पापा कहते थे बड़ा नाम करेगा, कोई इंजीनियर का काम करेगा? - Vivek Kaul's Diary
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पापा कहते थे बड़ा नाम करेगा, कोई इंजीनियर का काम करेगा?

Aug 17, 2016

28

An education entrepreneur, I used to once know, liked the idea of offering MBA courses at various price points.

"If someone can afford to pay Rs 1 lakh, we should charge him Rs 1 lakh. If someone can afford to pay Rs 7 lakh, we should charge him Rs 7 lakh," was the basic argument he used to make (I am paraphrasing here).

His justification for it was fairly straightforward. "Hindustan Lever Ltd (now Hindustan Unilever Ltd) sells Lifebuoy. It also sells Lux," he used to offer as a way of explanation of different price points.

And he wasn't just a speaking type. He acted on what he said and had different business schools offering an MBA at various price points. Another peculiar feature of this entrepreneur was that he opened and shutdown business schools depending on how good the economy and in turn, his business was looking.

So, if he felt, that in the coming years, the demand for business school education would drop, he would not hesitate in shutting down a few business schools as well. That way he had a control over costs and at the same time there were no seats going around vacant in the years to come.

Now imagine what it did to the morale of students who had just passed out? Having studied at a business school, which had already shut down. Of course, the entrepreneur wasn't running a charity, he was simply running a business which was responding to supply and demand, like every other business does.

And that is how he operated, until he had a run-in with the education authorities and had to scale down his operations dramatically.

Having said that he had a reasonably good record in shutting-down business schools just before the demand for business school education fell. At least, that is what the old-timers who had worked with him for a long period of time, used to say. This primarily was a function of the fact that most of his business schools operated out of a few floors of rented buildings and did not have a campus, so to speak.

The same cannot be said about many entrepreneurs who in the last few years set up engineering colleges, to cash in on what they thought was an education boom. But as happens in case of many bubbles, by the time the supply of the new engineering seats hit the market, the demand for engineers had already started to slowdown and in the years to come things only became worse.

Given the fact, that many of these engineering colleges were set up by politicians, the All India Council for Technical Education(AICTE) went easy on approving these institutions. For politicians, establishing engineering colleges, on cheap government land, was a good way of putting their ill-gotten black money to use.

Also, once the college was in place, the hope was that the management quota seats, would keep bringing in the black money. Hence, education made for a great business model. The key assumption here was that the demand for engineers in information technology companies would keep exploding. Of course, the model also worked on the assumption that an engineering degree would continue to be aspirational for the middle class and the lower middle class households.

And all this made for an excellent business model, or so people thought. Nevertheless, this wasn't rocket science exactly and many people had figured it out, including, you, me and our mothers. It's just that we didn't have the money or the political connections to execute it, like the politicians did.

As Philippa Halmgren writes in Signals-How Everyday Signs Can Help Us Navigate the World's Turbulent Economy: "Whenever the majority of the population seeks to pursue the same idea at the same time, it usually ends in tears. It is a sure sign of trouble when 85 per cent of business school graduates want a job in the financial markets."

And it is a sure sign of trouble when many politicians want to set up engineering colleges and many prospective students want an engineering degree which gets them a job in an information technology company.

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The number of engineering seats exploded from around 5 lakh in 2005-2006, to 10 lakh in 2009-2010 and to more than 15 lakh, currently. India produces more engineers than the United States and China, put together. Given this, it isn't surprising that many of these engineering seats are going vacant.

Take the case of Maharashtra which has 1.35 lakh engineering seats. Newsreports point out that around 51,000 seats went vacant this year. That is around 38 per cent of the total seats. In Tamil Nadu, close to 1.19 lakh seats in engineering colleges found no takers. Tamil Nadu has the highest number of engineering seats in the country at around 2.79 lakh. Maharashtra comes in second.

In Karnataka, another state, known for its obsession with the engineering degree, 15,561 engineering seats found no takers. I can go on state by state, but the results will nonetheless remain the same. There is a surfeit of engineering seats across the country.

In fact, as the government recently told the Lok Sabha, "overall there is surplus capacity in the engineering sector with 8,44,328 seats remaining vacant in 2014-15." The surplus capacity does not mean that the competition to get into an engineering college has become any easier.

While, the number of seats may have exploded, the number of good colleges continues to be few and far between. In fact, various studies over the years have found that a majority of Indian engineering students are unemployable. A recent study carried out by Aspiring Minds found that 80 per cent of the engineers who graduated in 2015, were unemployable.

This isn't surprising given that starting an engineering college by acquiring the land and putting up buildings, is the easiest part of the job. What an engineering college (or for that matter any college) requires are good teachers. And there is a clearly a huge shortage of even half-decent teachers going around.

Having taught and studied at private colleges (MBA and journalism) I can vouch for the fact that they are extremely poor pay masters, once we take into account the kind of fee that they charge to their students.

There have been gainers out of the entire process as well. And these are the information technology companies. With the number of engineering colleges exploding, the starting salaries in these companies has more or less remained the same, over the last few years.

Also, the AICTE after allowing the establishment of all these colleges has now plans of shutting them down. As Anil Sahasrabudhe, chairman of the All India Council of Technical Education (AICTE), told Mint in September 2015: "We would like to bring it down to between 10 lakh and 11 lakh (one million and 1.1 million) from a little over 16.7 lakh now."

And that is how government institutions operate. First they create the problem and then they think they will be able to solve it, by simply shoving it away. The good thing is, at least in one area in India, the market is doing a good job of cleaning up the mess that prevailed.

Vivek Kaul is the Editor of the Diary and The Vivek Kaul Letter. Vivek is a writer who has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times, in the past. He is the author of the Easy Money trilogy. The latest book in the trilogy Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System was published in March 2015. The books were bestsellers on Amazon. His writing has also appeared in The Times of India, The Hindu, The Hindu Business Line, Business World, Business Today, India Today, Business Standard, Forbes India, Deccan Chronicle, The Asian Age, Mutual Fund Insight, Wealth Insight, Swarajya, Bangalore Mirror among others.

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14 Responses to "पापा कहते थे बड़ा नाम करेगा, कोई इंजीनियर का काम करेगा?"

Dr. Kuldip Singh

Aug 19, 2016

Regarding good business module pursued by our worthy politicians, the article holds good in the field of Medical Education and for producing doctors, if you replace Engineering colleges by the word Medical Colleges.

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yugendra pal singh

Aug 18, 2016

My dear Vivek
well written & hit the nail on head.
y.p.singh

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krishna chandra vyas

Aug 18, 2016

Very good narrative Mr Vivek Kaul.

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KIRIT SARAIYA

Aug 17, 2016

one factor missing in this is that expansion of engineering college is done without looking to quality of education. if we have colleges with quality education students from Africa or middle east can come and study. this can be good source of making good foreign exchange.
why action is not initiated against authority who gave permission to open colleges without knowing requirement of engineering graduates. They have spoiled future of many young students.

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ndsubramanian

Aug 17, 2016

Dear Sir!
most of your readers including me are from Tamilnadu. When I see the caption in Hindi without a corresponding English translation I feel that you too have become a hindi chauvanist. In a subject of finance and economics what way this hindi caption helps you or any reader except an ulterior motive of indirectly imposing hindi on us. WE are a nation of multitude of languages, cultures races and diversity is our strength. You cant create unity by this sneaking methods.

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TUSHAR

Aug 17, 2016

A friend( Schoolmate ) of mine is a comity member as an expert to comment on RESERVOIR OF VARIOUS DAMS in India. He s also a guide to UPSC students .Once ,out of frustrations , he told me " Tushar, these candidates who have supposed to be passed Civil Engineering course , JUST DO NOT KNOW A B C D of Civil Engineering. " He even told the comment he had written on the report as "IF SUCH ARE THE CANDIDATES IN CIVIL ENGINEERING , THEN FATE OF INDIA IS DREADFUL " .I asked him , " What will happen now ?" he answered , " n their next session , a NEW GUIDE will be appointed with lots of ...... " Yo know what he meant .
Whenever we meet , he tells me new things about those people.
By the way , Mr. Kaul, why do not you write some thing about MBBS course ? It has almost similar story . I ,being a Gynecologist , I suggest you to do the same .
Thanks
Dr Tushar

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K Ahuja

Aug 17, 2016

Very correct and very well known. Examine also the accounting process used by such so called trusts to estimate their costs to fix fees for approval of whatever regulating body that may or may not exist. Land is subsized, there are no taxes. And all profit centres within the institution like bus service or hostels supplies etc. Are not shown as revenue or profits on books and on top of it all depreciation is shown as deductible cost in addition to interest costs. No wonder the entrepreneurs have many luxury cars mansions and so on as their personal property. Please write a column about these practices backed up by balance sheet data of such institutions. What is required is a change in laws that regulate the so called Trusts.
Private education especially higher education has become better than farming to evade taxes. Do we have a right to talk about inclusive growth. Even Hillary and Trump are talking about sky rocketing costs of higher education in the US. Students who come here at least experience a different way of learning!

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KD

Aug 17, 2016

This song is very old! In late 60s and early 70s an engineer becomes class 1 gazetted officer. On the day one of the job hundreds of people report to them. Our previous generations has enjoyed these kind of privileges in India and they generally joke to us that we are highly paid clerks. Many of these people were still not satisfied and became IAS officers who were literally the king of that city in 1970s.

No degree has devalued as much as engineering degree. Even if you graduate from MIT or Stanford at the top of your class, you will not get this kind of job anymore. There is a slim chance that person graduating with MBA degree from Ivy League university will get this kind of job.

Therefore, I urge engineers who graduate from elite universities to make up their mind. They are nothing more than ordinary blue collared workers. Otherwise, you are up to very big shock and probably depression.

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DR. AJAY BAJAJ

Aug 17, 2016

Hi,

It's not only engineering but most of the professional courses have the same problem. Being a dentist, I will talk about dentistry. We have around 325 dental colleges in India.There are total about 900 all over the world, so we have roughly 35% of them in India alone! We produce more than 25,000 dentists annually and already have more dentists than required. WHO says there should be 1 dentist per 6000 of population. In all major cities, we have 1 dentist per 1200 of population, meaning 5 times more than required. Smaller towns and villages still have scope to accept more dentists as most of the doctors prefer to settle in major cities. Smaller places have another problem. Oral awareness is poor and paying capacity is also lesser for patients. Once a dentist, always a dentist. He has not learnt anything else in life, he will continue to be adjusting with poor practice for next 40 years. And we are adding more at an alarming speed. Dentists with even 5-10 years of experience are ready to work for 20K full day for other dentists as starting a new practice can cost close to a crore or more (including clinic property) and there is no guarantee that you will get return on investments. Naturally, 30-40% of dentistry seats are now going vacant! Gone are the days when you had to pay capitation fees for dentistry... You can even bargain with college management for normal fees also. And needless to say, many of the dental colleges are thinking of shutting down.

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Dr Aniruddha Mapani

Aug 17, 2016

The politicians are one step ahead of you ! For-profit companies have been given permission by Niti Aayog to open medical colleges, so this is what they are now going to reinvent their engineering colleges as ! Lots more money to be made

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