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Human Development

Profit Making Private Schools vs Public Schools, Is it ethical for schools to operate like a business?

Profit Making Private Schools vs Public Schools, Is it ethical for schools to operate like a business?


  • GS 2 || Governance & Social Justice || Human Development || Education

Why in news?

  • Central Square Foundation, in partnership with Omidyar Network India, has developed a report State of the Sector Report on Private Schools in India’. Admission in Government Schools has Reduced to 52.2% in 2018 from 76% in 2017. Around 12 Crores (46.3%) Children study at Private Schools in India.


  • The Indian government and institutions have worked for many years to reform the existing education model, and while they have been successful in many ways, there are several issues that the Indian education system is dealing with.
  • The ASER 2019 report states that parents exhibit a unique bias when it comes to the selection of schools for their children.
  • The report shows that parents are more likely to opt for a private school when selecting a school for boys while government schools are the primary choice of parents when it comes to girls’ education.

Issues with school education in India

  • Inadequate government funding: According to the Economic Survey, the country spent 3% of its total GDP on education in2019-20, which is very low in comparison to developed and OECD countries.
  • Lack of infrastructure: The majority of schools are not yet fully compliant with the RTE infrastructure.A quality, free and regular school education represents our most potent infrastructure of opportunity, a fundamental duty of the state.They do not have drinking water, a functional common toilet, or separate toilets for girls.
  • Failing government schools- Meritocracy represents the idea that people should advance based on their talents and efforts. India’s meritocracy is sabotaged by flailing government schools.
    • The proportion of India’s children attending a government school has now declined to 45 percent.
    • This number is 85 percent in America, 90 percent in England, and 95 percent in Japan.
  • High dropout rates-India’s100 percent plus school enrolment masks challenges; a huge dropout ratio and poor learning outcomes.In India and 4 lakh schools have less than 50 students (70 percent of schools in Rajasthan, Karnataka, J&K, and Uttarakhand).China has similar total student numbers with 30 percent of our school numbers.

Why government schools are not the first choice?

  • The perception among people that teachers in government schools are not good enough– People believe there aren’t enough teachers in these schools, or that the schools aren’t open regularly.
  • Different states- different challenges- Different states in India have different types of education systems. Each has a unique set of challenges.
  • Inadequate capacities and poor infrastructure –The secondary and higher secondary level government schools do not have adequate capacities, so the net enrolment falls, especially for girls, sharply beyond the primary level.
    • The country spent less than 3% of its total GDP on education in 2018-19 or about 5.6 lakh crore.
    • India ranks 62nd in total public expenditure on education per student and measures of the quality of education(pupil-teacher ratio) in primary and in secondary education,”
    • In 1964, the Kothari Commission had recommended a 6 % allocation of 6 % of GDP, but India never spent 6% of GDP on education since Independence.
  • Problems associated with government school teachers– Professional development for teachers is a major issue in government schools; nearly half of regular teacher vacancies are filled by guest or ad hoc teachers.
    • Nearly 95 percent of teacher education is in private hands, and the majority of it is of poor quality.
  • In 2017, NITI Aayog CEO Amitabh Kant said the government needs to exit infrastructure projects and even look at handing over schools and colleges to the private sector as is the case in Canada and Australia.
  • At the same time, he was critical of India’s private sector, terming it as “most irrational” and “insensitive”.

Benefits of Private sector in Education

  • Better access to infrastructure, faculty, global exposure, and wider interaction with global educational institutions along with higher-level research and innovation.
  • It acts as a platform for faculty exchange between different institutions resulting in better training of teachers and opening more opportunities for them.
  • It leads to more competition in the education sector thus leading to better quality for students.

Concerns with the Private schools

  • Fees/Cost – Every academic year, parents bear the burden of unfair increases in school tuition fees.Additional costs, such as transportation, extracurricular activities, and sports, add to their burden.The administrations of such schools argue that the hikes are reasonable and justified.
  • The costs of running a fully operational private school with high-quality teaching and world-class infrastructure are quite high.
  • Autonomy vs. welfare – Another contentious issue is balancing the autonomy of private schools with their public welfare function.
  • According to the Supreme Court, regulatory measures imposed on unaided private educational institutions must in general, ensure –
    • upholding proper academic standards
    • school environment and infrastructure
    • school administration’s prevention of maladministration
  • Regulating school fees is one of the most significant legal and political challenges policymakers in India face.
  • The issue of fee regulation finds itself at the intersection of two important ideas.
    • One, the constitutionally protected freedoms enjoyed by private schools.
    • Two, the need for making quality education affordable and accessible to all.

Is it ethical for schools to operate asa business?

  • No aid from any source –There are around 3,50,000 private unaided schools (24% of all schools) where 75 million children or 38% of all students. Such schools do not receive any grant from the government and have to generate their revenue for sustenance.
    • In M.A. Pai Foundation v. State of Karnataka(2002), the Supreme Court held that regulatory measures imposed on unaided private educational institutions must, in general, ensure the maintenance of proper academic standards, atmosphere, and infrastructure and the prevention of mal-administration by the school management.
  • Institutions have the authority to generate “surplus and make the profit
    • In the Islamic Academy of Education and Anr. v. State of Karnataka and Ors(2003), a Constitution Bench of the Supreme Court held that these institutions have the autonomy to generate a surplus which must be used for their betterment and growth.Private schools are thus entitled to a reasonable surplus for educational development and institution expansion.
  • Schools should make a profit but should not be profiteering
    • The autonomy of such institutions must be balanced with measures to prevent education from becoming commercialized.
  • However, there is not much clarity on what the terms “surplus”, “reasonable surplus” or “commercialization of education” entail.

State models of Private Schools

  • Many state governments have either enacted or are in the process of enacting fee regulation legislation.
  • These are intended to keep private schools from charging unreasonably high fees and to keep funds from being misused.
  • Tamil Nadu, for example, uses the fee fixation model.
  • A government committee is given the authority to verify and approve fee structures proposed by private schools under this provision.
  • Karnataka has a formula that caps school fees by enacting rules in its school education legislation.

Should government outsource education to the private sector?

  • The empirical evidence on publicsector outsourcing of education services is quite positive: competition can lead to higher-quality education and more efficient use of resources.  Increased competition might lead to cost minimization, but it could also increase the costs per student for schools losing students.  There come the questions of equity, urban-rural divide, rich and poor divide, fees structure, etc.
  • Government Aided Schools:Rather than outsourcing the whole education system the government can increase the aid given to the school functioning. The schools receive funding from the government to run their school; however, the management and administration is done either by a management body, trust, or a private institution. As they receive grants from the government they have to abide by several policies and rules put forth by the HRD ministry and education department of the respective state government. In terms of infrastructure and facilities, they fare far better compared to government schools.

Way forward

  • For the regulation and management of private schools
    • Addressing financial mismanagement and misreporting is the solution to making these laws more effective.
    • The Supreme Court recommended accounting standards for private schools in Modern School v. Union of India (2004).Measures such as the following could also be considered –
      • Audits conducted regularly by the government.
      • Generating capacity in state-level education departments
      • Inspections on a regular basis
      • Stricter penalties for false reporting
  • For the management and development of government schools
    • The government (State and Union) must improve pedagogy, teacher development, community participation, parent committees, and so on.
    • India should also examine the fundamental safety, well-being, and hygiene factors in government schools. For example, properly functioning toilets, drinking water, and compound walls.
    • India can improve professional networks for teachers, allowing them to continuously learn from one another.
    • Decentralization: Local governments can take ownership of government schools, and school development committees can collaborate with elected local governments to meet the needs of schools.
    • Create a comprehensive curriculum review, similar to what Kerala has done, and synchronize it at the national level to facilitate the inclusion of inter-state migrant children.
    • Improving the infrastructure of government schools will make them more attractive.


  • The private sector in the education domain has supplemented the state’s efforts in India’s progress towards universal education. The private sector has brought various positive aspects in the education sector such as more funding, better infrastructure, curriculum flexibility, increased focus on teaching quality among others. The indiscriminate privatization of education has deprived the children of a weaker section and underprivileged the opportunity to receive quality.
  • Despite its demerits and challenges, private education is imperative for universal education. The requirement is to minimize demerits while leveraging benefits.

Mains model Question

  • It has been claimed that the private sector degrades education to the level of a commodity. Discuss why education should be regarded as a necessary public good in this context.