Moratorium on new engineering, business colleges mooted

India’s regulatory authority for technical and engineering institutions has said it may stop accepting proposals for new technical colleges in states with surplus capacity. Scores of engineering and business management institutions have announced closures.

The All India Council of Technical Education (AICTE) said last week there could be a moratorium from 2014 on management and engineering programmes in certain states affected by excess supply.

As many as 65 business management colleges are planning to close down across India and several states have openly said that they do not want any new engineering colleges to open.

Experts said the closures were not entirely unexpected, with a mismatch emerging between supply and demand. The low quality of several engineering and management colleges meant they could not attract students and were unsustainable.

“It is the colleges in remote India and institutes of poor quality that are struggling to get students,” said SS Mantha, chair of the AICTE.

Oversupply

“It is a fact there are a lot of engineering colleges and management colleges,” said Ashok Thakur, special secretary responsible for technical education in the Ministry of Human Resources. “AICTE is commissioning a study to see whether we really need more.”

Several states including Andhra Pradesh, Tamil Nadu, Maharashtra and Rajasthan have written to the AICTE requesting it not to sanction new engineering institutions because they have a "problem of plenty" and fresh approvals would add to the vacancies with which the existing colleges are already grappling

“Some of the state governments like Tamil Nadu have told us [the ministry] that they don’t want more colleges,” Thakur told University World News at the margins of a conference in Dubai. “AICTE is working on it. But you have to notify sufficiently in advance so there cannot be a moratorium before 2014.”

However, he insisted that it would be out of the question for any existing colleges to be shut and students left high and dry, as the colleges had been set up legally. The institutions “are affiliated to universities and have a ‘no objection’ certificate from the university [to set up] and also permission from the state government. It’s only the new ones they [AICTE] can stop.”

Thakur conceded that it may not be easy to impose a moratorium. “The legal hitch is that we cannot be arbitrary because until now we have said that the private college sector is market-driven and we cannot deny anyone a right to a profession.”

Thakur insisted that to prevent closures, colleges had to adjust to market conditions. “Because of the current market conditions, demand in some subjects has gone down. Engineering colleges have to be sharp enough to change their courses. They have to offer new courses that are relevant.”

Unregulated increases

India has had wild and unregulated increases in both management and engineering institutions in the last decade – it has 350,000 management seats and 1.5 million engineering places on offer.

Most of the growth has occurred in the private for-profit sector, with private institutions contributing to 80% of enrolments in professional programmes.

In 2011, 50% of management seats in Maharashtra remained vacant while 53,000 engineering seats in Tamil Nadu had no takers. In Karnataka, 60% of the seats offered by the Consortium of Medical, Engineering and Dental Colleges of Karnataka remained vacant in 2011.

“This situation was bound to come,” said Narayanan Ramaswamy, partner and head of the education sector for consulting firm KPMG Advisory Services. “When the demand for MBA graduates and IT professionals increased everyone wanted to open an engineering and management college.

“Now the market is correcting itself and the mismatch between supply and demand will be balanced in due course.

“Several of these small institutions were money-making entities run by politicians, and it is good that they are closing down. This also shows that students are maturing because they realise that industry is not dumb and just an MBA from anywhere will not land them a job,” Ramaswamy said.

Quality vs quantity

While several smaller institutions are struggling to find students, India’s premier engineering and management institutes – the Indian institutes of technology (IITs) and Indian institutes of management (IIMs) – have not seen any decline in demand.

According to Pankaj Chandra, director of IIM-Bangalore, tens of thousands of students sign up to take the Common Admission Test (CAT) for entry into the IIMs. In 2011, close to 200,000 candidates competed for 3,000 IIM seats.

“It is a great time to do an MBA. The brightest ones still want to do an MBA,” Chandra said.

A report on IIT exam reforms prepared by IIT Kharagpur director Damodar Acharya states that nearly 2.5 million candidates sit the different engineering exams every year across the country.

The slowdown in economic growth also means that industry hires fewer students, and of high quality.

“Several of the institutes offering an MBA have poor infrastructure, minimal faculty and sub-standard curriculum,” said Aditi Kaur, a final-year student at Jamia Milia Islamia University in New Delhi.

“At the end of two years I will have neither a well-paying job nor be qualified with the entrepreneurship to start something on my own. Under such a scenario I would rather do a university course than a professional one.”

However, according to the ministry’s Thakur, it is the smaller private institutions, and not the IITs and IIMs, where the big IT companies such as Cisco and Tata scout for talent. Graduates from the IITs and IIMs are often recruited into the financial services sector.

Although the Eleventh Five Year Plan 2007-12 increased funding to higher education nine-fold, the bulk of the money went to “these fancy IITs and IIMs” and a lot of smaller government and private technical institutions were left out, Thakur said. “The government is reluctant to fund private institutions.”

But a new US$800 million World Bank-funded education project will include private institutions. “Some 300 government-funded engineering colleges could lay a claim [to the funds] and we are looking to see if we can also work with private institutions,” Thakur said, referring in particular to institutions in remote areas.

India wants to encourage around 30 million more students to opt for higher education over the next decade. Currently, around 15 million students are pursuing higher education programmes in technical and non-technical subjects.

Education Minister Kapil Sibal has said that India needs to add at least 25,000 more colleges to achieve this target, and has also stressed the importance of private institutions. At present, only 13% of students eligible to enrol in a technical programme do so; the global average is 27%.

“It is important to increase the gross enrolment ratio, but why increase seats in courses where students are not coming?” asked Dr G Viswanathan, chancellor of VIT University in Vellore.

“The AICTE’s decision to stop approval of new colleges in states which have more engineering colleges, and start new colleges in north-eastern states where there is dire need for more professional institutions, is welcome as it will remove the regional imbalance in the country.”

* Yojana Sharma contributed to this report from Dubai.