Gujarat's regressive law capping private schools' fee

Legislature of Gujarat state in India recently passed a bill capping annual school fee of self-financed (private) schools. As per the new act

  1. The total annual fee, including the admission fee, should not exceed Rs. 15,000/- for primary, Rs. 25,000/- for secondary, and Rs. 27,000/- for higher secondary schools.

  2. This applies to all private schools in Gujarat affiliated to Gujarat State Board, CBSE, ICSE. (It's not clear if it applies to IB. India Times says that IB schools are also included, while some other sites say that it applies only to CBSE, ICSE and State Board, and not IB.)

  3. Schools are to take permission from a government committee before hiking the fee.

  4. The committee will have powers to suomoto action against schools. It can even cancel school's recognition.

Five issues regarding fee cap

There are five issues are to be noted here. One, the sequence of one bad policy leading to the other. Two, the conflict between rationale of not-for-profit clause in education and cap on fees. Three, confusion between different types of fee charged by the school. Fourth issue is the obvious point regarding its effect on schools. Five, the low cap.

1. Schools in India are supposed to be not-for-profit (My book has chapter on various arguments for and against this rule). It means that the additional revenue generated by schools have to be utilised on the school itself and can't be taken out of the school. This constrains managements to utilise profits for other purposes.

In order to get around this policy, schools charge additional fee for textbooks or force students to buy particular textbook, earning commission on such transactions. Charging disproportionate money for school bus is another usual way. These technically don't come under school fee and hence money generated through this is considered as profit earned similar to any other for-profit enterprise.  This is similar to movie theatres in Tamil Nadu charging abnormally on popcorn to get additional revenues, in response to cap on ticket price.

Parents find these additional fee unfair and disproportionate. They are forced to use these services and hence they naturally complain about "high fee".

Thus, constraining schools in one aspect leads to unfair practices in other aspect. In order to regulate this, government is bringing a law to cap school fee, one bad policy leading to another.

2. The logic of fee cap isn't clear when there's already a rule mandating not-for-profit nature. If there's already a rule mandating not-for-profit nature of schools, it means that current tuition fee charged by schools even if it's high, is reflective of the costs, since there's no profit making from that.

What's the point in again capping school fee when the school fee, even if it's high, is reflective of costs? Does it mean to say that government is mandating schools to be not only not-for-profit but also cheap?

If government thinks schools are fudging the accounts to mask the not-for-profit clause, wouldn't auditing them be a way out, instead of capping the fee?

3. There is a confusion between different types of fee charged by schools. Minister's remarks illustrate this confusion.
“Donations are being taken beyond imagination. Schools decide which brand of shoes to buy and from which shop. The sale outlets of these brands are set up within the school compound and the parents are forced to buy uniforms, water bags, shoes, school bags, etc. This is not a good precedent.” 
“A crorepati family once told me that his grandson’s school had asked him to bring Rs 25000 for a celebration of a festival. He said he can easily afford the amount. But what right does the school have to charge such an amount,” Chudasma said adding that the schools across the state have been involved in collecting fees for Holi, Uttarayan and Diwali celebrations. “This is not fees. It is extortion. This has caused personal pain to me. I cannot bear it any more and so we are bring in this legislation,” he added.
If the real problem is the "unfair amount collected for additional services like uniform, books, festivals etc", it isn't clear if regulating the "usual annual tuition fee" stops the unfair practices in other aspects, unless the bill means that the cap also includes fee of the additional services (books, uniform etc).

4. It is argued that only few hundreds of schools are affected by this, that's no reason to support this. One should note that good quality education costs money, even if it is done with not-for-profit motive. It is especially true for schools in cities that have high infrastructure and human personnel costs.

Ahmedabad is home to some innovative schools, part of India's rare species. I suppose most of them will be affected by this new law and if this is implemented strictly, they will suffer.

5. Even if one puts aside all the above arguments and accept the fee cap, for the sake of argument, the stipulated cap is too low for any good school to function.

Good education costs money

While it is true that good private schools are often unaffordable to many, the sad truth is that good education costs money, even if done with not-for-profit motive. The high costs of education aren't usually visible because government usually bears it. There's a reason why governments spend money on school education.

We have created this mess

In an ideal world, most students would be attending good quality public schools and such high-cost private schools are attended only by a select few who have special requirements. By failing our public schools, we have forced people to shift to the unaffordable high-cost private schools and in response to the backlash, we are trying to strangulate private schools.

In the process, we have made parents devoid of good schooling in both private and public sector by strangulating private schools and not taking any significant steps to improve public education.

With the growing significance of private schools, such pressures are only meant to increase. If the past behaviour is any indication, the governments are going to yield to the pressure.

If only our public schools were better, we wouldn't have gotten into this complex mess.

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