Tuesday, April 11, 2006

Why reservations might be a good idea, huh!

There are three steps to stifle a market. One, increase the entry barriers. Two, remove protection for private property. Three, defuse any possible competition. Usually these three factors serve to increase the supply response. In the long run they provide the four attributes of quality; cost; access and diversity that maketh a desirable market. Once you add state regulation one upon another that adversely affect these factors, you set up the market for sure ruin.

The reservations is just another nail in the coffin of higher education in India. The pure economic reasoning in me cringes, but I think these steps are desirable and unavoidable in the short run. Why?

Possibly we need a repeat of the '91 Liberalization in the sector of higher education. For that we need a crisis. A crisis is generated only when the present set-up will bleed itself. Hence I support the reservations. In fact, I wouldn't mind even 85% reservations. The short-run is painful. But I hold more optimism in the long run. Once they succeed in bleeding the higher education market will the citizens and policy-makers realise the importance of developing sound markets and not ruinously doctor them with policy measures like this. Once that happens a lot of other constraints like the no for-profit set-up in education and strictures on private universities may be removed. These factors are present not only in tertiary education but elementary education as well. All these measures only dampen the supply of education. In fact, I hope they don't get any bright ideas of providing vouchers to the students to choose their seats. That would only delay the crisis and possible recovery of education markets.

Any sound higher education market needs the freedom of whom to teach, what to teach and how to teach. There is no need for a central Department of Higher Education (part of MHRD) in the Indian government. There may be a case for a department at the state level to maintain a registration list of universities and colleges. In fact, roads and de-regulation can do far good to targetted groups rather than reservations.

Right now, we are far far removed from a sound market. To get there we need a repeat of the crisis before Liberalization. So don't be surprised by an increase in the "black market" fees for seats in higher education. I am keeping my hands crossed for the "
innovative" responses of the private sector and the citizens.

Here is a quick list of a few sources of info that may illuminate the debate on reservations in higher education.

Higher education sector in India: Opportunities and Reforms
College Autonomy: Policy, Practice and Prospects
The holy quota: Have reservations really expanded quality education for marginalised groups?
How to build Quality Institutions

Knowing higher education in India better
Indian higher education reform: From Half-Baked Socialism to Half-Baked Capitalism

Understanding reservations better
Earnings and Education among Ethnic Groups in Rural India
Has job reservation been effective? Caste, Religion, and Economic Status in India
Positive discrimination in India: A Political Analysis
In Defence Of Larger Interests
Affirmative Action Around the World: An Empirical Study

My previous posts on education
Why IIPM is significant for Indian education?

Any other valuable sources of information will be appreciated.

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