India! I dare you to be rich

Category Archive: Public policy

Although not a major system reform, a VERY good decision by Modi government re: RTI. Three cheers.

Narendra Modi government takes RTI to another level: All replies to be put online]

Need I say more?

There are FIVE RTI applications (prepared by me) lodged regarding Ramdev

I now hope that all five replies will go online very soon.

Either way, I'll put them online. 

Well done, Modi government.

Now someone needs to lodge an RTI regarding the Sugnyaben Commission. What has it investigated since it was first established?

Let's put as many RTIs to put all questions regarding Modi's involvement in the 2002 riots in the public domain. I've got a lot of questions. Happy for someone to write to me – I'll provide the material for various RTIs.


I am informed on FBDecision taken by UPA, being implemented by the new govt… Notification was made in 2013..

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Full text of Administrative Reforms Commission reports: not worth the paper they are written on.

I get deeply annoyed when someone tells me that "We have already got all the answers in our various Commission reports. All we need is to implement them." (I won't name anyone but this includes some very well known people in India).

We have a FUNDAMENTAL PROBLEM here that people must try to understand: Our "Commissions" have been manned by well meaning people with absolutely no idea of how incentives and accountability work. India would have done well to undertsand Arthashastra, instead. 

I've compiled the entire 15 reports of the Second Administrative Reforms Commission into a single Zip file (around 90MB). Download here

But most importantly, I've compiled the OCRd version of all 15 reports into a single Word document. Download it here. (There are some problems with OCRing these PDF versions, but this is the best I could do. We will need to wait for even better software. I use Omnipage 18 but that's not yet perfect.)

The main reason why I consider these reports not worth the paper they are written on, is that they don't even ONCE discuss the need to eliminate the IAS and other tenured services. There is nothing here about contractual appointments and accountability.

These reports therefore qualify as garbage. Any first year university student can assemble these longwinded essays that mean nothing.

What we need – first and foremost – is an ACCOUNTABLE SYSTEM of governance. That's what we don't have.

And that's rpecisely what the SKC agenda aims to deliver.

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Streamlined draft religious freedom policy for SKC agenda – for further comment

Here's a slightly streamlined religious freedom policy – for comment.


Every person must have the freedom to seek the truth, form beliefs and live according to the dictates of their conscience —whether at home, in worship, or at work. Indians should be free to care for the poor, heal the sick and serve their communities in accordance with the faith without unnecessary government interference. The right to live, work and worship according to one’s faith is a foundational freedom.

The government should not infringe on the free exercise of religion. The state and religion are different domains, with entirely different purposes. Religious belief is not a matter for government policy.Under no circumstances should the state make any law about or against religion. No religious activity can be opposed by the state unless it trespasses other’s liberties. This does not mean the state must be secular – a word with often unclear meaning. We require the state to be non-denominational, tasked with a job entirely different to that of religion.

Debates among different religions (conducted in a non-violent environment) are a natural part of free society, but the government – a servant of the people with limited obligations – has no business to recognise any religion nor comment on the merits of the content of any religion.

Some claims based on religion can provoke or lead to violence. A government must come down heavily on all advocacy or use of violence, irrespective of the basis of such advocacy.

The government must be ‘religion-blind’, ‘caste-blind’, ‘tribe-blind’, ‘language-blind’. A government has therefore no cause to recognise ‘religious minorities’. If everyone has equal freedom, ‘minority’ rights are not needed. However, until the rule of law is fully established in India, we will preserve Articles 29 and 30 of the Constitution.

We recognise that in India even greetings can take on a religious connotation. Many official events open by breaking a coconut or lighting earthen lamps. Guests may have tika applied or welcomed with garlands. Many such practices are cultural and do not involve religious implications. To avoid confusion, where any party elected representative attends a religious event, he or she will scrupulously abjure use any official title and speak as a private individual. No costs can be charged to taxpayers for attending such an event.

Religions freedom

Flowing from the above strict separation between religion and the state, the state must not interfere in people’s religious beliefs and affairs. Religious freedom is a fundamental freedom, a matter of fundamental choice. We can enjoy our religious freedom only by giving others similar freedom. This means tolerating all religious beliefs (and accommodating them in good faith, to the extent possible).

No state funding of religious institutions or activities

Following from the principle of separation, a government must not financially support religious activities. For instance, subsidies for Durga Puja on grounds that these increase tourism are not admissible expenditures, since they involve funding a particular religion. Similarly, subsidies for religious pilgrimages such as for the Haj or temple management by government functionaries is not acceptable. Government is often asked to step in where a temple’s organisation becomes defunct or temple property reverts to the state. We will develop a system to auction such property to avoid the government getting involved in any religious activity.

No freedom of religious institutions to encroach on public land

Religious freedom does not, however, give anyone a right to encroach on public land, harbour criminals and terrorists, harass or threaten those carrying on civilized discourse, or otherwise create public nuisance such as by feeding stray animals, fouling rivers and ponds, or disturbing the peace by blaring loudspeakers at unseemly hours.

We will ensure that no religious structure encroaches public land. Any structures will be respectfully removed and handed over to suitable religious organisations whereupon these structures can be rehabilitated in appropriate private property.

Policy regarding conversion

Religious freedom, like all other freedoms, must be accompanied by matching accountability. Although freedom of speech includes the right to preach and convert others, it must be done through legitimate persuasion methods. We oppose attempts to convert people to different religions through coercion, bribes, or misleading conduct. This does not mean creating any law in this regard, but encouraging religious organisations to agree a self-regulatory code of practice that establishes minimum standards for such activity. We will repeal and/or declare unconstitutional any law that prevents conversion, such as by ‘force, allurement, inducement or fraud’, while leaving enormous discretion with the authorities for interpreting such terms. Only a self-regulatory regime can deal with the sensitivity and complexity of such matters, while preserving the freedom of religion of all Indians.

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Streamlined draft agriculture policy for SKC agenda – for further comment

Further re-drafting, for comment. This one is about agriculture. I've taken existing material and refined it. Please provide thoughts/comments asap. This will be continuously improved over the next few years.

NOTE: I can't emphasise enough that any attempt to implement reforms outlined below will fail (and even backfire) without prior governance systems reforms.


Farmers are some of the most skilled citizens of India who are being held back by a regressive regime that blocks their growth at each step. Food security and costs are undoubtedly a major area of concern, but shackling agriculture is not the solution. India is blessed with the world’s largest irrigated area and perhaps some of the most fertile lands. We believe that India can, by unshackling agriculture, supply not only its domestic needs but to the rest of the world. Sadly, existing policies curb farmers’ freedoms, distorting incentives, lead to low agricultural productivity and significant volatility in production.

Our policies have also turned the terms of trade against agriculture through a ban on exports, on dumping from abroad, and on restrictions on the movement, storage and processing of agricultural commodities. Coercively low agricultural prices (often irrationally volatile) have impoverished farmers, resulting in rural poverty, indebtedness and unemployment.

Excessive government control and restrictions on the freedom of farmers have resulted in negative subsidies (a drain from famers to cities) and barriers in access to technology. The Indian farmer does not get the chance to prove himself. The fact that the Aggregate Measurement of Support (AMS) was confirmed to be negative is substantial proof of the built-in animus against farmers. Farmers have become heavily indebted. Agriculture has become a losing vocation. This has led farmers to prematurely leave the farm. We need orderly structural change, not policies that micro-manage agriculture on behalf of farmers and create massive distortions in their incentives.

Our policies have led to the declining productivity of inputs, excessive ground water withdrawal, poor soil fertility, insufficient use of farm-yard manure, rapidly declining agro-biodiversity and insufficient use of technologies are key challenges. There is almost no farm machinery in India that uses electronic sensors or control systems. Green houses are not adequately used. This leads to severe inefficiency in use of existing resources.

On the other hand we have subsidies which do much greater harm than good:

  • subsidised power leads to excessive groundwater use, instead of creating incentives to use water saving technologies such as drip irrigation and water harvesting. Crop production has shifted towards water hungry crops. Bajra and maize were extensively grown in north India in the past, but with power subsidy, wheat and rice are now the main crops, severely depleting the water table;
  • ultimately it is citizens who pay for these subsidies, as governments never produce any wealth;
  • most subsidies end up in the pockets of the rich (e.g. companies that produce fertilisers, particularly urea; the politicians and the bureaucrats involved in their distribution). Low fertiliser prices have also led to smuggling of Indian fertiliser to neighbouring countries; and
  • the subsidies create inflation through deficit financing, which erodes the value of the rupee in the pocket of the farmers.

Inadequacy of the M.S. Swaminathan report

We have concerns about the report of the National Farm Commission under the chairmanship of Dr. M. S. Swaminathan. We believe its recommendations are likely to enhance farmer dependence on subsidies and create new and ineffective bureaucratic programs, instead of liberating the agriculture industry from the stranglehold of government. We believe the intent of the report is best achieved through market-based reforms.

A market-based agriculture policy

While agriculture is a crucially important sector for the country, there is a very limited role for government to play in this sector, largely related to light-handed regulation for conservation of biodiversity, the water table and the environment; and regulation of private enterprises engaged in logistics, crop insurance and other support. The government and citizens should recognize and honour farmers by empowering and liberating from shackles of the government, letting them compete in the open market. This will motivate farmers to adopt modern technology and to innovate.

We will remove all restrictions on the production, movement, and pricing of agricultural inputs; and restrictions on post-harvest treatment including marketing and exports. Such market-based reforms of agriculture will ensure that hundreds of millions of farmers get a new lease of life, being supported by large private market investments in logistics chains.

Freedom to produce and trade

We will ensure untrammelled freedom of access to market and technology to farmers. Self-sufficiency is not the way to achieve food security. In a global market, the farmer will do best through free trade in food products. The market offers in-built incentives for productivity and efficiency:

  • the free market looks ahead (futures markets) and even stores food for emergencies. Any extreme shortfall will usually be met by the market through timely imports;
  • access to the global food market will ensure low food prices through imports from the more productive nations; and
  • the market will keep farmers on their toes, motivating them to be even more competitive and innovative. All progress is underpinned by competition, innovation and productivity.

We will ensure a predictable export-import regime that allows farmers to trade their products globally, without any exception. Mill-owning lobbies often fund politicians to block exports, such as cotton exports. This leads to a ‘switch on, switch off’ export policy which harms farmer and brings India into disrepute. Indian businesses should survive on open competition and quality, not on lobbying.

All unnecessary regulatory restrictions on the farm sector will be removed, such as rules about the minimum distance between farm and mills.

One of the great opportunities for Indian agriculture comes through the increasing wealth of China, particularly with its increased demand for meat. We will regulate meat processing in a human and hygienic way, so farmers can take advantage of the many international export opportunities in this sector.

Strong land rights and responsive land market

Over and above the strong emphasis on land records and corruption-free land system, we will ensure free entry into and exit from the agricultural vocation.

  • A farmer will have the right to dispose his land to anyone at any price without unnecessary intervention by the government. There is one aspect of land use that is of some concern: the tendency for fertile land to be converted into urban use land. We believe that market forces should generally determine land use and that increasing productivity can potentially offset some of the loss of agricultural land, but urbanisation is best undertaken on infertile land. Where market forces seek the conversion of fertile land to non-agricultural use, we will clarify the conditions for such transfer and introduce checks and balances such as public consultation, supply of agricultural offsets (i.e. alternative land suitable for agriculture) and other such mechanisms to stop the rapid depletion of agricultural land.
  • Ceilings on land are inconsistent with liberty and free enterprise, and lead to enormous corruption and cheating. All land ceiling laws will be repealed.
  • We will facilitate voluntary consolidation of land through an ongoing land exchange process. This exchange will enable mutual land transfers where participants decide to exchange ownership. This will significantly reduce barriers to productivity.

Ending MSP and price deregulation in three years

The minimum support price (MSP) system has created massive distortions, such as by encouraging rice crops in water-scarce Punjab, and has destroyed the entrepreneurial dynamism of the Indian farmer.

Like with other industries, the government should focus on infrastructure provision for agriculture and development of well-regulated markets, not on regulating prices. As market signals are freely transmitted to farmers, they will seek the most competitive yield. We will deregulate prices for all agricultural produce, while retaining a floor price in selected cases during a phase-out period (of around three years).

Phasing out of government loans

Without waiving any government loans to farmers, we will impose a moratorium on any coercive recoveries. Instead we will consider options to sell such loans to the private market, with conditionalities on how these loans are to be recovered. No new loans will be issued by the government to the agriculture sector; instead well-regulated private loan markets will be encouraged.

Deeper markets to serve the rural sector

We will encourage well-regulated markets in a range of services for the rural sector, such as:

  • private markets to insure crops. Through honest disclosure, Indian farmers will get the opportunity to avoid significant loss from unforseen contingencies;
  • private information networks that offer internet access to villages; and
  • private laboratory networks for soil testing and certification of produce.

Cooperative farming

More responsive cooperative farming regulation will be introduced, and cooperative department officials firmly prevented from undertaking corrupt, whimsical actions. This will ensure that farmers can organise and seek professional management inputs to facilitate agro-processing, thereby enhancing their incomes.

Subsidies and unnecessary interventions phased out

We will phase out all agricultural subsidies including irrigation (water) and electricity subsidies.

We will phase out Agricultural Produce Marketing Committees (APMCs) which function as wholesaler cartels in mandis. Some of this reform has already been initiated by the Modi government. Opening markets will allow traders and farmers to buy and sell freely, making India a national market. By liberating the market, we expect FDI in retail and private competition to facilitate cold-chains. We expect large retailers to directly purchase produce from farmers to minimise the rotting of perishable goods. This will increase returns to farmers and lower prices to consumers.

We will phase out the Food Corporation of India (FCI) and substitute it by market based, private enterprise competitive marketing and warehousing networks.

The Essential Commodities Act will be repealed.

Finally, as soon as the direct anti-poverty programme has been rolled out, the Public Distribution system (PDS) supported by compulsory procurement will be repealed.

Organic farming not to be supported by government

Excessive use of pesticides is harmful to humans and wildlife. As mentioned earlier, we will tightly regulate the use of pesticides. However, there is no nutritional difference between fertiliser-pesticide grown crops and organic crops. We do not see any need to support the organic farming sector. There is a growing demand for organic produce and we have no issues with such food being sold, subject to honest disclosure of the source.

Genetically modified crops allowed under rigorous regulatory regime

It is inappropriate to prevent India from benefitting from modern science. However, any genuine concerns should be identified and analysed on evidence. In principle, we support genetically modified organisms (GMO) wherever proven safe through a strong regulatory framework.

For instance, Bt cotton doubled India’s cotton output in five years and made us the world’s largest exporter. But in November 2009, Monsanto scientists found the pink bollworm had become resistant to the first generation Bt cotton in parts of Gujarat. Monsanto responded by introducing a second generation cotton with multiple Bt proteins, which was rapidly adopted. Bollworm resistance to first generation Bt cotton was also identified in Australia, China, Spain and the United States.

The use of GMO imposes a duty of care on suppliers to educate and monitor farmers. Professor AK Gupta of IIM Ahmedabad notes that he has not come across a single Bt cotton field with refugia (i.e., non-Bt cotton rows on the border). The resistance to Bt gene is an obvious consequence.

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Streamlined draft health policy for SKC agenda – for further comment

I've tried to streamline the draft contents of the SKC agenda health policy. I'll further edit for clarity, but at the moment I'm seeking comments on the content.


Ensuring emergency health for all and basic health for the poor

A free citizen is responsible for his own health and of his family. Health is a usual part of living and except in a few cases, no extra effort is called for to equalize the playing field. People should meet the costs of their visits to doctors and medication from their own savings or through insurance. There is no basis for other taxpayers to subsidise the reasonably well-off or the rich.

To more clearly identify the role of government in this matter, health care can be split into three parts: (1) basic health and elective surgery; (2) emergency hospitalization; and (3) general programs including vaccination against infectious disease, general programs to reduce infant mortality and promote public and women’s health.

1. Basic health and elective surgery limited to the poor

For the poor, health care becomes part of the requirements of reasonable equality of opportunity.  It is not justifiable to argue for universal basic health care and elective surgery. Public policy in this area has to be particularly mindful of moral hazard. Free support at taxpayer expense can lead to people being less responsible in managing their own health and some people going on unnecessary visits to doctors.

However, those in extreme poverty cannot afford such basic care or elective surgery. The poverty line for purposes of negative income tax would include (as voucher) a premium for basic health insurance that covers such requirements. It is possible someone's income falls to zero but they are sitting on massive assets. That won't qualify them for the health care paid for by the state. They must sell down their assets first to pay their costs and only after their assets also reach below a minimum level, will they become eligible for state care.

Being a large purchaser the government will aim to get such coverage at the lowest possible prices from the private health insurance sector. And we will ensure that the poor are automatically enrolled for such coverage upon registration for the negative income tax regime.

Some people choose to self-insure. They would have the assurance that should their expenses become catastrophically high, the general social insurance scheme for the poor will be activated for them.

2. Universal emergency care and major hospitalization

For major medical matters, things are different.  Ideally, each citizen should either take private insurance or self-insure for major health contingencies. However, this does not always work. People who have not insured but turn up badly sick or injured (as in a traffic accident) on the doorsteps of a hospital cannot be turned away. Even fully insured persons could be injured in a traffic accident, requiring emergency care without available proof of identity or insurance.

We will insure universally for major hospitalisation and emergency care through the tax system. Citizens will be able to take private insurance for care beyond basic emergency care and major hospitalisation. Such additionalities could include ambulance services, designer spectacles, a private hospital room, treatment at a hospital of choice or by a doctor of choice, use of experimental medicines or medical techniques not available for general use, early booking of elective surgery, or cosmetic surgery.

To ensure appropriate use of such facilities, a modest co-payment will be required in all such cases.

Delivery of emergency care and major hospitalization

The government will not directly deliver emergency care and major hospitalization, but get these delivered through private enterprise using economic design principles that keep competition high and costs and the moral hazard down.

Tendering these services within specific geographical areas on a long term basis can solve numerous problems. We propose (the model to be refined) that the country’s geographical area be carved out into reasonably sized zones which will then be put out for tender. Private health consortiums wishing to provide the prescribed services at a prescribed standard to all residents of the area, will be requested to quote a single, flat price per-person annual price. This approach would take into account local costs of living including any specific difficulty in finding and appointing doctors in remote areas. The lowest (or fittest) bidders would be awarded long duration (say 30 year) contracts for these areas and paid the agreed amount each year based on the estimated population in that region. This will create certainty in payments and allow for huge investment in health including preventive health outcomes. Consortiums would be expected to establish world class hospitals and/or negotiate with existing hospitals in that geographical area. Except for emergencies, people would be allocated specific hospitals for treatment within their residency zones.

The health regulator will closely monitor the quality of delivery of services. Stiff penalties for non-compliance with agreed standards of health outcomes will be imposed. With focus of the government only on outcomes (not direct management) this approach would:

  • increase competition in supply of health care services;
  • put a cap on costs (with providers getting a fixed amount regardless of quantity of work undertaken). Fee-for-service payments for providers are harmful and create incentives to treat excessively, to undertake more tests, to prescribe more. A cap on total costs creates an incentive to manage outcomes as efficiently as possible, since stiff penalties will be in place for outcome failures; and
  • create incentives for the successful bidder/s to promote preventative health care.

Privatisation of government primary health centres and hospitals

By the end (aiming for completion in three years), upon full implementation of this system, government-owned and operated primary health centres and hospitals will be shut down. Where possible, the lands and assets of these facilities will be sold to relevant private health consortiums which will be required to take responsibility for up to five years for the staff employed in these centres and hospitals.

Transitional strategy

Given this policy involves a fundamental change in a matter of life and death of hundreds of millions of people, we will ensure that each step is considered and well thought out, not rushed due to the presence of the three year target. We will ensure that not one life is unnecessarily lost due to a rushed transition. But we are confident that the result of the process will be the booming of India’s health services.

3. Other universal health programmes

In addition we will ensure general programs including vaccination against infectious disease, general programs to reduce infant mortality and promote public and women’s health. We will also strongly support a range of programs to educate the people about sanitation, nutrition, obesity, diabetes, TB, malaria, leprosy, hypertension, drug abuse, occupational hazards, cancers and other such problems.

4. Drug industry and policy

We are concerned that drugs take so long to be approved. We will review the process and speed up the process of approval for drugs. We will also require the testing and approval of ayurvedic, homeopathic and unani medicines before any of these can be sold. A lot of snake oil is being currently sold in the guise of medicine. This will be entirely stopped. With these two steps we believe India can aim to become the hub of the world’s drug industry in the coming years.

5. Medical occupational licensing

We will review medical occupational licensing to minimise monopolistic tendencies in the profession, and we will create new categories of health professionals to allow trained paramedics, under supervision of doctors, to handle the more common health problems. 

6. Regulated markets in kidneys and other organs

Organ donation systems suffer from massive shortages of organs. Based on the experience of Iran, we will establish well-regulated markets in kidneys, to be later followed with such markets in liver and other organs. This will not only save hundreds of thousands of lives each year, it will also save enormous health costs. This principle will also be applied to the blood donation market.

We observe that there are numerous unregulated markets in matters of health that are proliferating in India. This includes surrogacy. We will regulate surrogacy to prevent anyone abandoning their surrogate child.

7.   Stringent regulation of private health insurance providers

We will ensure that the private health insurance market is competitive and allows switching without any loss of coverage. We will also ensure that private health insurance prices are regulated (approved by the Government after assessment by the regulator) and that private insurance companies have no capacity to reject anyone's application. The only admissible clause is that some pre-existing conditions need not be covered for 12 months. This is to prevent gaming by patients who get sick and then try to take out insurance companies to cover their disease. The government will also regulate a penalty factor for those who take out health insurance after age 35.

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Streamlined draft Sone Ki Chidiya agenda on higher education

Slightly streamlined, for the next draft. For comment:

India has very few world-class institutions of higher learning. Lakhs of our students are therefore forced to go abroad for higher education; most do not return, particularly as foreign countries are usually keen to retain the best brains that come to their shores. To facilitate the creation of the world’s best tertiary education system in India, with a hundred universities of the standard of Harvard, higher education needs to attract the needed investment and expertise. This can only be achieved through fundamental reform of the system.

The role of government in higher education is fundamentally different from its role in school education because the benefits of higher education are largely captured by those who successfully complete tertiary education. Students in tertiary institutes will become much richer, on average, than the average taxpayer. If the average taxpayer were to subsidize their education, it would amount to the poor subsidizing the (future) rich. There are great public benefits to higher education, but the university educated are fully compensated for these benefits through their higher earnings. This implies that:

  • government should not subsidise higher education as it amounts to the poor subsidising the rich;
  • there are no entitlements or rights to higher education on grounds of equal opportunity. Entry into a portal of higher education is a privilege, contingent upon significant hard work. Only the talented, who have put in the necessary hard work, should aspire for higher education; and
  • there is no reason for the government to manage the delivery of higher education.

Of course, those who get admitted to genuinely competitive institutions of higher education need to be facilitated to raise sufficient funds to attend the course. That policy question can be resolved without subsidising the students or managing institutes of higher education.

Tertiary sector privatization

All government universities, technical colleges and the like will be sold off by the thirtieth month on the same pattern as schools, after due preparation and with key conditions specified below. Given advance announcements, this will attract investment and expertise from within India and abroad to make India a knowledge and research hub. By the government not funding tertiary institutions, significant tax revenues currently allocated to higher education will be released for more essential purposes, even as the quality of university education and infrastructure is significantly boosted by the open market fee charged by universities.

These institutions:

  • be co-regulated for integrity and quality through a few conditions necessary to demarcate them as institutions of tertiary education. No bureaucrat can teach an Einstein or tell him how to manage the teaching of his discipline. The question of whether an institution is a university can best be decided by the universities themselves. All details regarding the higher education system should be decided by those who run it, not by bureaucrats. We will leave the sector free to innovate and customise its offerings to the needs of the market. We see no need for any government body to regulate universities. In addition to privatisation of all universities, we will dissolve the UGC and similar bodies, such as the AICTE. We will, however, require co-regulation of the sector and will enact various principles-based acts to recognise the key self-regulatory aspects of the higher education system.
  • become for-profit corporations with shares traded on the stock market. Their sole business objective would be to provide tertiary education. These institutions will be required to use their lands for the primary purpose of higher education for 999 years. In some cases, lands will be taken back or reduced, particularly where the land is in now in the heart of major cities. Universities will need to manage their affairs in smaller parcels of land.
  • have operational independence. They would be able to set their own salary structures to attract distinguished academic professionals and, consequently, bright students. They would be able to determine the type and quality of tertiary education services they wish to deliver, the mix of courses to offer and other things that universities do. The competitive market will then deliver the best mix of options for students. Not one rupee will be spent on any government-funded ‘educational planner’ to predict the demand for graduates in specific areas. Only that much higher education will be provided as the market needs and will bear.

The reason why universities won’t increase their fees to astronomical levels upon privatization is because of their critical need to attract customers – in this case, high quality students. High quality students, like any other self-interested person, will look for good quality but low cost education and force the fees down to competitive levels.

Will some academic disciplines be ousted from the teaching agenda by this model? Doubting Thomases will argue that privatization will affect the supply of courses in arts and philosophy. But this argument is without basis. Modern private sector corporations recognize the great value of liberal education in broadening the perspectives of managers. Indeed, arts graduates do better in modern businesses than technical graduates because innovation, entrepreneurship, leadership, people management and strategic thinking have little to do with technical skills.

In this manner, the freely operating tertiary education market will decide what courses are needed for India. We would get a hundred Indian Harvard Universities in a few decades through this model.

Low Interest Loans to tertiary sector students

It is important to ensure that all those who obtain admission to institutions of vocational and higher education are able to raise sufficient funds to attend the course. To ensure this, we will institute a government program to provide a low interest loans to tertiary sector students, to be repaid through the income tax system. An Indian citizen (not overseas citizen of India or permanent resident), who gains admission into an approved tertiary institution in India will be eligible to borrow from the government all fees charged by that institution, as well as the cost of necessary books and equipment and modest living costs. These loans will bear a low interest – around 1 per cent higher than the government bond rate. The repayment would be through the income tax system after the student gets a job and starts earning above three times the level of the poverty line. This loan will enable all meritorious persons in India to pursue higher education.

Income streams from university students are more secure than houses or land, with almost all university graduates earning well. A rolling debt model will therefore be used. From the thirty-first month, ten-year bonds will be issued for the amount of student loans to be issued that year. Prudent investors in India are expected to purchase these secured bonds. The bonds will be retired after ten years using recoveries from students who would mostly be in the workforce by then.

We will subsidise any mismatch of timing between student earnings and the face value of the bonds, the residual costs of administering this programme and a write-off for defaults. The justification for this small subsidy is that it enhances equal opportunity for those unable to pay their fees.

All such students will require a specific endorsement on their Passport. Any such student who wishes to leave the country (even temporarily) will need to furnish a bank guarantee to Customs equivalent to twice the amount of their outstanding loan (in recognition of the social value lost to India if they permanently migrate), which will be forfeited if they fail to return within a declared time. Those without proof of this guarantee will be turned back at the immigration check and not permitted to leave India. All their international income will also be subject to Indian tax – a condition to be included in various tax treaties.

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