The Indian education system is one which is characterised by stagnation and inefficiency. Large amounts of money being invested in the system to provide infrastructure and accessibility are going to waste because of the lack of incentive structures to improve the quality. There are historical barriers to the education in India coupled with the post independence approach of focussing on tertiary education more than primary education.According to the census 2001, more than one out of every three citizens in India is illiterate. (Muralidharan, Ruzzi, Cheney, 2005)
In order to gain some perspective on the profit model, it is important for us to examine some of the functions that a profit model in education is supposed to carry out as elucidated by Dietrich in his report in 2013.-
The profit incentive in the education market will attract more potential investors to invest in education. The increase in the number of players leads to an increase in the number of institutions opened. The incentive will also be to open institutions in places with least competition thereby leading to a spread in the reach. This satisfies the deficiency in accessibility.
The increased competition amongst the increased number of players leads to a price battle which leads to a reduction in the price and the fee structure.
Increase in quality-
The increase in supply will lead to a competition for students. This competition will lead to an effort on the part of the profit institutions to improve the quality of the education provided. (Dietrich, 2013)
A number of mechanisms have been used to introduce profit in education in various countries. One of these is the school voucher system which is issued by the government and can be used by parents to send students to the school of their choice- public or private, Profit or non- profit. Some governments fund for- profit providers through tax credits, by making educational expenses, deductible taxes. In some countries these systems are universal while in other countries they are used for select students. (Helena, 2012)