Definition of Liberalization

Liberalization refers to relaxation of previous government restrictions usually in area of social

Thus, when government liberalizes trade it means it has removed the tariff, subsidies and other
restrictions on the flow of goods and services between countries.

Introduction of Liberalization

The economic liberalization in India refers to ongoing economic reforms in India that started on
24th July 1991. After Independence in 1947, India adhered to socialist policies. In the 1980s,
Prime Minister Rajiv Gandhi initiated some reforms.

In1991, after India faced a balance of payments crisis, it had to sell 67 tons of gold to the
International Monetary Fund (IMF) as part of a bailout deal, and promise economic
restructuring.

The government of P. V. Narasimha Rao and his finance minister Manmohan Singh started
breakthrough reforms.

The new neo-liberal policies included opening for international trade and investment,
deregulation, initiation of privatization, tax reforms, and inflation-controlling measures.

The main objective of the government was to transform the economic system from socialism to
capitalism so as to achieve high economic growth and industrialize the nation for the well-being
of Indian citizens. Today India is mainly characterized as a market economy.

Meaning of Liberalization

Liberalization of the economy means to free it from direct or physical controls imposed by the
government.

Economic reforms were based on the assumption that market forces could guide the economy in
more effective manner than government control.

Examples of one of other undeveloped countries like Korea, Thailand, and Singapore etc.

That had achieved rapid economic development as a result of liberalization was kept in
consideration.
Impact of Liberalization on Education System in India

Liberalization refers to relaxing certain reforms and policies in India. These reforms can be
termed as relaxation of previous government’s restrictions usually in areas of social or economic
policy. Usually, the term is used in reference to Economic Liberalization. Though India is
Economically Liberal, the Education System is not Liberal. There are many reasons, one of them
is that the national education industry does not want competitiveness and Government does not
want to give away its control. The higher education system in India suffers from lack of
autonomy and burden of affiliation. It is characterized by extreme rigidity and lack of flexibility.
The real weakness of the higher education is in the structure itself, and there is a need for
introspection and reflection. Also, the public mind set is for the shortcut and easy going. Our
policy in terms of education is focused more on only expanding the system with no focus on for
quality education. One of the basic problems today is the inability of the university system to provide
higher education to all who aspire for it. Also, there is no political commitment of public funds. Lack of
research-oriented education devalues the quality of education to a large extent. There are very few
institutes and companies that really carry out research work which is useful for the masses. According to
a study, India ranks 25thin the world when it comes to quality of research and the scientific impact. With
a country with an academic system comprising of about 2.5 million graduates each year, this statistic
indicates a clear inability for the system to sustain itself. India's literacy rate of around 60 percent
places it in the company of countries such as Uganda, Rwanda, Malawi, Sudan, Burundi and
Ghana. Broadly speaking, India accounts for 50 percent of the world's illiterates even though
India accounts for around 17 percent of the world's population.

Education Policy (2009) in India with regard to Liberalization

According to the Article 25 of the Companies Registration Act, educational institutes in India
can be setup only by trusts, societies and charitable companies, but the profits cannot be taken
out of the institution and have to be reinvested. However, the government does not define and
clarify rules for foreign universities to set up campuses in India. Interested parties have been
hesitant about moving forward until they are clear about the degree of regulation, funding and
other issues. Though foreign educational institutions are not permitted to offer degree
certifications in India, the education department has allowed nearly 150 foreign institutes to offer
courses with Indian varsities under an arrangement that, a part of the course will be done in India
and the rest will be done abroad. Foreign universities have adequate experience and the required
prerequisite to immediately begin training new future researchers and teachers and their
disappointment is obvious.

But there is hope for foreign universities in the form of Foreign University Bill that is seemingly
on the cards as of 2009. If the government ensures that no fraud takes and if it delimits the
bureaucracy by placing only minimal restrictions on the incoming foreign universities, there is a
chance for a vast improvement in the quality of Indian higher education system which suffers
from the government's neglect.

Impact of Liberalization on Education System in India

Positive Impact of Liberalization on Education System in India:

• Liberalization will bring a constant stream of funding which will also facilitate a research based
career and make it a viable option for the future of Indian teachers and students.

• It will expand the supply which is in shortage and the competition among educational
institutions will ensure that they do not charge an excessive premium for education. Increase in
the supply of education will automatically result in the fall in education expenditure.

• The Indian economy which is majorly fuelled by the service industry will get a boost with the
education sector becoming a large chunk of the economic source.

•Hundreds of thousands of Indian students study abroad at an annual estimated cost of around
US $ 1 billion and it can even stem the exodus of thousands of students who left the country to
study abroad. This will save India immense capital.

• Allowing corporate would ensure the development of better industry oriented graduates with
specific skill sets.

• Increased in educated population implies rapid developments in technology and

• Liberalization offers students an option of studying close to home with the added benefit of a
degree which will be valid worldwide.

Negative Impact of Liberalization on Education System in India

• The international higher education is largely an unregulated market. While no doubt that there
are prestigious universities hoping to build links overseas, recruit top students to their home
campuses and strengthen their brand abroad. But there is no dearth of mere sub-prime and low-
end private institutions which are seeking to stave off bankruptcy through the export market and
there are even a few respectable universities which have been forced by government funding cut
backs to raise cash elsewhere.

• Students and local institutions in developing countries are also similarly unregulated. At many
times ill-informed and often naive. Students tends to avail such services without much
information or understanding. A foreign label in a degree is tempting enough to make them drop
their wisdom. Uninformed or simply dubious institutions in developing countries may form
partnerships with low-quality colleges and universities in India.

• There is also the risk of fake institutes which are looking to stuff their pockets whenever the
opportunity arises.

• Corruption is rampant in India. There is little left to the imagination as to what might be the out
come of such a policy in terms of bribes, false degrees, partial marking etc. There may be
unforeseen out comes which come to light only after the outcome occurs

• Local institutes which have limited capital will not be able to survive, rendering many jobless.
Even the reputed ones will face competition as their national certificates will be less valued as
compared to the world recognized certificates.

Possible Solution

• A possible solution to this policy is that the government should be kept out of the education
business, partially if not fully. Its role should be restricted to regulating the sector. Just like in
other markets the educational market might have its share of market failures. Rectifying these
should be the responsibility of the regulator and it must be independent of the government.

• To ensure that national interests are served and the students do not receive an inferior service
from unscrupulous providers, there needs to be transparency. It can be done by the government
authority. This will also help universities think about their motivations for entering the market.

• An effective educational regulator in India like SEBI, the RBI or TRAI is also needed which
will regulate the capital markets, the banking sector, and the telecom sector respectively.

• Certain independent rating agencies like CRISIL, ICRA or CARE are also required to rate the
institutes and these ratings need to be made public as well

• Another possible solution can be that no less than half the members of the governing body of
the institution must be Indian citizens and the post of president or the equivalent must be an
Indian citizen residing in India.

• Another way to protect the fleecing of the candidates is that tuition fees will not be raised
without the approval of local concerned authorities.

• Foreign universities can also be regulated by giving them limited period trial, a sort of
probation period. And it would on the basis of performance in the trial period, that these
universities will be allowed to setup long term operations. The proposed system should be
applied to all modes of operation franchise agreements, twinning programmes, study centers,
programme collaborations and off shore or branch campuses.

• Strong disincentives, such as for feature of substantial security deposits. This will ensure that
foreign players and their partners do not discontinue their operations after a few years, leaving
students in the lurch.

• Priority should be given to those institutes which have been accredited in their country of
origin. The institution will also be expected to submit the latest audit report of the accreditation
agency. To avoid a kind of monopoly, the system will be made transparent and quick.

• Though a bit strict measure, prohibition of sending profits back home to parent institutions
abroad can also be a conservative measure.

• Also, only foreign universities from countries that offer Indian universities a business
opportunity abroad should be allowed in.

• Effective registration and certification systems are also needed. Such a regulation should
prevent unapproved institutions from pa1rtnering, protects and informs the consumers, enables
good quality foreign institutions to enter the Indian market and which create a level playing field
between domestic and foreign institutions so that the former can compete effectively in a
liberalized environment.