People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 18

May 06, 2012



Newer and Newer Avenues for Profit Maximisation


THE CPI(M)’s 20th Congress `Resolution on Some Ideological Issues’ noted the process of creation of newer and newer avenues for profit maximisation as one of the new features of contemporary imperialism. This is contained in the trajectory of neo-liberal economic reforms  that the Indian ruling classes have also embraced during this period of  globalisation.  As a consequence, apart from the direct loot and privatisation of public assets, the policy framework itself is being so changed so as to facilitate private profit maximisation. 


This is seen today in the current pathological preoccupation of the Planning Commission with public-private-partnership (PPP) as the main model for economic growth.  Attracting private capital with opportunities for adequate profit to build public assets and infrastructure is necessary for India’s economic development.  But to place public assets for private profit maximisation is an entirely different  concept.  By doing this, the Planning Commission itself is planning the demise of economic planning in India. 


The PPP is being actively promoted in all fields of economic activity, notably in infrastructure and social services.  By now it is clear that all such PPP projects have resulted in the jacking up of user charges which effectively prevents the poor from using these facilities.  Delhi’s airport is most expensive for travelers in the world today.  Toll tax collection awarded to private players `in perpetuity’ has ruled out the aam admi from the highways.  Humongous amounts are being transferred to private players in education and health by the government for paying the fees and charges  for the mandatory  admissions from economically weaker sections.  Such amounts are literally subsidies to the private sector. Instead, if these amounts were used for public investments, then these could have created  larger employment and greater facilities for the aam admi.  The experience of Latin American countries, where PPP became the norm for all social amenities such as water supply, electricity etc, shows how the common people’s livelihood has been devastated. Now the PPP is being planned in agriculture  and a pilot  project has been initiated by the Maharashtra government under the  World Economic Forum’s “new agriculture initiative”. In a situation where 83 per cent of land holdings in India are marginal and small, the PPP proposals for aggregating production  and marketing will  have a devastating impact on the already beleaguered farmers who are being driven towards distress suicides.  Even here, the state will put in 50 per cent of the investment and allow the private corporates to avail of all the existing agricultural subsidies. 


Let us consider the case of education.  There are many Bills pending in the parliament which seek to legalise such private profit maximisation, including permitting foreign universities to open their branches in India. 


The Supreme Court has recently sanctioned the legality of the amendment to the constitution guaranteeing the Right to Education for all children between the age of 6 and 14.  It has thus, inter alia, mandated every private school to ensure at least 25 per cent enrolment from the economically weaker sections.  The caveat is that their fees will be subsidised by the government and this target is to be reached progressively during the next eight years.


The government is willing to pay upto Rs 19,000 per annum per student from the weaker sections to private schools. While the elite schools may be unhappy, the budget private schools would make a windfall profit. Already, according to the Annual Status of Education Report (ASER), private schools enrolment has sharply grown from 18.7 per cent in 2006 to 25.6 per cent in 2011. Studies across the states have shown that the per pupil expenditure in such schools is vastly below that of the government schools, while they charge as fees, anything between 5 to 12 times more. 


The Universal Right to Education, international experience shows, can never be achieved, without the wide network of state-run `neighbourhood schools’. This has laid the foundation of all developed countries, irrespective of their social systems. Apart from this, our Bill suffers from not providing for children below 6 years with the government refusing to attach Anganwadis with the primary schools.


Many of the pending Bills on higher education, however, instead seek to legalise this approach of government subsidising private education players. Take the case of Andhra Pradesh alone, it has 705 engineering colleges with the capacity of 3,04,200. However, only 2,08,936 qualified the entrance examination, leaving an excess capacity of 75,836. There are only 29 government colleges with a mere 5,276 seats, rest are private. With the government subsidising the fees of SC/ST/OBC students, the AP government has spent Rs 3,621 crores in the last fiscal alone compared with the budget of only Rs 1,087 crores for  technical education. If all eligible students are to be covered then Rs 7,500 crores is required. This is for one state alone. Consider the fact that to start a government college, the initial requirement is only Rs 50 lakhs. Instead of starting government colleges, such high subsidies to private colleges apart from providing them with land and loans etc only means the creation of new avenues for private profit-maximisation.


In addition, the government continues to drag its feet on legislating social control over such private business enterprises with regard to fee structure, syllabus, teachers and staff salaries etc. Salaries of teachers in un-aided budget private schools are, at least, 4 to 7 times lower.


The economic gains from the export and import of higher education is an essential element in the general agreement on trade and services of the World Trade Organisation. According to the Planning Commission, 88 per cent  of funds required for the approved expansion of higher education in the Eleventh Plan were to be generated through this PPP route. The Approach Paper to the Twelfth Five Year Plan, unambiguously states: “private initiatives in higher education, including viable and innovative PPP models, will therefore be actively promoted. The current ‘not-for-profit’ prescription in education sector, should be re-examined in a pragmatic manner.” Private participation in enlarging the coverage of mid-day meal schemes, fully funded by the government, is being encouraged and major part of the Rashtriya Madhyamik Shiksha Abhiyaan’s expansion is to take place through PPP.


Professor Tilak of  National University of Educational Planning and Administration has recently detailed all the measures that the XII Plan approach paper is proposing for legalising such large scale privatisation and commercialisation (Economic and Political Weekly, March 31, 2012). He says: One, it says, “Private sector growth in higher education (including technical) should be facilitated”.  How is this to be done?  The paper stresses “the need for removal of entry-barriers to private participation” in not only higher education, but also all levels of education.  Two, the paper argues that “innovative public-private partnerships should be explored and developed”.  Three, it states, “The `not-for-profit’ tag in higher education sector should, perhaps, be re-examined in a more pragmatic manner”. Four, it favours providing “deserving” private institutions with “access to public funds in the form of loans, financial aid for students and competitive funding for research”. Five, it states that institutions of higher education “should be encouraged to raise their own funds through various legitimate means”.   Six, it recommends considering the idea of creating large education hubs at four or five locations in the country, anchored by large public sector enterprises, possibly with the participation of the private sector and using funds from their allocations for corporate social responsibility.


He concludes by saying that higher education in independent India has moved  “from a system embedded in welfare statism… to a system based on a neo-liberal market philosophy. Sadly, the transition seems to be complete and dangerously irreversible.”  There are today 73 private universities and nearly 100 deemed universities compared to almost nil a decade ago. Private higher education today accounts for about four-fifths of enrolment in professional education and one-third overall. Contrast this with USA where less than one-fourth are enrolled in private institutions.


It is necessary to now recollect the Report of the 1948 Commission on University Education headed by Dr S Radhakrishnan which said: “as we claim to be a civilised people, we must regard the higher education of the rising generation as one of our principal concerns….  Many of these proposals will mean increased expenditure, but this increase, we are convinced is an investment for the democratic future of a free people.”  


Instead of investing in the future by improving state-run education, qualitatively and quantitatively, this UPA-II government is subsidising and promoting unregulated commercial educational shops. 

(May 2, 2012)