[Answered]“Inclusiveness and equity are very important characteristics of a good public institution.” In light of this discuss the need and significance of subsidies in higher education. What are related concerns?

Recently, the proposed fees hike of residential hostels in Jawaharlal Nehru University (JNU) has sparked a widespread protest and controversy over subsidies in higher education.

Need of subsidy in higher education:

1. Almost more than a fifth of the population is below official poverty limits and 93% of the workforce is engaged in unorganised sector, subsidised education provides access to quality education to the poor.
2. Subsidies in education education generates a host of positive externalities such as health improvement, reduction in poverty, crime and population growth.
3. It directly or indirectly influences almost all facets of social life, and therefore should be viewed as a non-negotiable public good and by far the most potent social investment.

Advantages of Subsidies in Higher Education:

1. Inclusiveness and Equity: Subsidies in higher education have enabled the marginalised and socio-economically backward sections of the society to get access to quality higher education which has largely been the domain of socially dominant groups in the society.Inclusiveness and equity are very important characteristics of a good public institution.And, over the years, this has actually increased in public institutions and that is entirely because of subsidy.
2. Economic contribution: The subsidised education plays a significant role in building an economy as in the case of India. Students’ engaged with research and specialised education go on to become better contributors to the economy. Higher education boosts innovation, creative thinking and innovations.
3. Demographic Dividends: India is one of the youngest nations in the world comprising huge chunk of population in favourable demographic phase. However, this young populations educational and skill status is not aligned to the requirements of the market.Therefore, subsidies in higher education sector has a greater role to play in reaping the benefits of demographic dividends.
4. Social Mobility: Earlier, higher education used to be the exclusive preserve of elites, and other socially and economically backward classes were deprived of higher education.But due to the efforts made by the government (in the form of subsidies and other benefits) to make it within the reach of every social group, a large number of poor and the marginalised have to begun to express their aspirations for social mobility through access to higher public education institutions.
5. Human Capital: The country has developed a wide network of institutions like CSIR, IITs and Central Universities which provide quality subsidised education to the masses.These institutions have become the nucleus of providing trained man force in propelling research and development and economic growth in the country.Students of all sections of society from these institutions went on to occupy the higher positions in government in forms of engineers, doctors, bureaucrats etc.

Problem with Subsidies in Higher Education in India:

1. False beneficiaries: A World Bank study argued that the rich stood to gain more than the poor from public provision of services such as healthcare and education due to various factors. Despite free provisioning, availing of services entails private costs which the rich found easier to pay.
2. Do not guarantee quality education: Access without assured quality is no access. Also, there has been a lot of clamour that subsidies hampers meritocracy.
3. Does not guarantee an increase in incomes: An analysis of a cross-national data showed that, on average, education contributed much less to growth than would be expected in standard economic models.
4. Uneven distribution: There is considerable unevenness in the distribution of public finances. Student subsidies for premier institutions like the IITs and engineering colleges are incomparably higher than those for universities and colleges, particularly for liberal arts institutions.
5. Privatisation: Private institutions are generally not likely to be amenable to measures promoting access and equity. Therefore, a large number of private education institutions remains inaccessible to economy weaker sections.

Way Forward:

1. Technological improvement like Aadhaar, direct benefit transfer can be used to eliminate inclusion and exclusion errors.The third party verifications of beneficiary will help in eliminating the free riders.
2. University administrations should be encouraged to look for funds. To look for endowments, donations newer generation opportunities are emerging. Self-financing courses must be started to make both ends meet.
3. Public provisioning of higher education can also serve as an important tool in reducing inequality.
4. Below a certain income level, students can participate in higher education without payment of any fee and fee applicable for richer students.
5. If a person was born in the most backward 100 districts, then she can get deprivation points. This criteria can be used for subsidising, for charging fee and for admission purposes.
6. Rationalisation of fee structure according to the demand of programmes based on marketability, affordability and input cost and according to different income groups could pave the way for optimal utilisation of subsidies.
7. A proper regulatory mechanism should be placed in order to make private institutions in line with the government’s goal of making higher education accessible and affordable to vulnerable section.

 Education is one of those genuinely long-term businesses. A public effort is needed to frame a different management style, better autonomy and accountability. Subsidies can help in improving access to higher education and bridge socio-economic divides across communities in the country. However, these can be rationalise in order to reap optimum benefits.