BY V Y KANTAK
THE University Grants Commission will probe the issue of huge capitation fees allegedly demanded by two Tamil Nadu-based institutes, including one run by a Union Minister. The decision was taken following media reports that officials of Shree Balaji Medical College and Sri Ramachandra University allegedly demanded capitation fees in the range of Rs 40-50 lakh from students.

Balaji Medical College which is said to be owned by Minister of State for Information and Broadcasting, Mr S Jagathrakshakan is a constituent unit of Bharat University. However, the charge has been denied by Mr Jagathrakshakan. The committees will go through the video footage and talk to the stakeholders, including the students. If found guilty, UGC can recommend withdrawal of the deemed-to-be-university status of both the institutions. 
Institutionalised Corruption
Capitation fee refers to the unlawful collection of payment by educational bodies in exchange for a seat in the institution. It is also known as donations. This practice is popular in private colleges and universities in India, especially those that grant baccalaureate degrees in Engineering, IT and the sciences. This is an example of institutionalised corruption prevalent in India. The practice goes mostly unnoticed because the board/owners of these institutions hold political/financial powers and also the parents who pay the donations are more than happy to do so.
India’s long tradition of private colleges and the current growth in private institutions have been facilitated by the lack of a restraining centralised national government. Prior to Independence, many philanthropists and religiously oriented individuals and institutions established centres of higher learning to promote the values of spirituality, human dignity, and integrity. The usual orientation of private initiative and private funding was social transformation and leadership rather than monetary gains.
Even after Independence, private initiative and households have played a substantial role in supporting higher education. Central government’s share of total higher education income in 1950-1951 was just 49 per cent. Although it’s funding rose to approximately 80 per cent during the 1980s, since the 1990s government has resorted to cutbacks in higher education in the wake of structural adjustment, paving the way for the rapid expansion of self-financed private higher education. The pattern of government cutbacks and private expansion is familiar in much of Asia. Much less familiar is India’s extended experience with college enrolments that were legally private but publicly financed.
Public Subsidies
Also unusual in India is the fact that central government provides only one-quarter of the funding for higher education, with the rest coming from the states. Both the federal and state governments can pass legislation pertaining to education. In case of any conflict between the two, federal law prevails. Though the federal government tried to regulate private colleges in various states through the introduction of the Private Universities Bill in 1995, this effort failed due to resistance from the private sector. Instead of pursuing this bill further, the federal government adopted a policy of awarding the status of “deemed universities” to private institutions that met the national goals and criteria laid down by the UGC and other statutory bodies.
Under section 3 of the UGC Act (2000), deemed universities are required to possess viability and a management capable of contributing to university ideas and traditions. Under this scheme, the Manipal Academy, a pioneer in private higher education, has been granted the status of a deemed university. It is the only university that is totally self-financed, as most others have to rely on explicit or implicit public subsidies for their very survival.
Taking advantage of the provision, some states passed their own legislation on private higher education. Chattisgarh was the first to pass a Private Universities Act, in October 2002. The newly emerged state of Uttarakhand succeeded in getting 4 private universities during 2002–2003. In fact, there has been a sudden proliferation of private medical and engineering colleges, especially in the southern and western states of India-namely, AP, Tamil Nadu, Karnataka, Kerala, and Maharashtra. In 2001, AP had 95 private self-financing engineering colleges and 303 medical colleges in comparison to 11 public engineering colleges and 25 public medical colleges.
In many states, private universities have started up in haste without adequate infrastructure and appropriate faculty. Those already functioning have raised fees sharply in conjunction with professional courses or foreign collaborations. Not surprisingly, these developments engendered public demonstrations and resentment, driving the judiciary to intervene.
The interventions by the SC and its contradictory judgments have only added to the prevailing confusion. India’s Constitution guarantees various minorities, based upon religion or language, the right to establish and run institutions of higher learning. The idea was to allow these minorities to run educational institutions “for religious and charitable purposes.” But shrewd politicians and businessmen took advantage of this provision, raising exorbitant amounts of money through capitation fees beyond the reach of many middle-class families.
Concept of Paid Seats
The SC banned the Capitation Fee Act, 1988. Instead, it allowed a number of “paid seats” to be established in consultation with concerned state governments. The idea was to make some families pay full costs toward the education not only of their own wards but also of some others, in the name of social justice. But in October 2002, the SC reversed its earlier stand and gave a green light to financially independent private and minority interests to establish higher education colleges of their choice. Although the court also warned against “commercialisation” by private colleges, it was not clear what the practical impact of that warning might be.
In its most recent judgment (August 2003), the SC has again taken a tough stand against capitation fees. Notwithstanding the legal rulings, alliances among politicians, business, and academia sustain the commercialisation of higher education for private gains. Thus, although democratic India stands out with the role taken by state governments and courts, it joins a powerful international trend of sharp growth in commercial private higher education, some tied to a new and dominant political economic marketplace and some to the lack of a firmer restraining political legal framework. –INAV