The Telegraph
Since 1st March, 1999
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Left stops Arjun in FDI tracks
- Minister has second thoughts on courting investors in education

New Delhi, Aug. 7: The Left parties appear to have scared Arjun Singh off his proposal to woo foreign direct investment in education.

“After seeing the reaction of the Left, I am having doubts,” the human resource development minister said at a news conference today. He indicated that he has not abandoned the idea but is nervous about attracting the Left’s wrath.

Soon after he took over, Singh had said, at least thrice, that he wanted to get FDI for the cash-starved education sector. In a BBC interview, he said the ministry would like to explore the possibility of inviting foreign investment in primary and higher education.

But he had said this during the early days of the Congress-led government, before finance minister P. Chidambaram presented his budget with the proposal to increase the FDI ceiling in telecom, civil aviation and insurance that sent the Left up the warpath.

Singh was then optimistic about the Left taking a “pragmatic” stand. He said he was “sure” they would be amenable to a discussion. But the row over Chidambaram’s proposals has come as a warning.

Left leaders have made it plain that there can be no question of allowing FDI in education. When the minister had first come up with the proposal, the CPI’s D. Raja said: “Singh’s priority must be to increase allocation in education and not to look for FDI. There is no question of allowing foreign educational institutions in the primary sector.”

But experts in the National Educational Institute of Planning and Administration, a think tank, point out there already exists a policy introduced by the NDA government allowing 100 per cent FDI in education through the “automatic” route. “This means a foreign institution can invest in India just by informing the commerce ministry. The HRD ministry has nothing to do with giving permission,” an expert said.

The ministry has, till now, made no special effort to woo foreign investment in education. This is what Singh was looking at before the Left took the wind out of his sails. “The FDI in education has been paltry — a mere Rs 40 crore,” he said.

FDI in higher education means a foreign institute can fill in the gaps if they so want. For instance, IITs may not always be able to accommodate all the candidates wanting to study a particular discipline. In that case, a foreign institute can open branches in India to teach the subject in high demand. Similarly, for primary education, foreign schools can open branches in India. “But they will only look for high revenue yielding areas,” says a member of the think tank.

Much of this give-and-take between India and the world is expected to take place when talks on the General Agreement of Trade Services are held next year.

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