This 14th All-India conference of the Students Federation of India is being held at a critical time in recent history. Over the last five years a deep crisis has overcome the metropolitan core of modern capitalism, and not just its poorer periphery. Never before since the Great Depression has the economic and political viability of capitalism been as much under challenge as it is today. And the legitimacy of modern capitalism as a system that can deliver a socially and historically acceptable minimum standard of life for much of its inhabitants is once again in question.
A single set of numbers, among many, is adequate to convince anyone of this reality. Though the figures are not strictly comparable, unemployment in the leading capitalist country, the United States, is (after adjusting for “discouraged workers”, or those who have stopped looking for a job) today at around a fifth of the labour force and close to the 25 per cent figure it touched at the height of the Great Depression. The problem is that this affects the young who find themselves unable to find or keep a job when they enter the labour force. In the 1930s, when fascism overwhelmed Germany and threatened freedom in the rest of the world, youth unemployment in Germany touched the 50 per cent level—one in every two young persons was unemployed. Now youth unemployment in countries like Greece and Spain has crossed the 50 per cent mark. Moreover much of this is chronic unemployment, where individuals are kept out of the labour force for long periods of time.
Needless to say, the real life implications of such an outcome need not only result in a shift to the worst forms of conservatism. It also provided the grounds for the advance of progressive ideas and the struggle for a humane alternative to capitalism, which given it inevitable core features is what we call socialism. That possibility is already visible in the disparate and as yet inadequately organised and channelled protests in different parts of the world. Participants in these protest movements are overwhelmingly young, and very often students. Over the last year and a half, university students have proven to be among the most politically active segments of the population in countries as far apart as Chile and Egypt. Not only have they participated in protests, sit-ins and marches, they have also attempted to bring change into their universities.
An abiding feature of these protests is that they have brought the student community up against the neoliberal ideology that is seen as having made the crisis as severe as it was and is. This is because that ideology affects the student community quite directly. For example, one consequence of neoliberal policies is that the education that is seen as necessary to be even considered for employment in an uncertain job market is being privatised, priced, made expensive and denuded of quality. Governments, including our own, are finding ingenious ways of shedding themselves of the responsibility that they should rightfully take on of preparing future generations for a better and more productive life. Hefty hikes in tuition fees and rising cost of living is leaving young people burdened with debt when they enter a labour force with little hope of employment. What was earlier considered an American disease is now a global contagion.
The other important reason why unemployment is more than insufferable is the evidence that not everybody in the system is a loser. Rather, while the majority lose, a small minority thrive. In the aftermath of the crisis the share of total income going to the top 1 per cent of US households rose to 19.8 per cent in 2010. This is about the highest since the 1920s. There has been a long-term regressive redistribution of income as well. According to Alan Kreuger, adviser to President Obama: “the shift in income inequality over the last three decades has been the equivalent of moving $1.1 trillion of income from the (bottom) 99 per cent to the top 1 per cent every single year.”
These regressive changes under capitalism have been underway since the 1980s. Prior to that, we know that faced with it own loss of legitimacy after the Great Depression and the two World Wars of the twentieth century, by the challenge posed by the success of socialism in the Soviet Union, and by the inspiring effect that the definitive and clinching role that the Soviet people played in the defeat of fascism, capitalism entered an unusual and quite exceptional phase for close to two-and-a-half decades. These were the years referred to as the Golden Age of post War capitalism, with enlarged public spending and a welfare state. After a long time capitalism seemed to be a system that could ensure reasonable growth with low unemployment and low inflation. These were also years when far more students enrolled themselves in higher educational institutions looking to benefit from the new opportunities the system offered.
In short, this was the period in which capitalism delivered the best it can offer. This even led up to arguments that capitalism as a system has itself changed. Many argued that countercyclical state expenditure had made cycles and recessions events of the past, that the welfare state had restored a degree of equity to the system and the scourge of unemployment had been substantially addressed. To the extent that this was at least partly true during those years, it also meant that capital and its functionaries benefited less than they had done in the past from the incomes generated by the system.
It is clear from hindsight that these classes “deprived” of their undue share were merely biding their time given the weakness of the system during the interwar and war years. Starting from the 1970s they began pushing for a redistribution of income to be ensured through a fundamental transformation of the role of the state. It is that project of the capitalist elite that has been loosely termed neoliberalism.
Neoliberalism involves the use of the rhetoric of market fundamentalism, in which the market is presented as the most efficient mechanism for the functioning of the economic system to justify the unfettered functioning of private capital, both domestic and foreign. The role of the state as an agency for promoting growth with employment and for ensuring universal provision of various basic services, including health and education, and for protecting and improving the status of various disadvantaged groups is delegitimised and diluted. This, however, does not mean that the state has no role to play. Rather there is a concerted and often open effort to incentivise private activity by redistributing social wealth and incomes in favour of private capital. Segments of the state apparatus are converted into sites for primitive accumulation and revenues accruing to the state are curtailed because of reduced taxation of and increased transfers to the rich.
It should be clear that the success of this neoliberal project implies outcomes that are not just regressive in terms of income distribution but adverse from the point of view of reducing deprivation and advancing human development. For sometime this strategy appeared to be working. Riding on one bubble or the other, whether it be in the stock market or the housing markets, capitalism seemed to be in a position to convert fictitious capital in the form of liquidity infused by central banks to finance a credit-financed demand boom. It was when this unbridled creation of credit assets and the associated proliferation of risk showed itself to be unsustainable, that the process had to unravel leading to the crisis that triggered the Great Recession. What we are witnessing today is end of the era of neoliberal triumphalism.
The country that reflected starkly these tendencies was, of course, the United States. As all of you are aware, the attack on publicly funded and provided education is one aspect of this neoliberal onslaught. Not surprisingly, the United States revealed in most glaring form the implication of this trajectory for higher education. Since governments in countries like India seek to imitate this trajectory, it may be useful to focus on its principal features.
It is indeed true that the US has always had a combination of public and private higher educational institutions, which allowed it to achieve the highest participation in education at the tertiary level in the world. However, there were two features that were in the past important in defining this structure. The first was the dominance of public education. In the 1970s, around three-fourths of the 8.6 million students enrolled in higher educational institutions in the US were in publicly funded institutions. The second was the dominance of non-profit institutions even within the private sector. Almost the whole of the private system (the remaining 25 per cent of institutions) consisted of private non-profit institutions, with only 0.2 per cent being for-profit institutions.[i]
The period since the 1970s, especially the period characterised by the onset of neoliberal policies, saw a number of changes. First, was a gradual emphasis on lower quality education in the public sector. The share of “community colleges” that offer less-then bachelor’s degree certification or vocational education increased over time. As enrolment in higher education increased during the 1970s by more than 40 per cent, from 8.6 to 12.1 million, the share of students in community colleges increased from around one-quarter to one-third. This was presented as a way of increasing access to higher education at lower cost, though it did imply a sacrifice in quality that disadvantaged a growing number of students.
The second was a gradual deceleration or decline in the rate of growth of enrolment to 14 per cent in the 1980s and 11 per cent in the 1990s. Associated with this was a rise in the share in enrolment in the for-profit sector from 0.9 per cent in 1980 to 1.5 per cent in 1990 and 2.9 per cent in the end of the 1990s. 0nd then in the 2000s we have seen a spurt in private education. Enrolment has risen driven by the need for a degree to be employable,[ii] with a 25 per cent increase between 2000 and 2008. Simultaneously the share of the for-profit sector in rose dramatically from 2.9 to 7.7 per cent taking the number of students enrolled there from less than half a million to close to one-and-a-half million in 8 years.
Finally, the cost of higher education went up significantly. Between 1980 and 2008, the real tuition cost (adjusted for inflation) for a four-year undergraduate programme rose by 235 per cent in public institutions ad 179 per cent in private institutions. Even community colleges registered a 150 per cent increase. Since real media family income in the US rose only 15 per cent in the US because of rising inequality, a median-income family that had to pay 18 per cent of its income for education of one child in an average not-for-profit private institution had to outlay as much as 44 per cent in 2009. The net result is a growing reliance of debt to finance education. This is one damaging consequence of the decline in public funding for higher education.
The problem, as you all know, is not restricted to the US. As in all things neoliberal, most countries are increasingly learning from the United States. Consider the case of India. I hardly need to tell this audience, that higher educational facilities in this country are grossly inadequate. For example, the proportion of the population in the 18-23 age group accessing higher education stood averaged just 15 per cent across the country in 2009-10.[iii] What is more the ratio varied hugely across states from 9 per cent in Assam to 47.9 per cent in Delhi? The figure for marginalised and underprivileged sections like the Scheduled Castes and Scheduled Tribes was 11.1 and 10.3 per cent respectively. In terms of availability of educational facilities, there were many states where there were less than 5 colleges for every 100,000 population in the 18-23 age-group, and a large number where that figure stood at less than 10.
However, this shortage exists despite some expansion in higher educational facilities. Between 1990-91 and 2007-08 the number of colleges in the country rose from 4900 to 13400, the number of professional institutions from 900 to 6900 and the number of universities from 180 to 410 (Economic Survey). Part of the reason is because of private investment in education. The shift towards more private provision is reflected at all stages in education – but if anything, the move has been even sharper in higher education, and mostly concentrated in the past few years. In 2000-01 the share of government and private aided higher educational institutions stood at 33 and 42 per cent respectively, while that of unaided institutions stood at 25 per cent. These figures had changed to 25, 32 and 43 per cent respectively by 2005-06. Enrolment has been increasing steadily in higher education in the past two decades from 3.4 million in 1984-85 to 13.64 million in 2008-09 (UGC 2011).[iv] However if we look at the institutional affiliation of students, the share of government and private aided institutions in enrolment fell from 41 and 37 per cent respectively to 36 and 33 per cent, whereas that of unaided private institutions rose from 22 to 31 per cent. In the even in 2009, there were about 17.3 million students enrolled in various streams of higher education in India (MHRD 2011).
These are if anything underestimates of the current situation, since these numbers are likely to have excluded a large no of private institutions that do not offer certification reflecting recognition of their “degrees” by the government. However, there are a number of private institutions that have indeed been established with recognition. Over the 5 years ending March 2011, 81 private universities had been set up through various state Acts passed by the respective state legislatures across the country. Moreover, the UGC had legitimised some private investment in education by giving them deemed university status. As of 2011 there were 130 Deemed to be Universities in the country, both public and private. Based on the recommendations of the Radhakrishnan Commission a provision was included under section 3 in the University Grants Commission Act of 1956 that institutions which have unique and distinct character of their own could be deemed to be a university and enjoy the concomitant privileges without losing their distinctive character. Originally, this option was to be exercised only in the case of “institutions which for historical reasons or for any other circumstances are not universities, yet are doing work of high standard in specialised academic fields comparable to a university and the granting of the status of university would enable them to further contribute to the cause of higher education which would mutually enrich the institution and the university system.” In the 35 years between 1956 and 1990, only 29 institutions were granted the deemed university status.
However, the provision has been put to use more often in recent times to advance the neoliberal agenda, with even private institutions being deemed as universities. Further, since 2000, deemed university status has been granted even to de novo institutions, with no proven record. In the 15 years after 1990, 63 institutions were declared deemed universities. Since then another 40 or so institutions have been notified as deemed universities. Many of these are institutions which provide professional education or training of a vocational kind. What is more, certain state governments have been liberal in encouraging the establishment of private “universities”. Twenty-four of the 81 private universities established through state Acts had been set up in the State of Rajasthan alone.
This is indeed surprising. Obtaining and adopting the nomenclature “university” in India has its regulatory implications. In principle, the provision of higher educational services that delivers recognised “degrees” cannot be undertaken as a commercial activity. As per law, no educational service provider if recognised as a university by the University Grants Commission (UGC) or is offered recognition by organisations like the All India Council on Technical Education (AICTE) can operate on a “for-profit” basis. Surpluses can be generated based on fees charged, but those surpluses will have to be ploughed back into the institution.
Despite this constraint some “not-for-profit” private players may have chosen to enter the higher education area with charitable objectives, as they had done in the past. But the rush of private interests into formal higher education is indeed surprising if the no-profit principle prevails. This gives rise to the suspicion that there is a well-recognised move to change the rule so as to allow for profit making in the educational sector. It is of course true that while commercial activity in higher education (that is, for profit) is still illegal in India, many of these are actually profit-making institutions by another name. They charge relatively high fees and find ways to siphon out the surplus. However, those in the business for the long run are unlikely to be happy with these surreptitious routes to profit, especially if the investments they have chosen to make are large. So the private rush into higher education is perhaps indicative of the fact that the rules governing higher education are likely to change.
What seems to be the case is that as part of its neoliberal agenda the government is planning to change the rules using the need for access to high-quality, world-class education as the ruse. As you are aware there is a bill to be considered by the parliament titled the Foreign Educational Institutions (Regulation of Entry and Operations) Bill. What is the purpose of that bill? Per se, the law on foreign direct investment in India allows foreign educational providers to enter the country. The government, vide Press Note 2 (2000 Series) dated 11.2.2000 of the Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) has allowed FDI up to 100% on the automatic route in the Education Sector, subject to the sectoral rules/regulations as may be applicable. The policy, therefore, allows for commercial provision of educational services by foreigners and the repatriation of surpluses or “profits” earned through such activity.
The problem, however, is the “sectoral regulation” that does not permit universities and institutions offering recognized degrees (whether domestic or foreign) to function as “for profit” institutions. Further, according to the Consolidated FDI Policy (effective April 1, 2011) of the Government of India, FDI can be made in Indian companies, partnership firms, proprietary concerns, venture capital fund and trusts that are in the form of a venture capital fund. FDI in trusts (other than venture capital funds) and institutions established under the Societies Act is prohibited. This suggests that any foreign investor wanting to establish a recognized institution would have to do so through a “not-for-profit” company incorporated under section 25 of the Companies Act, 1956.
However, foreign universities and higher education establishments are unlikely to enter the country and establish a long-term, sustainable presence for purely altruistic reasons. If they do come to India, their interest would largely be to address the crisis of funding they face in their own countries. State funding there is on the decline. Demographic factors are reducing the share and size of the local college going population. And high costs and fees are keeping even many of these students out of the system. Earning revenue from abroad to sustain their activity is thus crucial. But for that need to be allowed to make and repatriate profits.
According to the answer to question No 389 raised in the Lok Sabha referred to earlier, starting with a miniscule some of $0.19 million, FDI in the education sector had amounted to a cumulative total of $448.97 million by September 2011. Much of this is capital clearly aimed at repatriating profit since they come through the “Mauritius window” in which the double taxation treaty exempts companies “resident” in Mauritius, even if headquartered elsewhere, from taxation in India. According to the Ministry of Commerce and Industry estimate quoted in the parliamentary answer to the question, more than 75 per cent of the cumulative investment had come through this route. India does seem to be emerging as a lucrative playing field for foreign investors in the educational sector.
Using this, the government is obviously trying to change the rules with its new bill. In some ways, what the Foreign Educational Institutions Bill does is that it seeks to bring certain of those foreign institutions within a separate regulatory framework, requiring institutions providing diplomas and degrees to register under a designated authority, making them subject to regulation and seeking under such regulation to ensure that the promoting institution has a proper pedigree, brings in adequate resources, employs quality faculty, offers adequate facilities, and reinvests all surpluses in the institution, which cannot function for profit. However, even though these are not considered for-profit institutions, the government is not seeking to regulate the fees they charge the students they take in, set parameters for compensation for faculty, or impose demands such as reservation of seats for disadvantaged sections as it does in its own institutions.
In fact, the Act has clauses that subvert its very intent. For example, it provides for the constitution of an Advisory Board that can exempt any foreign provider of all requirements imposed by the Act except the requirement of being a not-for-profit body. It also exempts institutions conducting any “certificate course” and awarding any qualification other than a degree or diploma to be exempt from most of the provisions of the Act, making them subject only to certain reporting requirements. This amounts to saying that if a foreign provider enters the country, reports its presence, and advertises and runs only such “certificate courses” (as opposed to courses offering degrees and recognised diplomas), it would have all the rights that many of the so-called “fly-by-night” operators exploit today.
By creating a separate regulatory bill for foreign institutions the government is clearly segmenting the higher education sector. Using that segmentation and the argument on the need to promote “world class” education in the country, it is likely, in time, to push for dilution of the not-for-profit criterion for the foreign segment. Once that is done a case to extend the principle to the domestic sector based on equity considerations can be pushed. Why discriminate against Indians?, would be the argument.
The case for dilution of the rules governing the foreign segment is also being strengthened by using the instruments that education is a service that comes under GATS. Some time back, the Commerce Ministry had put out a consultation paper (Department of Commerce n.d.) clearly aimed at building support for an Indian offer on education in the negotiations under the General Agreement on Trade in Services (GATS). The paper, while inviting opinions on a host of issues, was clearly inclined to offering foreign educational providers significant concessions that would facilitate their participation in Indian education. In its view: “Given that India’s public spending, GER (gross enrolment ratio) levels and private sector participation are low, even when compared to developing countries, there appears to be a case for improving the effectiveness of public spending and increasing the participation of private players, both domestic and foreign.” GATS is a trading agreement and therefore applies to those engaged in trade in services for profit. Providing such concession would force a fundamental transformation of the face of higher education in the country.
In their search for profit and its repatriation, foreign investors too are bound to make a case under the ongoing GATS negotiations to permit the easier entry of commercial educational providers with repatriation rights. This could result in a conflict between the decision to permit entry by foreign educational service providers and the terms of such entry, on the one hand, and the current understanding of the role institutions of higher education should play. Since GATS is a commercial agreement, India cannot make any commitment with regard to education under GATS, without rethinking the principles it has held and continues to hold on the educational front.
Put all of this together and both the motivation and the likely outcome of this bill is clear. If the intent is to attract new, more and better foreign investment in higher education to close the demand-supply gap, then the specific framework being chosen is likely to subvert its intent. If the idea is to regulate only those who have been coming and would come, then a separate law just for foreign operators as opposed to all non-state players is inexplicable. This suggests that the process underway is one of creating a window for foreign players and then changing the rules of the game in ways that persuade them to exploit the opportunity. And if the rules are changed for foreign players, they would have to be changed for private domestic players as well. The transition to a new regime would then be complete.
The implications of this should be clear. For the progressive student movement, the struggle for an accessible, high quality and democratic system of higher education is part of the effort to understand and undermine the onslaught of a predatory capitalism with a neoliberal ideology. That struggle is indeed underway in India and the SFI has been a leading force in that struggle. I am therefore proud to be here to salute you.
There are many who argue that the success of neoliberalism in India, with its high rate of growth and exports of knowledge-intensive services makes it a different case. I would, therefore, like to underline the fact that it is in some of the countries that neoliberal ideology has been most successful that the student movement against the neoliberal onslaught, especially in higher education, has been the strongest. I would like to draw attention to the case of Chile, the poster child of neoliberalism under the tutelage for long of the military that had destabilised the democratically elected government of President Salvador Allende.
For over a year now the students of Chile organised among other forces under the Student Confederation of Chile (CONFECH), a confederation of student unions and the University of Chile Student Federation (FECH) has been putting pressure on President Sebastian Pinera and his government to roll back the neoliberal transformation of the educational system in Chile. Their latest protest was on August 23, 2012 when multiple marches and confrontation with the police led to arrests of 113. But this was just the most recent episode in a series. Earlier, on June 28, 2012, for example, thousands of students marched along the main thoroughfare of Santiago to continue the protest that is remarkable for its persistence and continuing intensity. In April this year Education Minister Harald Beyer proposed a new university education funding plan that did not roll back privatization but promised to remove private banks from the educational loan process and decrease interest rates from six percent to two percent. The President of the University of Chile Student Federation (FECH) Gabriel Boric, reflecting the popular mood, rejected the proposal. “We don’t want to trade debt for debt, which is what the government is offering us,” he reportedly said.
Chile, which for many years was presented as a country that, because of neoliberal policies recommended by the Chicago Boys among others, had avoided the fate that the lost decade imposed on many countries in Latin America. That however is not true. The lost decade was because of neoliberalism and not because of the absence of it. In fact neoliberalism has meant the worst forms of inequality in Chile. The average income of the richest 10% of Chileans is higher than Norway’s, while that of the poorest 10% is similar to that of the population of an extremely poor country like the Ivory Coast in West Africa. This has affected higher education too. They’ll demand reform of the way Chile’s education system is funded. It’s one of the most privatized in the world, and perhaps the most expensive relative to income. Fewer than half of all Chilean children get a free high school education. As one analyst has noted: Under neoliberalism, “the promise of making college education available for all took the worst possible turn: an increase in enrollment was possible only to the degree to which students and their families went into debt. University fees in Chile are among the highest in the world and most of them are paid by credit.” In the event, “the relatively rich pay for the best basic education (elementary and high school) and benefit from the best universities (admitted on the basis of exam scores and/or purchasing power), while those with fewer resources and a mediocre basic education have to make substantial sacrifices to attend dubious institutions at a high cost. Thus, protest for a better education is a statement against social inequality.”
Though it is more than a year since the periodic and massive student protest began little has been achieve except for a reduction in interest rates and similar “reforms”. So the student movement itself is moving forward, going beyond just educational reform to other social and economic issues. According to one analyst: “ Taxation; healthcare; immigration. The list of grievances goes on. Chile’s student leaders have argued that inequities are everywhere in Chilean society–and that they’re all rooted in political atrophy.” Clearly the battle for a better, universally available and democratic educational system is a battle against neoliberalism itself.
[i] Geiger, Roger L and Donald E. Heller (2011), financial Trends in Higher Education: The United States, Working Paper No. 6, Center for the Study of Higher Education, The Pennsylvania State University.
[ii] Between 1970 and 2008, the share of all 18 to 24 year-olds who had graduated from high school and were enrolled in postsecondary education rose from 33 per cent to 47 per cent.
[iii] Government of India, Ministry of Human Resource Development, Answer to Lok Sabha question No. 4593 on 21 December 2011, available at http://22.214.171.124/LssNew/psearch/QResult15.aspx?qref=115207, accessed April 8 2012.
[iv] Estimates of the number of students in higher education tend to vary with source. Thus, the Census of India, 2001, estimated that 16.1 million students were enrolled in degree and equivalent programmes, while the National Sample Survey Organization placed the figure for higher education attendance in 2003-04 at 16.1 million, and the Ministry of Human resources in its Selected Educational Statistics provides a figure 10.4 million of that year. These figures are from the Ministry for Human Resources.