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Why governments shouldn't mess with private school fees
Imagine you are a young, idealistic person and you start a private school. You hire inspired teachers like yourself. The school does well and gets a nice reputation. Then a new law, the Right to Education Act (RTE) comes in 2010. It mandates parity with teacher salaries in government schools. You are forced to triple your teachers' salaries to Rs 25,000 per month. Even Doon School has to raise its salaries. The law also insists that 25% of your students must come from poor families. Although the government is expected to cover fees of the poor, it pays only a partial amount or none at all. Fees of the 75% students rise steeply to cover the costs of both factors. Soon, teacher salaries rise again to Rs 35,000 as mandated by the pay commission. Again, you have to raise fees.
Parents are angry now with constantly rising fees and 'fee control' becomes a political issue. The government steps in with a new law to control student fees. Gujarat, for example, caps the fee at Rs 1,250 per month for primary and Rs 2,300 for high schools. Tamil Nadu, Rajasthan, Punjab also have fee caps and Uttar Pradesh and Delhi are considering one. Your school's survival is threatened because fees will not cover your costs. You have three choices. You can either bribe the school inspector, who is happy to show you how to fudge your accounts; or you can severely cut back on the quality of your school programmes; or you close down. Ironically, you had supported the RTE law, which raised teacher salaries and gave the poor a chance for a good education. Since you are an honest person and won't compromise on quality, you are forced to close down your school.
Parents are devastated. The widespread clamour for fee control results in the closure of good schools. As a parent, your choice now is to send your child to a government school or an inferior private school. Most parents won't opt for a government school — although it offers free tuition, textbooks, uniforms, school bags, meals — because teachers are frequently absent or are not teaching. This is why even children of the poor have been abandoning government schools. Between 2011-15, enrolment in government schools fell by 1.1 crore and rose in private schools by 1.6 crore, as per government's DISE (District Information System for Education) data.
Capping fees is a form of price control, which used to be a ubiquitous feature of our socialist days under Nehru and Indira Gandhi. It only created huge shortages and a black economy. The Soviet Union also collapsed partly because of price controls. But we have come a long way since then. Hence, it is curious that this damaging idea has become a political issue. Only 18% of private schools charge fees higher than Rs 1,000 per month and 3.6% charge more than Rs 2,500 a month. So, where are the votes? Narendra Modi knows this and has privately expressed his reservations against fee caps. He realises that there is vigorous competition between private schools, especially in cities, and this has kept private schools fees low — the national median fee today is only Rs 417 per month. You don't need fee control because competition keeps the prices low. Moreover, state governments spend two to three times per child in state schools than the fee cap.
What then is the answer? It lies in the Self-Financed Independent Schools Act 2017 of Andhra Pradesh, which encourages private schools to open, gives them freedom of admission and fees, and removes corruption from board affiliation. To the Andhra model, we should add a requirement for extensive disclosure on each school's website — giving all fees, staff qualifications, details of infrastructure, strengths and weaknesses — everything that a parent wants to know before selecting a school. With competition, fee control becomes unnecessary.
Private schools have played a vital role in keeping India afloat in the past seventy years. Their alumni have filled the top ranks of professions, civil services and business. Their leadership has made India a world class software power. The government should focus on improving government schools rather than messing with the fees of private schools. As citizens, we should drop this sinister demand for fee control. Instead, let us sing along with Nat King Cole, who expresses nicely our attitude to private schools: 'Sometimes I love you, sometimes I hate you. But when I hate you, it's because I love you.'
Gurcharan Das, August 18th 2017