Developing Education Services In India Economics Essay Example

higher education sector, which is thriving with support from the professional services sector and aims to enhance global higher education quality. The paper analyzes the effects of various aspects of the General Agreement on Trade in Services (GATS) on Indian higher education. It compares the current state with future strategies for global competitiveness and explores concerns and opportunities related to trading higher education services, including challenges faced by traditional institutions as well as private and foreign participants.

The aim of this paper is to propose strategies for enhancing higher education services in India, enabling them to effectively compete with global leaders in the education service industry. The key topics relevant to this subject include WTO, GATS, Higher Education, and Global Competitiveness.

Introduction

In the past, more emphasis was placed on agriculture and manufacturing sectors; however, technological advancements have made service sectors more significant. With a growth rate exceeding 9% and aspirations to double it in the future, India is primarily focusing on service sectors for its progress and expansion. Education plays a vital role in producing a skilled workforce that is crucial for competing globally.

India's GDP growth is primarily driven by the service sector, which includes exporting educational services and providing a skilled workforce. The growth rate of the service sector surpasses that of agriculture and manufacturing sectors. Given the increasing global business opportunities, the service sector has significant potential for faster growth in comparison to the overall economy.

The role of education plays a crucial part in shaping India's socioeconomic framework. While education is predominantly considered as a government activity, there has been an emergence of an additional education industry alongside formal education. This industry encompasses tutoring and

coaching classes, online education programs, distance learning, educational consulting, and domestic and international study programs.

The introduction of WTO-GATS has further incentivized businesses to invest in profit-oriented education practices. India's higher education sector faces various challenges and opportunities that require thorough discussion.

The following paragraph presents a concise and significant review of literature in order to identify the research gap and establish the scope and objectives of the study. The paper critically analyzes the global struggle of Indian higher education in relation to the General Agreement on Trade and Services (GATS).

Reevaluation of Literature

There have been limited studies conducted in the field of education, specifically higher education. The impact of post-liberalization and globalization policies has been significant in various interdisciplinary studies. Notable studies include Satish Y. Deodhar's (2001) research on GATS and Educational Services: "Issues for India's Response in WTO Negotiations" and Satish Y. Deodhar's (2002) "Managing Trade in Educational Services: Issues for India's Response in WTO Negotiations." These studies suggest that India's commitment to GATS in education has not been beneficial, but they also emphasize that without WTO commitments, India cannot achieve the desired growth rate, which indirectly benefits other nations. Documents and articles by Razib Ahmad (2003) on "10 reasons why India should allow FDI in education sector," Jane Knight (2003) on "The Observatory on Borderless Higher Education," Jane Knight (2003) on "GATS, Trade and Higher Education Perspective 2003-Where are we?," Mrinalini Shah (2004) on "Education Sector, Destination India: A New Trade in WTO Regime," and Samina Rafat and Shikha Sahai (2004) on "WTO-GATS Regime and Future of Higher Education in India" all discuss the globalization of higher education and unlocking opportunities for

the already globalized Indian service sectors. The service sector in India relies on its knowledge resources, which are acquired through the organized education system.Devesh Kapoor and Pratap Bhanu Mehta conducted a significant survey in 2004 on the topic of "Indian Higher Education Reform: From Half-Baked Socialism to Half-Baked Capitalism." They highlighted the limitations of the post-liberalization and globalization era in higher education.

The survey findings indicate that India has not made any commitments in the GATS negotiations for education. Khan AQ and SM Anas Iqbal's paper from 2005 compares public and private investment in higher education in India, highlighting the increasing private involvement. The Australian government's report on international education competitors also identifies India as a potential destination for Australian education services. Rupa Chanda's study on GATS and higher education services in India, as well as Shashi K Shrivastava's research on the Indian higher education system, share the view that India has a promising future in global competition under the GATS framework. Sanat Kaul's paper discusses the four modes of GATS and their implications for Indian education services, emphasizing the importance of negotiations for India's economic benefit.Agarwal's Pawan's (2006) survey on higher instruction in India demonstrates the importance of evaluating the current state of higher instruction in India. The survey encompasses various issues including FDI, GATS, WTO, and the privatization of the sector. The working paper on higher instruction recommends additional reforms to leverage the market by harnessing the potential of abundant knowledge resources and a skilled workforce.

Research Gap and Scope of the Study

The previous research on higher education in India has primarily centered around its future advantages under WTO commitments. However, these studies have mostly

approached the topic from a theoretical standpoint. In contrast, this study presents an analytical model that investigates the key aspects of higher education in India. Furthermore, given that India's higher education sector is still evolving, this study aims to explore the potential opportunities and challenges it faces for global competitiveness within the GATS environment. The research objectives are based on analyzing the present state of higher education in India and its implications following international commitments.

Aims of the Study

This study aims to achieve multiple goals, including evaluating the current state of higher education services in India during both pre- and post-liberalization government periods. It also seeks to examine the structure of Indian higher education system with a specific focus on private-public engagements, as well as assessing government intervention in facilitating and promoting future advancements in this field.

The purpose of this text is to examine the challenges and future opportunities in the higher education sector in India for strategic planning. It aims to conduct a SWOT analysis of Indian higher education's current state in terms of global competitiveness. Additionally, it seeks to justify the need for India to expand globally by comparing its higher education system with international standards.

Higher Education Services in India: A Bird's Eye View

Education in India is primarily handled by the government, but there has been significant growth in an additional education industry over the past decade that operates alongside our formal education system. The current university-industry scenario has created various avenues for students to pursue higher education through private tuition, coaching classes, distance education, online study programs, and educational consultancies offering courses both within India and abroad. The emergence of the education services

market as a profitable industry has been encouraged by phenomena like WTO-GATS, which have attracted entrepreneurs and businesses to invest in education (Satish Y. Deodhar, 2001). State budgets mainly fund a significant portion of educational expenses through recurrent expenditures. The Kothari Commission Report (1964) and the NPE (1986) recommended allocating 6% of GDP for education.

In recent years, the education sector in India has received an investment of approximately 3.7% of GDP, with 17% specifically allocated to primary education. Primary education receives around 50% to 55% of total education spending, while university and higher education receive about 11% to 12%. However, India faces challenges in maintaining high standards of education, especially in knowledge and technology fields.

India has also witnessed impressive growth in higher education. In the academic year 1950-51, colleges affiliated with 30 universities had a total enrollment of only 263,000 students across all disciplines.

Sanat Kaul (2006) reported that there were a total of 11 million pupils in Degree colleges and non-affiliated university-level establishments, which were affiliated to 230 universities by 2005. Additionally, over 6500 vocational establishments had approximately 10 million enrolled students. The registration rate was steadily increasing at a rate of 5.1% annually. However, engineering courses were only being pursued by 5% of Degree pupils, while the overall percentage for sciences stood at 20%. Notably, there was a considerable rise in demand for professional courses.

Education in India has experienced significant growth and success over the past decade. The sector has improved rapidly due to factors on both the supply side and demand side. Particularly, primary education has been greatly enhanced, leading to increased participation rates. Additionally, the rise in demand for education has created

investment opportunities beyond formal systems. To meet this need, many businesses have chosen to invest in educational institutions.

To transform India into a leading knowledge economy, it is crucial to maintain focus, commitment, and resources while also improving governance and service delivery. As more educational institutions are established, there is a greater demand for professionals; however, limited supply has resulted in the commercialization of higher education services.

The future outlook for higher education services in India appears promising in the era of post liberalization and globalization. Currently, India's economy is experiencing growth and there are approximately 140 million students pursuing higher education, which represents 10% of the global student population. It is expected that there will be a significant increase in the number of international students studying in India, creating various opportunities in the field of education services, particularly in the trade of higher education services for India. These opportunities will allow Indian institutions to establish their position without making full commitments. The current state of higher education in India shows consistent growth across all areas. However, to fully benefit from liberalization, India must meet necessary obligations and accept approved proposals from developed countries (Mrinalini Shah, 2004).

The analysis and investigation of private commitments in higher education is necessary in the current global fight in order to understand India's performance against global standards through a combination of private and public efforts. The WTO negotiation allows for the privatization of the sector and provides equal opportunities for the public, resulting in maximum chances for students in higher education. India had an incredible position in higher education during the ancient and medieval periods, with the cultural heritage of its ancient

education system gaining popularity worldwide. After Independence, Indian universities became a dependable source of cheap and quality education for students from third world countries, particularly Iraq, Iran, the Middle East, North and West Africa, and Central Asian countries.

Beginning: Reserve Bank of India Handbook of Statistics of Indian Economy ( Assorted Issues from 1991-2006 )

The Reserve Bank of India has released a handbook that contains statistical information about the Indian economy between the years 1991 and 2006. This handbook covers various aspects of the Indian economy during this time period.

Education Services in Post WTO-GATS Regime

The Government of India participated in WTO negotiations and made commitments in 1995 with the aim to promote economic growth, especially in developing countries. The WTO-GATS negotiations strive to establish a global framework for trade in services, aiming to expand and liberalize such trade. Education falls under the GATS classification system for services.

The flexibility of GATS commitments allows any state to make commitments in any sector of their choosing, without being forced to do so. This enables countries to utilize their competitive advantages and benefit from these commitments, while also addressing commercial interests and regulatory policies. In GATS, education services are further categorized into five parts: Primary, Secondary, Higher, Adult, and other education services. The education sector has the least number of commitments in GATS, with only 48 members as of August 2007. On the other hand, all member states have made commitments in the tourism sector, while the financial and business services sector has received the highest attention. The area of higher education has seen rapid changes, referring to post-secondary education at sub-degree and university-degree levels. GATS provides clear definitions for

services in four different ways, all of which are relevant to education services, particularly in higher education.

Mode 1: Cross Border Delivery: This mode is already being practiced in India without any discussion. Here, consumers do not have to travel; the services themselves cross the border. This can be achieved through the internet (e.g., online classes), distance education services, tele-systems, etc. It also includes the sale of paperback books and educational CDs or DVDs. Mode 2: Consumption Abroad: In this mode, the consumer or student travels to the country where the service is provided.

One example of this situation is an Indian student studying abroad at his own expenses. This approach impacts the advancement of technology and the migration of students across borders for higher education. Mode 3: Commercial Presence: In this approach, the service provider establishes their commercial presence across borders through various provisions such as franchises, off-campus programs, collaborations, and foreign direct investments (FDIs) in Indian institutions. India does not currently allow foreign higher education institutions to operate within its borders, but in order to compete with domestic educational institutions, India should consider permitting it.

Importing institutions should be developed to improve campus facilities. With the HRD Ministry considering allowing foreign universities to establish campuses in India, we may witness a rise in campuses of overseas universities in India. Mode 4: Movement of Natural Persons: This mode refers to the temporary movement of individuals across the country to provide educational services, such as foreign faculty and scholars teaching in India or Indian teachers teaching abroad under visitation agreements. For further discussions on trade services, Indian authorities should present their own proposals and preferred commitments that

are in their best interest instead of accepting proposals and commitments made by other countries. This will generate sufficient data related to trade for educational service providers and users.

Based on this, authorities have the ability to easily manage various sectors of educational services and also ensure critical observation of India's struggle.

Global Competitiveness in Higher Education: Niche for India

After 1991, India's knowledge resources have been growing rapidly, leading to the expansion of higher education. Globalization has made higher education recognized worldwide. India has achieved some of its highest targets, but there is still a large gap to be filled in key indicators of global competition such as R&D, hi-tech exports, etc.

The text highlights the need for India to address gaps and meet global standards by implementing planned policies for the development of higher education. Despite not yet reaching global standards, India can compete globally through structured programs, policies, and better utilization of knowledge resources. Tables and figures demonstrate the comparative analysis of the global competitiveness of higher education with selected global leaders in this field.

Prospects and Challenges of Indian Higher Education under GATS

India's vibrant knowledge economy benefits both the service sector and education sector, providing a strong foundation for Indian IT and ITES companies. Currently, India has the world's third-largest pool of technically and professionally trained workers. The demand for professionals and engineers educated in India extends globally, making them a key resource for global competitiveness in all areas of growth.

India's higher education policy from the 1950s focused on establishing excellent schools, especially in engineering and scientific fields, which has now proven to be highly successful. The

establishment of institutions like IITs, IIMs, Schools of Science, and Schools of Law, along with numerous advanced training and research facilities, has been widely recognized. Indian doctors educated domestically have been vital contributors to the British Medical Service for many decades. Indian scientists have also held important positions in research laboratories in the US and other developed countries. However, it was the IIT engineers who truly excelled during the dot.com boom of the 1990s, earning praise and recognition for India's competence abroad. Out of around 140,000 IIT graduates so far, approximately 40,000 have pursued opportunities in the US.

According to Sanat Kaul (2006), the Indian Institute of Technology alumni have been recognized for creating 150,000 jobs and $80 billion in market capitalization. It is also noted that investors often inquire if there is an Indian involved when a new IT company is launched. Furthermore, Resolution 227, sponsored by 55 US Members of the House of Representatives, honors the economic innovation attributed to these IIT alumni. India possesses abundant knowledge and expertise in off-shoring and manufacturing industries.

Indian fabrication sectors can become competitive in certain countries through skill upgrades. Technological advancements present India with a unique opportunity to utilize its human resources effectively. The movement of skilled labor and workers, as well as job opportunities in the IT/ITES sector (requiring 8.8 million people directly or indirectly by 2010), are crucial for the growth of service industries. It is necessary to evaluate the standards for accessing higher education services among both wealthy and poorer nations based on the views expressed by the WTO and GATS commitments.

In the competitive global landscape, it is important to emphasize the aim of commitments

in providing higher education to underprivileged individuals through scholarships based on merit. This is necessary in order to narrow the inequality gap. India is seeking to liberalize trade in educational services and make specific commitments in its proposal for dialogue. It is crucial for Indians to recognize that they are not compromising their rights and values that are essential to their national identity, cultural beliefs, and protection. There are various freedoms and measures available under GATS that can be effectively utilized to safeguard Indian interests.

Article II.1 introduces the Most Favored Nation (MFN) clause, stating that a state will treat another member state no less favorably than any other state. However, Article II.2 permits states to negotiate exceptions to this commitment, which must be specified in the commitment agendas. For example, India can provide special treatment to students from SAARC and NAM states without providing the same treatment to others, as long as this is mentioned in the commitment agendas. Article XII.1 allows states to take measures to control balance of payments (BOP) issues. This may include restrictions on payments and foreign exchange until the BOP situation improves. Currently, India does not face any BOP problems.

However, if it occurs in the future, India has the option to limit trade in educational services to prevent the outflow of foreign exchange from the country. Additionally, Article XIV allows actions to safeguard public ethics, maintain public order and national security, and prevent fraudulent practices. For example, if the Indian government believes that some educational material entering the country does not align with the morals and values of the nation, restrictions may be imposed to protect public ethics. In fact,

Article X also includes provisions for emergency precautionary measures (Sanat Kaul, 2006).

Suggestions and Decisions

India should support the US stance of including educational testing services in their commitments. However, India should advocate for gradual liberalization to accommodate its needs.

In order to effectively compete with foreign providers in the domestic market, and develop market intelligence for exporting our services, it will take approximately ten years to upgrade our testing services. India may also engage in various forms of trade in higher education. India should create a specific market for its knowledge programs. To compete with foreign institutions located in India, the infrastructure of our competing import institutions needs to be improved.

The upgrade of our priority institutions in terms of infrastructure and facilities requires almost a decade. This lengthy timeframe is estimated due to the poor state of current installations. Globalization has had a positive impact on national higher education institutions, as it drives higher education towards international engagement. The focus of the Indian education sector has shifted from the public sector to the private sector. Education has a vast global market in which students, teachers, and non-teaching employees are resources for generating profit.

India may negotiate with other states for their commercial presence in secondary instruction. Private high schools of CBSE criterion have received acknowledgment to be exported worldwide, and over 100 already exist in other states. Similarly, there are US schools in India and elsewhere primarily for non-resident US citizens. The global trade professional services are rapidly growing, therefore India should propose a specific commitment on the export of professional services under the trade mode 'movement of natural individuals'. This is crucial for the global recognition of

academic and professional qualifications.

Indian governments should request assistance from UNESCO and/or other international organizations to improve the country's educational infrastructure. This approach has been used in other WTO agreements, such as the Agreement on healthful and phytosanitary measures (SPS) and the Agreement on Technical Barriers to Trade (TBT). Additionally, this assistance should be provided in a structured and time-bound manner. The reason for this request is that developing countries like India will face significant difficulties in addressing various issues that may arise if commitments were to be immediately adhered to after reaching an agreement. In order to actively compete with developed countries and upgrade our facilities and infrastructure, developing countries should have a transition period of approximately ten years during which the full implementation of the agreement can take place (NIEPA 2001). India must make necessary changes to the existing system so that its higher education system can effectively confront the challenges posed by the global community.

Governments should create a comprehensive database containing information about different educational institutions. This database should include details about their registrations (both domestic and foreign), faculty numbers, financial sources, quality, and accreditations. Additionally, it is important to gather market intelligence about the education sector in other countries through our diplomatic attaches in Indian embassies abroad. We need to update our existing reputable educational testing services in order to compete with services like GRE, GMAT, and TOEFL. Testing services such as CAT, MAT, IIT-JEE, and others should be improved and modernized.

A commission needs to be established to suggest and implement upgrades. These upgrades will include improvements in the availability of testing services on a yearly basis, the use of computer-aided

and internet-based testing, and the acceptance of these tests by various academic institutions, including foreign ones. Additionally, an assessment must be conducted to determine if private providers can efficiently manage these services. According to Khadria (1999), out of the 12 aspects covered by the General Agreement on Trade in Services, education is the most important one for India. This is because India possesses vast knowledge and human resources. Unfortunately, education services are the least prioritized area within GATS.

In India, all four modes of GATS are currently being practiced without any further commitments. If India officially accepts them, it could be more beneficial as it would help convert the country's existing challenges into opportunities. There is immense potential for further growth in desired ways. Any area where the country has strength can be marketed cost-effectively. India possesses competent sectors known for their high quality and low cost, so there is no reason why this cannot be applied to educational services, particularly higher education.