33
CHAPTER IV TRENDS IN EDUCATIONAL FINANCES IN KERALA The preceding chapter presented an analysis of the trends in the pattern of funding higher education in both global and Indian contexts In this chapter, we propose to trace the changes in funding pattern of higher education in Kerala, the reasons for these changes and their implications. The purpose of this discussion is to place in context the newly introduced 'self financing' mode of financing professional education on a large scale. As in the previous chapter, we are relying largely on secondary data and studies made by earlier researchers. 4.1 Kerala's Unique Position The uniqueness of Kerala's development experience lies in the exceptional social development and quality of life in spite of low economic development. This is often referred to as the Kerala Model of the development which has become the topic of global discussion about development.

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CHAPTER IV

TRENDS IN EDUCATIONAL FINANCES IN KERALA

The preceding chapter presented an analysis of the trends in

the pattern of funding higher education in both global and Indian

contexts In this chapter, we propose to trace the changes in

funding pattern of higher education in Kerala, the reasons for these

changes and their implications. The purpose of this discussion is to

place in context the newly introduced 'self financing' mode of

financing professional education on a large scale. As in the

previous chapter, we are relying largely on secondary data and

studies made by earlier researchers.

4.1 Kerala's Unique Position

The uniqueness of Kerala's development experience lies in

the exceptional social development and quality of life in spite of

low economic development. This is often referred to as the Kerala

Model of the development which has become the topic of global

discussion about development.

Kerala 's achievements in education include near total

li teracy, free and universal primary education, low dropout rates at

the school level, easy accesses and gender equality. In these

respects Kerala is compared with some of the developed countries.

It is often acclaimed a s the 'Kerala Model' and some recommend

Keralization o f the whole education system i n India (Lewis, 1997) ' .

The nineteenth century initiatives by missionaries and

princely regimes o f Travancore and Cochin laid the foundation for

education in Kerala. The social reform movements that took place

accelerated the spread o f education. Large scale state funding of

education was an important factor behind state 's educational

development

But the state government today finds it very difficult t o

maintain the gains it has already made. The very success o f Kkrala

Model o f development in education has generated second generation

problems, the depth of which have not been fully studied. While the

demand for funds has been increasing, corresponding government 's

investment in social sectors like education and health has not been

increasing, partly because of fiscal cr is is .

Kera la ' s achievements in the field of education are well

known and very often a bright picture is drawn. The achievements

are definitely laudable. But at the same time, these achievements

should not allowed t o conceal some of the more serious deficiencies

and inefficiencies, The state lags behind in technical education and

research, It may be noted that Kerala's achievements in the

educational sector had been mostly in the less capital intensive

areas like school education and general higher education.

The educational system in Kerala developed in response t o

the demand created by social, political and religious groups.

General education dominated over technical education and therefore

the system got delinked with the production base of the state. The

higher education is not adapted to the needs o f Kerala's economy.

Restructuring, diversification and modernisation did not take place

due t o many reasons including f inancial . In the absence o f fresh

inputs, the academic programmes are getting obsolete and are

becoming incapable o f catering t o the requirements of the economy

in the modern context of knowledge intensive production and

services

Large quantum o f funds are required in Kerala for

diversification o f courses, improvement o f quality and enhancement

in the intake capacity o f technical education. While the demand for

more investment is on the increase, the allocation o f funds is on

the decrease partly due t o the fiscal cr is is o f the state government.

The government had been reducing the share o f social sectors in its

budgets Funds from central government and other funding agencies

including external agencies t o this sector are o n the decline. Cost

recovery performance is very poor. All these call for finding

alternative sources of f inance and implementation o f strict financial

discipline

Kerala lags behind in the field o f higher education not only in

qualitative terms but also in quantitative terms. The demand for

enrolment i n higher education is higher in Kerala due t o high

unemployment and the resultant low opportunity cost of higher

education it may be noted that the successive rounds o f National

Sample Survey have confirmed the highest incidence of

unemployment in Kerala among states. But there exists a wrong

impression that higher education in Kerala has expanded well .

Even the Ashok Mitra Commission (1999)' has observed "The

higher education system in Kerala has extensive reach". The

Commission has observed that 10 per cent o f those who enter school

enrol1 for University education and the total percentage students

entering higher education accounts for 1 5 per cent of the relevant

age group But the Commission's impression is not based o n facts.

The gross enrolment ratio in higher education in Kerala is

only 3 7 per cent of the relevant age group (18-24) population It t s

to be noted that the all India gross enrolment rat io in higher

educatton ts around 6 per cent In other words, the enrolment rattc

in Kerala is lower than the national average. It is important to note

that this ratio has come down in Kerala from 1972-73 when it was

5 . 9 percent (Tilak 2 0 0 0 ) ~ . Several other indicators also point t o the

fact that Kerala lags behind in higher education. The percentage o f

population with higher education was 3.9 percent in the state during

1995-1996 The national average for the same was 4 .2 percent. At

least, 15 states are ahead o f Kerala. O n this count Kerala is no

better than Uttar Pradesh ( Tilak 2 0 0 0 ) ~ .

Enrollment in Arts, Science and Commerce colleges in Kerala

is given in 'Table 4 1

Table 4.1 : ENROLMENT IN ARTS & SCIENCE COURSES IN

UNIVERSITIES OF KERALA University

Kerala M. G. Universi ty Calicut Kannur ~

Total Source Based on Economic Review 2000

Enrolment Degree . Post graduate

----l Total

49145 39194 43658 12888

144885

5271 4577 3663 1074

14585

54416 43771 47321 -

13962 159470

The total number o f degree and post graduate students in the

affiliating Universities comes t o 159470. Of the total under

graduate students number 1.45 lakhs and post graduates number

only 0 .15 lakhs.

The technical educational institutions especially engineering

institutions were few till recently. Their number remained almost

stagnant during the period 1970-71 to 1995-96. It was after 1993

that the number of engineering colleges started moving up and it

was due to the introduction of self financing institutions by

Universities, IHRDE, LBSCST, KSRTC etc. Given below is a table

showing enrollment in engineering colleges in Kerala

Table 4 .2 :

. 5798 8543

Source Based on Economic Review, 2000

ENROLMENT IN ENGINEERING COLLEGES IN KERALA

4.2 Fiscal crisis of Kerala and the declining public expenditure on education

Year

1997 1998

The fiscal crisis of Kerala is setting a limit to the States's

ability to finance public expenditure as in the past. This is evident

No, of Engineering Colleges

15 1 5

Annual Intake

4844 4844

from Table 4 3 The table shows the gravity of the fiscal crisis in

the state compared to all states

Table 4 . 3 MAJOR FISCAL INDICATORS FOR KERALA

Table 4 4 gives the share of education in the budgetary

Figures in percentage

expenditure of Kerala and All States,

Year 1990-95 1996-97 1997-98 1998-99RE 1999-2000BE

Table 4 . 4 SHARE OF EDUCATION, ART, CULTURE & SCIENTIFIC

3 . T o t a l Expenditure 1 2 7 . 4 1 2 4 . 1 1 2 2 . 2 1 22 .3 1 2 1 . 9 1 1 5 . 5 1 15 .0 1 5 16 .6 1 16 .3 a. Plan -. 1 10.6 1 8 2 d 6 . 9 1 5 . 4 1 6 . 2 1 5 .4 1 4 . 5 1 5 . 8 1 5 . 7 1 8 . 4 b. Non P l a n 1 3 2 . 5 1 3 0 . 7 1 2 7 . 0 ( 2 6 . 9 1 2 7 . 0 1 2 0 . 2 / 2 0 . 2 1 2 0 . 9 1 2 1 . 2 1 1 9 . 7

Source: Limits to Kerala Model of Developments, K.K.George,

Source: Finances of State Government 1998-99, R .B . I . Bulletin Feb. 1999

State Finances, a study of budgets of 1999-2000, R .B . I . Bulletin Jan

2000 Notes: 1. GFD Gross Fiscal Deficit. 2 GFD Exp. Gross Fiscal Deficit expenditure 3 RE-Revised Estimates 4. B E - Budget Estimates

.

CDS, Trivandrum 1999, p.82.

GFDJGFD EXPENDITURE KERALA

20.7 20.1 2 5 . 3 2 5 . 4 21 .6

REVENUE DEFICITIGFD ALL STATES

19.0 19.6 26 .3 28.5 26 .1

KERALA 44.0 41 .7 4 6 . 5 57 .6 67 .5

ALL STATES 24.6 43 .3 37 .0 5 3 . 8 27 .7

The table shows that a large share of the revenue expenditure

is on non plan account and is of a recurring nature. Most of the

allocation for education is spent on salaries, with the result that

little is left for current inputs, modernisation and restructuring.

Besides the share of capital expenditure is relatively low,

The table also shows that in recent years, the state

government has been reducing the relative share expenditure on

education The share of education in total expenditure has been

brought down from 27.4 per cent during the Fifth Five Year Plan t o

21.9 per cent during the Eighth Five Year Plan. The share of

education in plan expenditure has come down still more drastically

from an already low 10.6 per cent t o 6 .2 per cent. This leaves very

little funds for taking new initiatives and for spending on new

projects and schemes. During the nineties, the share of education in

Kerala's total plan expenditure has been lower than that of all

states The expenditure on education has shown one of the lowest

growth rates among states from 5'h plan onwards. The low growth

rate of 3 . 2 percent recorded during period 1974-1975 to 1984-1985

dipped to 1 1 percent during the subsequent period of 1985-1986 to

199 1 - 1992 (Prabhu, Seetha and ~ h a t e r j e e ) ~ .

The table on the relative share of higher education in total

expenditure on education is given below

Table 4.5 RELATIVE SHARE OF EXPENDITURE ON HIGHER EDUCATION

~ o u r c z a r i o u s Issues of Economic Review, z e r a l a State Planning Board, Trivandrum.

Kerala's relative share of higher education in total

expenditure on education was 14.8 percent during the period 1992-

93 It went up t o 16.1 percent in 1998-99. But it came down to 12 8

percent in 2000-2001. The share of expenditure on technical

education showed some improvement during the period.

4.3 Financial Crisis and centra l Funding Agencies.

Another reason for the financial crisis in Kerala's education

lies in the reduction in the flow of funds from central agencies,

based on the notion that the state is ahead of other states in

educational attainments. All Finance Commissions in the past have

failed t o provide adequately for the educational sector in Kerala.

As a result, Kerala had been receiving only negligible sums as

upgradation grants provided to this sector. The Planning

Commission, the central ministry for HRD and the external agencies

are also reducing their commitments to the state's educational

sector because of the state's better image (George 1 9 9 9 ) ~ .

4.4 Delinking Pre-Degree Course and its Financial Implications.

A special financial problem faced by Kerala in recent years

arises from its belated decision to delink pre-degree classes from

colleges and to shift them to schools. The task seems t o be quite

daunting New infrastructure has to be built in the schools to

accommodate nearly two lakh students. While vast infrastructural

facilities like buildings, laboratories, etc, are rendered surplus in

colleges New teachers are to be appointed in schools while there

will be surplus teachers in the colleges to be protected by the

government The immensity of the task faced by Kerala now can be

gauged from the fact that nearly Rs. 70 crores were required in the

first year itself to shift the pre-degree from college to school (State

Planning Board 1 9 9 7 ) ~

The de-linking of pre-degree courses from the colleges

provides a unique opportunity for expansion, modernisation1

diversification and vocationalisation of higher education. As a

result of de-linking, vast physical infrastructure facilities in the

form of buildings, libraries, laboratories e tc will be rendered

surplus in the colleges. Core faculty is also available. These

resources could be utilised for starting non-conventional courses, if

adequate funds are available. Additional inputs are required only

to supplement and complement the already existing facilities. But

the state government which is already facing resource constraints

finds it difficult to invest funds t o fully utilize these facilities. But

it is highly necessary to make this crucial investment in the long

term interest of the state. If further investment is not made, the

vast infrastructural facilities built at enormous cost and sacrifice

will be enfeebled and will go out of use.

The expenditure called for is estimated t o be around Rs. 241

crores (AKPCTA 1 9 9 1 ) ~ The l l t h Finance Commission was

requested by the AKPCTA to appreciate the potential links between

Kerala's educational development and i ts future economic

development and to give financial assitance t o Kerala t o meet this

special problem But the Finance Commission did not award any

assistance to Kerala t o meet this special problem of the state.

4.5 F inanc ia l C r i s i s of t h e Univers i t ies

The financial problems of Universities in Kerala and

elsewhere are similar to a large extent . There are many reasons for

crisis The changes in the rapidly globalising job markets and leap

in science and technology demand a through restructuring o f

academic programmes o f the Universities. Unless the reforms are

introduced, the Universi t ies may become obsolete and irrelevant.

So new generation courses and programmes in the frontier areas o f

science and technology have t o be organised All these call for

heavy capital investment. While the demand for funds is increasing

rapidly, there has been a squeeze on the resources available t o

Universities.

The expenditure side o f the University consists of staff

salaries, cost of equipments, laboratory, books, periodicals,

construction, maintenance etc. The source o f income o f Universities

can be divided into government sources and internal sources. The

development o f Universities in India i s a joint responsibility o f

s tate and federal governments. The government 's share, whether

state or federal, shows upward trend and the law o f increasing s ta te

act ivi t ies applies to University education a s well . The government 's

share in University f inances increased from one-third at the t ime o f

independence to nearly three-fourth within the next three decades.

The federal grants to the state Universities f low largely

through the University Grants Commission (UGC) Therefore state

governments and UGC can be treated as the most important sources

of revenue for the Sta te Universities The grants are of different

categories - maintenance grants and development grants The UGC

grants are made available to the Universities mainly for

development purposes The grants from the state government are

both for development and maintenance

There are other external sources of income for Universities.

They include Centeral Government agencies like All India Council

for Technical Education (AICTE), Council fo r Scientif ic and

Industrial Research (CSIR), Indian Council for Social Science

Research (ICSSR), Indian Council for Agricultural Research and

other research organisations.

Studies elsewhere show that the state government grants have

been inadequate (Nanjudappa 1976 and Pancahankhi 1977)'.

Generally, the grant-in-aid policies of the state government exhibit

lack of concern for balanced expansion o f University education in

the state As a result, there exist inter University inequalities in

financial provisioning by s ta te government Absence o f clear time

schedule for the state grants is another draw back. The

' insufficiency o f grants ' and their declining trends have been

revealed by Mathew (1980)1° who studied the f inances o f Kerala

University

We have noted in chapter I1 that the grant in aid policies o f

UGC are not designed t o work in a fair manner and there is a n

element o f uncertainty and ad-hocism' (Panchamukhi 1997)" There

is the lack of co-ordination between the state government, the UGC

and the Universities (Parekh 1970)''

The grant in-aid policies should have three object ives viz.,

supplementation, stimulation and equalisation (Panchamukhi

1977)" Grants should supplement the resources o f the University.

They should stimulate internal efficiency and should reduce inter-

university inequalities. None of these object ives are being met by

the present grants-in-aid system.

The expenditure of a University can be classified into

expenditure o n academic act ivi t ies and other act ivi t ies . T h e

proportion of academic and non academic expenditure shows

variat ions in many Universities and the general tendency is for the

non academic expenditure t o exceed o r equal the academic

expenditure

4.6 Cochin University of Science and Technology - A Case Study

For a detailed analaysis o f the f inances o f the University

system in Kerala, we have taken up a case study of Cochin

University of Science and Technology (CUSAT). The growth trend

in expenditure and receipts of the Cochin University o f Science and

Technology (CUSAT) are given below in Table 4 . 6

Table 4 . 6 ANNUAL GROWTH TRENDS IN EXPENDITURE AND

RECEIPTS OF CUSAT F~gures in Rs. Lakhs and indicate increase over previous year

Source: Based on High Power Expert Committee Report 1999 (CUSAT).

The table shows wide year t o year f luctuations in both

receipts and expenditure. For instance, the annual increase in

receipts was 1 3 per cent in 1995-96 whereas it was 25.6 per cent in

the subsequent year Fluctuations in both plan and non-plan

receipts have been noted. The growth in plan receipts during the

period 1992-1993 and 1995-96 was negative. As for the non-plan

receipts, they fluctuated from 3 . 5 per cent in 1993-94 t o 24 2 per

cent in 1996-97. The fluctuations are caused by the fluctuations in

grants from the UGC and the state government which do not follow

any formula. The uncertainities in the quantum and timing of funds

from the funding agencies make budget exercise in the University

rather difficult. The University's expenditure pattern also shows

erratic movements.

The long term trends in University revenue for the period

from 1971 to 1997 are shown in the Table 4 .7 below

Table 4.7 LONG TERM TREWS IN UNIVERSITY REVENUE 197 1- 1997

Source: Based on High Power Expert Committee Report 1999 (CUSAT).

(Percentage)

The long term trends in University Revenue show that there

is a steep decline in the share of UGC. But funding by other

Government of India agencies is increasing. But this increase is not

adequate to offset the decline in the share of UGC grants. Another

trend is the steep increase in the share of state government funding.

~ h e r k has been some increase in internal sources. Yet another trend

Year lnter nal Rev

GmUsFmmSt.te Ciovenmrnt

Orsnts from UGC Tdal Plan

Tdaf Otha Agen" CS

Tdal Nm- plan

is the decreasing share of plan receipts in the total receipts as also

in the state government grants.

The table 4 8 shows that the expenditure under the heads

salaries and allowances account for nearly half of the total

expenditure. The share of scholarships, fellowships and schemes

which a re directly benefiting the students is coming down

TABLE 4 8 SHARE OF MAJOR HEADS OF EXPENDITURE IN AGGREGATE

EXPENDITURE OF COCHIN UNIVERSITY (Exclud~ng Debt Heads)

Source Based on H~gh Power Expm Corntree Report 1999 (CUSAT)

4.7 Finance Management

Budget is by far the most important document of planning and

control. It is the document that spells out the plans, aspirations and

perspectives of a University. But of late, the importance of the

document has been diluted because the projections in the budget on

receipts and expenditure are not realistic. It often presents a rosy

picture and mislead the academic community and the general public.

Budgetary control has also become ineffective.

E T Mathew after studying the finances of Kerala University

came to the conclusion that the basic problem of that University

was that it d ~ d not have a proper planning machinery (Mathew,

1980) '~ He noted that the development plan o f the University is

mostly characterized by adhocism They are not based on any clear

perspectives of the development needs of the University education

The state also does not have a plan for University sector

In the context of severe budgetary squeeze faced by the

Univers i t~es , i t is necessary that strict management control is

enforced in the Universities. This is all the more important in the

context of the rising demand for higher cost recovery from students.

The cost has to be managed effectively before higher cost recovery

from students is initiated. "The society and the people will be all

the more happy to contribute and nourish the University, provided

the tax payer is offered a better explanation than currently offered

of what Universities accomplish with the resources made available"

(Public purse, Public Purpose (1992)) '~.

For bringing about strict expenditure control, it i s necessary

to have a close watch on each and every head and sub-head o f

expenditure This calls for a detailed work study a s well as an

organisational study Work studies had been conducted in CUSAT

in 1992 and 1998. But the suggestions made in the report have

neither been discussed nor implemented in the University. The

management techniques have to be employed to share the

equipments and libraries and to avoid duplication in purchases.

Efficient utilization of the scarce resources is as important as

generating additional resources. But this does not, at the moment

take place in the Universities in Kerala.

4.8 The College Finances

In the evolution of the college finances, four important

phases can be identified. They include (1) period prior to 1962 (2)

period from 1962 to 1972. (3) Period from 1972-1990 (4) the

period since 1991. During the period prior to 1962, the colleges

were largely self sustaining. The private colleges were run

privately in the strict sense. The fees collected were used for

payment of salaries and other expenses. The students had to bear a

good portion of the recurring cost of education. Staff salaries were

very low The salary range was between Rs 3 to Rs. 200, from the

sweeper to the Principal, during 1922-1923 in the Union Christian

College, Aluva (Mathew 1990) '~ . The tuition fee was Rs 112 for

Pre-University class and Rs. 200 for P.G. class during 1961-62.

The range of operations of the college was very small. The annual

budget outlay and financial operations of a college during 1958-59

was to the tune o f Rs. 2 lakhs. The period was characterized by low

enrolment, low receipt from tui t ion fee, low and errat ic payment of

salaries e tc

Another very important feature of the period is the surplus o f

fees collected over expenditure on salary o f staff. But this trend did

not last long and towards the 1960's, the management could not

meet even the expenditure o f salaries out of tuition fees . Part o f

the reason lies in the introduction of new UGC scales for teachers

in 1958 which increased the financial burden. The Central

government assistance was offered only up to 1961 The teachers

movement, lead by the All Kerala Private College Teachers

Association (AKPCTA) launched an agitation to ensure the

continuance o f the U.G.C. scale. The Grand-in-aid code o f 1962

was a direct result of the agitat ion. The managements were required

to execute an agreement and abide by the code. According t o the

agreement between the government and the private managements, a

sum of money was set apart by the state "with the object ive o f

maintaining, improving and extending higher secular education".

All major expenditure heads o f colleges were covered by teaching

grants, building grants, equipment grants e tc . A uniform pattern of

funding, based on norms, came into existence for the first time in

Kerala, with the introduction o f grant-in-aid code With this the

financial dependence of private colleges on government increased

several t lmes It was the beginning of public funding o f private

colleges

But the grant-in-aid code introduced in 1962 did not solve the

problems o f the management as well as the teachers. The teachers

felt that unless the government assumed responsibility o f payment

of salary directly, their r ights would not be protected in the hands

of the managements Consequently, Direct Payment Agreement

(DPA 1972)17 was signed between the government, the

managements and teachers ' organisations (AKPCTA). According t o

DPA, the educational agency should collect fees as per the rate

fixed by University which should be remitted in the s ta te t reasury.

Norms for admission o f students and statutory provisions for

appointment o f teachers were established. As per the agreement,

government agreed to disburse the salaries, pay contingency and

maintenance grants The direct payment imposed a heavy f inancial

burden o n the government. The introduction o f DPA has led t o an

increase in the number of colleges, as the expenditure was met

largely by the government . But there was no matching improvement

in the quality of higher education. With increased spending by

government there was gradual withdrawal o f private managements

from investment in their colleges.

The period between 1972 and 1990 is eventful, particularly

because the highest ever budget allocation of 3 8 . 7 per cent for

education was recorded during this period (1978-79). The highest

ever percentage of educational expenditure t o SDP was a lso

recorded during the same phase. During 1985-1986, the share o f

education in SDP reached 7.1 per cent . But from 1980s, it came

down, but almost maintained the 6 per cent mark. The period since

mid 1980's saw declining share o f education in both SDP and total

government expenditure. Consequently, financial crisis became

endemic The crisis has come at t ime when more inputs are

required t o modernise the infrastructure and t o restructure the

obsolete courses and curriculum. However, the government is not

able or is willing to invest further in higher education.

4.9 Cost recovery

Yet another reason for the financial crisis i n higher education

is the fee structure in the s ta te ' s Universities and colleges. The

fees have not undergone major revisions based either o n increase in

input costs, or students' capacity to pay. Successive governments

in Kerala over the last five decades have been competing with each

other to abolish fees or exempt more students from paying fees. The

latest example in Kerala is the abolition of fees for pre degree

courses in early 1990s.

The periodical non-revision of fees has enhanced the

government burden in the context of escalating cost of higher

education The tuition fee collected from arts and science colleges

was to the tune of Rs. 4 .75 crores during 1994 -1995 (Rs .1 .36

crores from government colleges and Rs.3 .38 from private

colleges) Fees which represented 17.8 percent of the total grants to

private colleges from the government in 1976-1977. represented

only 13 2 percent in 1984-86 (Mathew E T . 1 9 9 1 ) ' ~ . The tuition

fees cover only about 4.11 percent of the expenditure on

government colleges. I t is now only 2 . 5 percent of government

grants to private colleges. The fees collected by the three

Universities- Kerala, Calicut and M.G in 1993-1994 form only 6 .44

percent of the total income of the Universities. The fees covered

only 5 .9 percent of the state expenditure in professional colleges in

1994- 1995

Given below is a table showing comparative fee structure of

an unaided school in Ernakulam and regular engineering colleges.

\ \ - \

Table 4 9 COMPARISON OF SCHOOL FEES AND REGULAR'EWGINEERING - . -

COLLEGE FEES 1999-2000

Source Toc H School Ernakulam for School fee and MACE Kothamangalam for engineering fee.

From table 4 . 9 it is clear that even in the LKG the fees

collected from the students is more than that of a regular

engineering student. The plus two student pay nearly three times the

fees paid by a regular engineering student.

The financial crisis in higher education can be remedied

partly by better cost recovery methods. The question of cost

recovery in higher education has gained attention recently and

attempts are being made by Universities in Kerala in this direction.

The long term trends in University revenue between 1971 and 1997

in CUSAT show (Table 4.8) that the share of internal revenue which

was 8 . 1 percent in 1971-1980 period increased to 12.3 percent in

1996-1997 The trends in 1990s in CUSAT show that the internal

sources which contributed only 3 .3 percent of the total receipts in

1991 contributed to 12.3 percent towards the latter half o f the 1990s

(CUSAT High Power Committee 1999)19

The model o f subsidisation followed in the state relies mostly

on providing hidden subsidies t o students by charging low fees,

which cover only a very small share of the cost . By charging

uniformly low fees, unequals are treated equally. It subsidises the

poor and the rich al ike. Low level o f fees, ultimately lower the

quality of h ~ g h e r education.

4.10 Role o f Private Sector

Our earlier discussion showed that private colleges today are

largely funded by government but managed by the private agencies.

In the past, funds were raised from the public, mostly f rom the

members o f the community which sponsored the college and t o

some extent, from members o f other communities. In many

instances, the state government and the local authorities gave land

to the colleges as g i f t . Even individuals gave land for colleges as

gifts The fund raising practices adopted by the managements were

innovative (Ulpanna Pir ivu, offertory etc12' The communities and

their leaders considered this a s an investment for future generat ion

and they did s o wi th great sacrif ice and abnegation. The large

educational infrastructure which the state has today is the result o f

their investment But now, after a few decades, all these

infrastructural facilities have become obsolete and it is necessary

to modernize them for which a lot of resources are required. But

the investment required for updating and upgrading is negligible

when compared to the original investment. But the educational

agencies do not show as much interest and enthusiasm, as they used

to show in the past. But in the absence of fresh inputs either from

the government or private managements the system would get

enfeebled and become irrelevant.

As seen earlier the educational scene underwent a

transformation from the late 1960s. It was during this period that

the government control of education was implemented. In some

instances, this control might have led t o certain extreme positions.

This in turn might have led to the gradual withdrawal of many

educational agencies from the active investment in education. The

consequences of withdrawal are tragic both to the community and

society at large

E T Mathew has found that in certain years the share of

private managements in financing was as low as 0 .66% (1978-

79)and 0 .68% (1982-83) Mathew E.T ( 1 9 9 1 ) ~ ' . This mode of

privatisation of higher education in Kerala is only "Pseudo

privatisation" which is unlikely t o relieve the government from the

financial burden (Tilak 1 9 9 5 ) ~ ~ . The private colleges in Kerala a re

nothing but publicly funded but privately managed inst i tut ions.

This mode of f inancing has been described as public financing and

private production. (Mathew E T. 1996)"

4.11 Four Models of Financing

On the basis o f f inancing and production, Mathew has

conceived four different options. (1) Public financing and public

production (2) Public f inancing and private production ( 3 ) Private

financing and public production (4) Private financing and private

production (Mathew E . T 1996)14. The government colleges belong

to the first category and private colleges t o the second. The

financial implicat ions o f both categories are almost the same t o the

state exchequer. Government meet almost all expenses o f both

categories o f col leges . The terms and conditions of service of

teaching and non teaching staff in both private and government

colleges are substantially the same.

The third category i s public production and private f inancing.

The government agencies and Universities in Kerala have started

self financing o r cost sharing professional institutions. The

engineering colleges of CUSAT, M G University and IHRDE,

LBSCST are examples of public production totally financed by

private individuals i . e . the students and their parents. The fourth

category is private financing and private production. The entire

resources are raised by the agency concerned from the students,

public and other sources. These institutions are owned, managed,

and financed privately. There is growing importance t o the third

and fourth category of institutions in Kerala. The new method of

financing goes for 100 per cent private financing but only through

cost recovery. In this study, we propose to analyse whether the

new method is i n conformity with the well established academic

norms as also norms of social justice like accessibility and equity.

4.12 Self Financing Higher Education

The system of charging higher fees for a professional course

was started by Universities in Kerala in late 1980's. In 1989 it was

introduced by the IHRDE in its Model engineering college. But the

Model Engineering College received aid from the exchequer during

its formative stages The tuition fee charged was initially Rs.

30001- per semester but went up to Rs. 10000/- per year. This

college though charging much higher fees than the other

government owned and aided colleges was not recovering the entire

cost from students Mahatma Gandhi University started self

financing courses in pedagogical sciences, nursing, laboratory

technology, pharmacy, physiotherapy etc. In 1993 government of

Kerala sanctioned three self financing engineering colleges each

under the IHRDE, LBSCST and MES. This was followed by Kerala

State Road Transport Corporation (KSRTC), Cochin University of

Science and Technology (CUSAT) and Mahatma Gandhi

Un~versity Several arts and science colleges affiliated to Kerala,

MG and Calicut Universities started self financing courses in

computer and Electronics. Diploma courses are also run by private

institutions, lHRDE and LBSCST on self financing basis. The Co-

operative Academy has started recently a number of engineering

colleges in the self-financing sector. The school of pedagogical

sciences of Kerala, Calicut and MG Universities conduct B.Ed, and

M E d courses for thousands of students in the self financing

stream

A number of arguments have been put forward for and against

the 'self financing' system. It is argued that self financing is the

only practical solution to get out of the present financial crisis in

higher education. These institutions depend totally on resources

mobilised from students. The institution's or government's share in

the cost of such institutions is nil. They are not really 'self

financed' but 'students financed'. These institutions are run by

private educational agencies in neighboring states. But in Kerala

~t is mostly the government agencies and the Universities that have

taken the lead in start ing self financing engineering and other

colleges According t o one view, self financing institutions started

by government and Universities may lead to conflicts between their

regulatory and ownership roles. In the event of any such conflict, it

the regulatory role that is most likely t o suffer (George 1 9 9 5 ) ' ~

Another l ine of argument is that large number of s tudents and

parents have the capacity and willingness to pay high fees The

outflow of funds t o the self financing institutions in the

neighbouring states is of ten cited as another reason for starting self

financing colleges in Kerala.

Our review in th is chapter has shown that Kerala had made

astounding progress in education in the past. Both the government

and the private agencies had contributed to this development. But

both agencies are now slowly reducing their contr ibutions t o this

sector, leading to the spread o f 100 percent student financed

institutions According to Coombs "The priority a particular

society at taches t o education in comparison to other public goods

and services is most strongly influenced by that societies cultural

background and traditions, its present goals and aspirations, not

least of all the nature o f i t s political system and cl imate. With

other things being equal, some societ ies including some o f the

poorest will undoubtedly invest considerably more of their scares

resources in educat ion than other societies (Coombs, 1981) '~ .

Kerala was one such society in the past . It appears that Kerala

society is changing i t s t rack, may be due to the changes in factors

cited by Coombs

END NOTE

1 I.,ewis, John P , India 's Political E c o n ~ m y : ~ . G o v e r n a n c e and Reforms, Delhi: Oxford University Press, 1997.

2 Mitra, Asok Repor t of the Kerala Education Commission, Kerala Sastra Sahitya Parishad Kochi 24 January 1999

3 Tilak, J B .G . , "Higher Education and Development in Kerala" Working Paper N o . 5 . Center for Socio - Economic and Governmental Studies (CSES) Kochi (2000).

4 Tilak, J . B G . (20001, ibid

5 . Prabhu, Seetha and Chaterjee. , "Social Sector expenditure and Human Development A Study o f Indian State" Quoted in Economic and Political Weeklv, May 1994.

6 . George, K . K . , What is wrong with Kerala's Education System? CSES Working Paper No.3 Kochi: Centre for Socio Economic and Environmental Statistics, 1999.

7 State Planing Board. Report of the Task Force on Higher Education, T N J a y a c h a n d r a n [Chairman], Government Press Trivandrum, 1997.

8 All Kerala Private college Teachers Association (AKPCTA), "Facts of Kerala 's Education Backwardness" Paper presented to I llh Finance Commission on Special Central Assistance for the

Development of Education in Kerala. AKPCTA Office, Trivandrum 1999

9 . Nanjundappa, D.M. and Panchamukhi P.R., The Working o f University Finances. Sterling, New Delhi 1976.

lOMathew, E T . , University Finances in India. A case study of he Kerala University, Sterling, New Delhi. 1980.

11 Panchamukhi P R., Economics of University Finances. Basic Principles and Practices. Centre for Multidisaplinary Research, Dharwar, Karnataka, 1977.

12,Parekh, G . D . , (1970) "University Finances Problems and Procedures", Quest No. 64, pp 33-40,

13 Panchamukhi, P R , (1977) 0 p Cit

14 Mathew, E T , (1980) 0 p . Cit

15. Public Purse, Public Purpose, "Accountability and Autonomy in Canadas University sector" (Ed.) James. Cutt and Rodney Dobell. Institute for Reseachs on Public Policy IRPP, Canada 1992.

16Mathew E T . (1990) "Financing college education in the Private sector in Kerala", Economic and Political Weekly, April 1990.

17.Direct Payment Agreement, (DPA) 1972; Agreement signed in 1972 after a long struggle -The government and the private educational agencies signed a memorandum of understanding. Salaries of teaching and non teaching staff and other recurring expenditure would be met by the government. In return the colleges are bound to remit the tuition fee in the treasury. Admission of students regulated, 50 percent on merit, 20 percent SCIST followed by management quota and community quota etc. Appointment of teachers and non teaching staff based on statutory provisions. Also see Mathew E.T. (1990) "Financing college education in the Private sector in Kerala", Economic and Political W e e k l s April 1990.

lg.Mathew, E T . , "Financing Higher Education" Concept Publishing Company New Delhi 1991.

19 Cochin University of Science and Technology, Revort of the High Power Committee, A. Mohandas [chairman] Cochin: CUSAT, 1998.

20 Ulpanna Pirivu and Offertory, Nair Service Society (NSS) under the leadership of Mannathu Padmanabhan resorted to diffkrent techniques of fUnd raising One such method is known as ulpanna Pirivu- by which each household to donate the agricultural produce. These produce will be auctioned and the fund raised may be utilised for the building up of colleges. Christian management who utilised ulpanna Piriw and offeratory received during weekend prayer and perunnal (Festival) E.T. Mathew, Economic and Political W&, 1990

21 Mathew, E . T . , (1991) 0 p . Cit

22 Tilak, J B G , Cost and Financing of Education in India Discussion Paper Service UNDP Project, Centre for Development Studies, Trivandrum 1995

23 Mathew, E T , "Financial Aspects of Privatisation of higher Education" issues and options, Economic and Political Weekly, April 1996

24 Mathew, E T , (1996) 0 p Cit

2SGeorge, K .K . , Higher Education in Kerala-Financial Crisis, Causes and Options, Mavilikara, Kerala: Vichara, 1995.

26.Coombs, P H . , The World Crisis in Education The View From t k E i a h t i e s , Oxford University Press, New York, 1985.