Can Demonetization Clean Up Ailing Indian Education System?

Sarika Rana updated on : 17 Nov 2016

“Capitation” or “donation” has been regarded as an informal method for gaining admission in a private educational institution. Do you think Demonetization has turned the tables? Find out!

Can Demonetization Clean Up Ailing Indian Edu

Last week a major policy decision was announced by the Honorable Prime Minister of India. The after effects of the decision can still be felt if you happen to pass a bank branch or an ATM. The never ending queues outside a financial institution and discussion on the after-effects have become ubiquitous across the nation. A redistribution of national wealth has caused a bit of a chaos. Use of digital wallets & online payments has increased at least 10x resulting in credit/debit card machines taking several attempts to process a transaction.

Now, the bigger question – Can this move clean up our education system especially higher education?

National Institute of Public Finance and Policy in a report published in 2014 had stated the following facts beyond our comprehension-

  • India's private education sector is the second biggest generator of black money in the country;
  • The capitation fees paid to private colleges totaled about USD 1 bn in 2014;
  • Menace was significantly severe in private engineering & medical colleges;
  • ‘Low quality’ education provided in a number of private colleges but still parents are willing to buy a degree.

“Capitation” loosely referred to as “donation” has been regarded for decades as an informal method for gaining admission in a private educational institution. It is not only prevalent in higher education but also at the K-12 level where money is accepted in cash towards donation/charitable contribution. A very high percentage of this money, say about 90%, is colored and continues to retain its color even after exchanging hands.

In the informal world, the going rate for an MBBS seat would depend on the quality & ranking of the institute. With less than 1 doctor for every 1,000 citizens, India offers a long-term highly rewarding career for a doctor, quality is not that relevant. In case of engineering & management courses, the cash-for-seat limits are not so high.  Even in case of schools, purchasing a seat is a matter of few lakhs depending on a number of factors.

With the latest move, the government has cracked a whip on all black money coffers across the country. The very existence of black money is under threat and even though use of means & circumstances are under way to save as much black money as possible, its short-term impact will be substantial. For the next at least two academic years, we can expect a significant drop in instances & prices of cash-for-seat. Thus, a temporary solution to this menace has been achieved.

This also gives a breather to the education sector regulators to work with colleagues from the finance ministry to raise significant roadblocks in the capitation fees business. The nuisance has been in existence for too long and there is no better time or place to completely eradicate it. Last week announcements vindicate the government’s will to act against black money, ways and means for a permanent solution can always be developed under the law in a due course of time.

Article Written by- Vidhu Goyal, Co-Founder, WONK

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