UGC vs shareholders

Updated: Mar 31 2007, 05:30am hrs
MUMBAI Universitys plan to tap the stock market is a nice twist in the normally sedate story of Indian academia. In principle, capital markets can be a good source of funds for educational institutions. The fact that very few universities, even in America, have used this model is no argument against the experiment. Many top universities of the world operate as private companies, with brand positions of impressive intellectual depth. It is this brand power that commands the loyalty of thosealumni and otherswho make liberal endowments to ensure that they perpetuate their dominance well into the future. In some ways, this function could be taken over by long-term investors, who, while seeking returns, would also monitor excellence.

A stock market listing should not shock anyone. Anybody who has seen the state of Indian universities, with their crumbling buildings littered with graffiti, their abysmal student-teacher ratio and their reality-challenging laboratories that should be research subjects in themselves, will acknowledge the need for such investment. While the details of the Mumbai University plan will take time to emerge, a listing could raise the profile of this 150-year-old institution sharply. By subjecting itself to the need to generate profits, the university would turn more responsive to the challenges of adapting curricula to current intellectual and commercial requirements. But the university would also need a degree of freedom to set attractive salary scales to attract top-flight faculty. Would the University Grants Commission (UGC) loosen its controls to allow this It would be marvelous if the UGC takes this case as an occasion to rewrite its rules. That funds are a crucial bottleneck for this sector is not in any doubt. The UGC budget for 2006-07 is just about Rs 2,000 crorefor 350 universities. As a result, the gross enrolment ratio for higher education in the country is languishing at 13%, compared with that of even middle-income countries at 36.5%. Shareholders may do a better job of ensuring quality educationand for much larger numbers.