’ (read education minister).

And please note, you need to get State government recognition, even if you are seeking central board affiliation like CBSE/ICSE or even International Affiliations. No wonder about 12 lakh or 20 percent of total schools are unrecognized.

Got all the necessary approvals? Great. Have a Coffee break and come back. Picture abhi baaki hai mere dost.

RTE: Mogambo Khush hua..

It is stunning indictment of our media and society, that the madness of the ‘Right to Education Act’ ( RTE) has not been questioned enough. Too much focus has been on the 25 percent seats reserved in private schools for poor children, that the other aspects have slipped through unquestioned, almost.

RTE imposes ridiculous standards on private schools. By the stroke of a pen, about 90 to 95 percent of schools became illegal. Because, they fail to satisfy one of the other ‘norms’. Either they shut down, increasing the number of children out of school or they run illegally, coughing up bribes to each regulator who knocks on the door.

The playground requirement would effectively ensure that most schools servicing urban poor, including all slum schools become illegal. Imagine a school in the Dharavi slum being asked to show a one acre playground.

The 1:40 Teacher student ratio will disqualify a large section of schools. Moreover, these teachers will now have to be paid government wages, which is at a significant premium to market wages

And what about the revolutionary 25 percent admission to students from weaker sections of the society into private schools? It is an abdication of government’s responsibility which it wants to force onto private schools. The government will reimburse private schools in its own sweet time, what it feels is the right amount. Not surprisingly schools will be forced to raise fees for remaining students. And then of course, the schools will be condemned as evil and exploitative.

For starters there is no mechanism to identify ‘weaker’ students. Two, they have to be admitted into age appropriate classes, irrespective of their ability. A child from a disadvantaged background, already placed in a difficult social environment now finds himself/herself academically disadvantaged. And yes, no child can be ‘detained’. Learning or no learning they have to be pushed forward, into tougher and tougher levels till board exam. Of course there are vague provisions like ‘special classes’.

So what can be done?

1. Allow for profit education in schools. This will allow entrepreneurs who are committed to education and bring huge investments. Contrary to expectations, prices wont go up. Yes, you will get a few luxury schools, but entrepreneurs go where the market is. And the biggest market is the middle class and the poor.
2. Relax infrastructure norms to allow schools to start small and grow big. Allow schools to run on leased building and keep capital expenditure down. Let a million schools start up. Those that succeed will grow and build infrastructure.
3. Regulate by outcome not by inputs. Does it matter if I don’t hire B.Ed graduates? What if I hire B.Tech graduates to teach? What matters is whether children are learning. Have more standardized age appropriate tests, which can tell you how learning outcomes are working.
4. The government should fund the poor directly, through the JAM (Jan Dhan, Aadhaar, Mobile) trinity. Imagine a poor parent walks into a private school and seeks admission and swipes his Rupay debit card for payment. The parents will be able to CHOOSE the right school, and retain the right to shift out if they are not satisfied.
5. What about the fees, Government need not fix the fees. They can bargain on behalf of the poor children that they are funding. If Piyush Goel and team can get LED prices down Rs 300/unit to about Rs 70/unit, surely they can replicate it here. Which school chain (except the luxury schools) can ignore such a market?

All this and much more highlight two facts. One, we need to stop this ideological war against ‘profit.’ Profit is not a bad word. Profit is the end result of meeting and exceeding customer expectations. Profit is the signal that customer has received value for what he/she has paid. Two, profit is a signal that encourages more and more entrepreneurs to enter a sector.