Govt readies PPP model for secondary education
In a move that is sure to make the Left see red, the UPA government is working towards greater private sector participation in secondary education.
By ET Bureau |
NEW DELHI: In a move that is sure to make the Left see red, the UPA government is working towards greater private sector participation in secondary education. At present, private players can operate in the education sector only through trusts and societies as a not-for-profit activity.
This is a crucial aspect that a section of the UPA government would like to change���instead of not-for-profit activity the government is now looking at a reasonable rate of return.
To effect this change, the government has proposed a rather complex system, as outlined by the Planning Commission in the XI Plan document. What has been suggested is setting up 6,000 model schools, one each in every block in the country. Of these, 2,500 schools will be set up through the public-private partnership. The proposal is currently being considered by the expenditure finance committee.
The exact nature of this public-private partnership is yet to be finalised but broadly it is proposed that the central government will bear 33% of the cost while the state and private sectors contribute the rest. The private player will have to make the initial investment and the Centre will pay its share of the construction costs over a specified time with interest in equal installments.
A time period of 10 years and an interest rate of 6% have been suggested, but is yet to be finalised. The cost of operating the schools will be borne by state governments and private players. Additionally, the private partner will be able to charge "reasonable" fees for at least one-third of the seats, set aside as management quota. The government would like the private sector to cross-subsidise other students through these earnings.
The framework being considered by the government also suggests that assets will be owned jointly by the state government and the private partner for a specified period, after which the they will be transferred to the latter.
The modalities of the PPP are still being worked out and the private sector is expected to give in its recommendations by the mid-July. Not surprisingly, private players would argue for a higher percentage of management seats and better rate of return.
The government has cited scarcity of funds, competing demands on resources, demands of the FRBM Act for turning to the private sector for help. The decision has triggered off worries as the entry of the corporate sector has immense implications. The parliamentary standing committee on HRD has already expressed its reservations.
Ironically, the government claim of fund crunch comes at a time when it has access to extra funds accruing from the additional 1% education cess, half of which was to be used for secondary education. The additional education cess in the current year is expected to net a little more than Rs 8,000 crore.
This is a crucial aspect that a section of the UPA government would like to change���instead of not-for-profit activity the government is now looking at a reasonable rate of return.
To effect this change, the government has proposed a rather complex system, as outlined by the Planning Commission in the XI Plan document. What has been suggested is setting up 6,000 model schools, one each in every block in the country. Of these, 2,500 schools will be set up through the public-private partnership. The proposal is currently being considered by the expenditure finance committee.
The exact nature of this public-private partnership is yet to be finalised but broadly it is proposed that the central government will bear 33% of the cost while the state and private sectors contribute the rest. The private player will have to make the initial investment and the Centre will pay its share of the construction costs over a specified time with interest in equal installments.
A time period of 10 years and an interest rate of 6% have been suggested, but is yet to be finalised. The cost of operating the schools will be borne by state governments and private players. Additionally, the private partner will be able to charge "reasonable" fees for at least one-third of the seats, set aside as management quota. The government would like the private sector to cross-subsidise other students through these earnings.
The framework being considered by the government also suggests that assets will be owned jointly by the state government and the private partner for a specified period, after which the they will be transferred to the latter.
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Mr Vijay Thadani, who heads the CII committee on education said, "The government has said that it is open to exploring different models of PPP. One model could be that schools are set up by private trusts. The other being that government sets up the schools and then engages private players to be service providers." The modalities of the PPP are still being worked out and the private sector is expected to give in its recommendations by the mid-July. Not surprisingly, private players would argue for a higher percentage of management seats and better rate of return.
The government has cited scarcity of funds, competing demands on resources, demands of the FRBM Act for turning to the private sector for help. The decision has triggered off worries as the entry of the corporate sector has immense implications. The parliamentary standing committee on HRD has already expressed its reservations.
Ironically, the government claim of fund crunch comes at a time when it has access to extra funds accruing from the additional 1% education cess, half of which was to be used for secondary education. The additional education cess in the current year is expected to net a little more than Rs 8,000 crore.
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Planning Commission member for education Dr Bhalchandra Mungekar said that private sector involvement has become imperative in the current fund-strapped situation and sticking to the "not-for-profit" route may not yield results. "A reasonable rate of return is necessary, but the issue is what can be defined as reasonable. The fact is such a step will have implications for fees, inclusive education and will need to deal with the issue of how we view education whether as a commodity or a social good," he said. ADVERTISEMENT
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