Higher Education – RUSA, NIRF, HEFA, etc.

Economics of education


From UPSC perspective, the following things are important :

Prelims level: Not much

Mains level: Paper 2- Financial challenges education sector faces in India

The article delineates the challenges academic institutions in India faces in the wake of Covid disruption and suggests some measures to deal with the challenges.


Disruption in the wake of pandemic raised the spectre of educational institutions shuttering their doors completely or taking unprecedented steps that have invariably affected jobs and livelihoods.

Economics of the academics

  • Economics has always been a part of academics; it is only in the present circumstances that it has become all the more apparent.
  • Management in private institutions, is going to meet demands on the one hand and availability of resources on the other.
  • One may call this new phenomenon “acadonomics”.
  • “Acadonomics” would imply a careful allocation of resources keeping in mind the transient nature of the issue of how long it is going to take to come back to the steady state of affairs that it once was.
  • ‘Acadonomics’ will also involve seeing the economics of moving on to an online mode of the teaching-learning process.

Comparison with the West

  • The academic choices are not the same for all countries across the world.
  • In the United States the elite private and state subsidised universities have endowments that can be used for a range of academic activities.
  • Top 10 of the U.S. have a cushion of anywhere between $10 billion to $40 billion.
  • By contrast, private academic institutions in India do not have any such buffers.
  • None of the institutions in India possesses big corpuses from alumni or industry.
  • Their survival, for the most part, is on the annual income that comes from tuition and the assortment of other fees collected.

Private education in India

  • Private institutions in India are hardly in a position to meet an eventuality such as COVID-19.
  •  In an educational set-up in India, nothing can be reduced — the norms cannot be lowered nor can the infrastructure be dismantled.
  •  For the most part, the fixed and operational costs remain the same, and infrastructure once created cannot be shrunk.
  • The downside to self-financed institutions is that in the time of the pandemic and loss of jobs, students plead inability to pay the requisite fee.
  • Which places additional burden on the management which feels already stretched because of existing commitments.

Dual mode of learning and issues

  • 1) Cost for persisting with a dual mode of the teaching-learning process is going to be quite prohibitive for the next few years.
  • The scaling of operations that would include the dual modes of online and offline is going to be expensive.
  • 2) The online teaching mode brings with it increased costs of IT infrastructure such as network bandwidth, servers, cloud resources and software licensing fees.
  • 3) Online teaching means new hiring in the IT sector and increased costs due to engagements with Massive Open Online Courses, or MOOCs, and other online platforms.
  • 4) Online teaching means setting up multiple studios and educational technology centres which translate into investments in high technology.
  • 5) Creation of virtual laboratories across all domains of studies and examination centres, etc. would add to the woes in terms of already depleted finances.
  • 6) Additional funds have to be allocated to train faculty for online teaching.

Way forward

  • The Centre and State governments should provide soft loans to students to stay with the educational course.
  • Students looking at online instruction would be disinclined to pay the same fee charged for offline instruction.
  • It would seem prudent for the government and regulatory bodies to not interfere in the fee structure, and, for the future, even consider a measure of higher degree of financial autonomy.
  • It is high time institutions in India are allowed to create coffers or corpuses for a rainy day.
  • Educational institutions could come to be treated like any other corporate body, with an allowable small margin of profit.

Consider the question “What are the challenges faced by the education system in the aftermath of the pandemic. Suggest ways to mitigate the impact.”


‘Acadonomics’ of the future will not only decide the fate of the academic sector in India but also its quality, ranking, research, innovation potential and its collective impact on our country’s economy.

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