Less than a week after it amended the Constitution to pave the way for 10% reservation for the economically backward among upper castes, the Narendra Modi government has announced this will be extended to private universities and not just public ones.

On Tuesday, Union Minister for Human Resource Development Prakash Javadekar said that private institutions will have to introduce not just the 10% quota for the upper-caste poor but the full complement of caste-based quotas as well – reservations for the Scheduled Castes, Tribes and Other Backward Classes.

Until now, these quotas were applicable only to public universities. Legal provisions to reserve seats in private universities existed, but previous governments had not implemented them.

Javadekar’s announcements have caused alarm and confusion among the administrators of private universities. Most of their concerns have to do with their finances.

The promoter of a chain of institutions started by his family in Maharashtra pointed out that a large number of private institutions have been set up or expanded with loans. If institutions are unable to recover that amount from fees, “we will all become like Vijay Mallya”, he said, only half-jokingly referring to the owner of the now defunct Kingfisher Airlines who fled India in 2016 after defaulting on a massive loan.

Private universities have assumed they will have to write-off the fees from reserved seats.

With the actual details of implementation still unclear, the announcements have raised several other questions.

Can the Centre implement the quotas on its own?

The Economic Times has reported that the Ministry of Human Resources Development is drafting a bill that will “basically provide for implementation of the SC [Scheduled Castes], ST [Scheduled Tribes] and OBC [Other Backward Classes] reservation as well as the EWS [Economically Weaker Sections] quota in private educational institutes”. Any candidate from a family with a collective annual income less than Rs 8 lakh will be eligible, according to media reports.

The possibility of the Centre’s drafting of a new law is being viewed as an overreach. “Education is a state subject, the Centre has to take concurrence of the states to implement this,” said P Palanivel, secretary, Education Promotion Society of India, which represents private institutions of higher education. One of its two presidents, H Chaturvedi, told The Wire: “The Centre will have to pass a law and then the state assemblies will have to do the same.”

Some private universities already reserve seats following the state laws under which they were established. The vice-chancellor of one in Haryana, for example, said his university already follows the 25% reservation for students domiciled in Haryana as required by the state Act. Legally, domicile is defined as the “place of living” or permanent residence.

It is not yet clear how the reservation policy decreed by Haryana will square with the one the Union government is trying to implement.

How will reserved category students pay fees?

This is the main sticking point: No private university administrator is expecting students coming in through reservations to be able to pay fees. In fact, a quota for the economically backward makes no sense without a fee-waiver.

Existing reservation policies under state laws often come with provisions for fee concessions. For instance, Haryana requires private universities established under the state law to offer fee concessions ranging from 25% to full waivers to students coming through the domicile quota. But these are factored into the financial plans of universities.

Can private universities write-off the fees of reserved category students?

They claim they cannot. Palanivel of the Education Promotion Society of India said that a university takes between Rs 200 crore and Rs 400 crore to set up and that the vast majority of private institutions in the country have been financed through loans.

“We secure loans by presenting financial plans in which we tell the bank how we plan to generate revenues, the amount of fees we will get and how we will repay,” said the promoter from Maharashtra. “A quota will create a big mess. Barring just a few universities backed by massive businesses, no one will be able to pay. There is one university that has borrowed around Rs 1,000 crore.”

Private universities also have to spend money to attract fee-paying students. Newspaper advertisements are essential for this purpose, especially for universities offering engineering courses, for which demand has reduced. Then, private universities aiming for “world class” status pay their faculty at much higher rates than public ones, many even invite academics from abroad to teach for short periods here.

“My university is now in expansion-mode,” said the promoter from Maharashtra. “I have borrowed Rs 100 crore and have decided on taking 2,000 students each year. But if this [reservations in private institutions] comes, it will not be financially viable – I will not be able to pay salaries. Everyone is being paid Rs 60,000 to a lakh more than what the Seventh Pay Commission recommends for teachers.”

What are the options?

One option private universities are discussing, albeit reluctantly, is that of the government reimbursing the fees of quota students. “If government is introducing a quota in private institutions, it must also do something to support them,” said the vice-chancellor of a private university with branches in several southern states. He added, however, that where such a provision for reimbursement exists, private universities cannot rely on the funds arriving on time.

A second option, applicable only to private institutions affiliated to public universities, is a fee revision for other categories, he said. In many states, fees charged by government-unaided private colleges affiliated to public universities are controlled, either by the state or the affiliating university. For example, private engineering and management schools affiliated to the Guru Gobind Singh Indraprastha University in Delhi, a state public university, follow the fee structure decided by Delhi government’s Delhi Fee Regulatory Committee. They already reserve seats for Scheduled Castes and Scheduled Tribes but not for the Other Backward Classes.

The vice-chancellor of the private university with branches in several southern states argued that if another 10% seats must be reserved, the state governments or universities must allow the institutions to recover that amount by raising the fees for students from unreserved categories.

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