Driving our students abroad at great cost to the nation

How much foreign exchange does India spend every year because a huge number of Indian students go abroad for study? Visit

12 lakh Indian students go abroad for education: AIU - The Hindu

and estimate the cost yourself.

This article reports that only about 26,000 foreign students come to India for studies.

Why does this happen? Many great universities of the world are run by endowments. Donations to one’s alma mater and to other institutions are also there in India: Visit the following websites for a few samples of what Indians are doing.

IIT-Delhi Endowments

IndiGo Co-Founder Rakesh Gangwal Donates Rs 100 crore

Kris Gopalakrishnan's trust donates 225 crores for brain research

There are many more. Two of the oldest contributions of the industry to Indian university education I know of was the creation of the Tata Institute of Science (Now, Indian Institute of Science) and the Tata Institute of Fundamental Research. Of course, the Tata Group has contributed to the creation of several other institutions.

How many great “not-for-profit” educational and research bodies do we have, that are not dependent on government grants on a recurring basis? Surely, there are many charitable institutions, but many of them are quite profitable set ups! Also ask why fees in Indian educational institutions set world records!

India lags in the creation of world class institutions with autonomy because our rules governing autonomous educational and research institutions are too restrictive. A donation may build a hostel or a big main building, or a new school. Our system allows that. However, the continued use of such capital investments needs to be matched by “revenue expenditure” which meets the costs of running the activity year after year. We need endowments, wisely invested, to give a good return. Our system hampers this, saying endowment funds need to be invested only in “approved securities”, which exclude equities. Our constitution does not say that profit making entities are born in sin, but we usually practice that belief in our governance!

Of course, exemplary safeguards are necessary when tax-exempt endowment funds are managed. There cannot be a whiff of corruption, partiality, etc. This does not mean that the only investments allowed are those which lose half the earnings to inflation! Efficient investment requires investing in equities. Allowing endowments to reputed institutions to be used efficiently is the surest way of making education affordable. Endowments reduce the dependence on fees paid by students. They allow the institutions to choose the students most likely to be the best scholars; not the ones who can buy seats at any cost!

There seems to be one way to have the cake and eat it too! Include approved index funds in the list of approved securities. This means that the recipient institutions cannot selectively invest endowments in companies run by brothers-in-law of influential people! They cannot gamble on the success of fly-by-night companies! It also means that the endowment would not crash to junk status unless the whole country’s economy crashes! With good oversight by SEBI, index funds seem to be quite reliable in India.

We do not need big bureaucracy to tell every educational institution how to invest its endowment funds. We do not have to “take over” every institution under government control as soon as it becomes big enough to earn an international reputation.

Do we have the will power to do something like this? Or is it easier to let lakhs of students go out every year to get an education they can afford?

Srinivasan Ramani

 

 

 

 

 

Kris Gopalakrishnan’s gift for the creation of a Centre for Brain Research

Kris Gopalakrishnan’s gift of Rs 225 Crores (say about US$35 million) for the creation of a Centre for Brain Research is an important development in India. Not merely because some of the profits from a technology based industry are made available for advanced research, but also because of the excellent choice of the subject. There are many in this country who can throw money at some field or the other of their choice, but few have the penetrating vision that selects the science whose time has come. Naturally, a philanthropist would be guided by advisors in making such a choice.  If this decision was steered by his advisors, I must congratulate Kris Gopalakrishnan for having chosen obviously excellent advisors. The choice of the Indian Institute of Science (IISc) as a partner in this effort is also a very good choice. The fact that IISc has already invested in a Centre for Neuroscience is a promising indication of IISc’s interests and capabilities.

Better understanding of the nature of knowledge and information, and understanding the brain that understands all that, – these are two big challenges in front of humanity today. Investing on these is the privilege of visionaries. The decision will have a significant impact on the scientific and economic future of India.

There is yet another reason why Gopalakrishnan’s contribution is very important; it demonstrates that there are Indians willing to make significantly large donations to promote education and research without looking for a profit. It is a common to see some panelist or other on TV discussions argue for the idea that education should be as open a sector as selling any other commodity or service! There is a profit motive in mind of the companies that sell their products and services, right? Why don’t you let them sell education as well? I think that such an argument is foolish.

I believe that private organizations should be free to provide educational services. However, if they are to confer degrees and qualify for tax-exemption, they should be not-for-profit institutions. I am sure that India has a large enough body of donors, who over the years would endow a thousand universities. They will structure these institutions such that they will administer themselves, and keep out the corrupt and the incompetent. Society should ensure that educational institutions should meet high standards and are managed in academic matters by their own faculties with the cooperation of a small set of eminent persons of high standing. That an institution should have high standards surely does not mean that it should obey every little instruction coming from the Govt. It is possible to create and run accreditation mechanisms that are free of exploitation or micro-management by Govt.

Equally, Society should allow contributions to universities at different stages of development to be deducted from the income tax of the contributor, as long as it is below a certain (say 50%) percentage of the total income tax payable by him that year. 

History shows that private donors have played a great role over the centuries in creating universities of great reputation. India needs to make sure that Indian donors are not turned away from doing great service to society by mindless control of politicians and bureaucrats.

Srinivasan Ramani