End this licence raj

The All India Council for Technical Education (AICTE) must be patting itself on the back for a job well done, with the Delhi High Court upholding its order to stop the Indian operations of the Chartered Financial Analyst (CFA) Institute of the US. But the AICTE would do well to spare a thought for the 10,500 students who are enrolled for the CFA course, which costs almost Rs 1 lakh over three years and is considered to be a premier qualification for those who want to become fund managers or equity researchers. Some of these students may well have the means to appear for the CFA exams abroad, but should the AICTE impose such high costs on those who merely seek a quality education?

The longer-term question is the larger one: should the licence raj be allowed to continue in professional education, at a time when the pervasive shortage of qualified people and the lack of quality institutions to provide professional education have reached crisis point? The AICTE's case for being the controller of quality in the field of professional education is tenuous because of its track record; the plain fact is that it has not covered itself in glory in this regard and is widely perceived to have neither the expertise nor the wherewithal to ensure the quality of professional education in the country, in the numbers required. If proof were needed for this assertion, one has to merely look at the quality of education churned out by a majority of the professional institutes which have been duly approved by the council.

Certification is not a bad idea per se, but competition in the marketplace is just as valid a concept. Engineering colleges in the southern states have to build a reputation in order to attract students; those who fail to do so are either shutting down or converting their facilities for other uses. Meanwhile, it is also true that quality establishments like the Indian School of Business have been functioning perfectly well without AICTE accreditation. Here too, as in the case of the CFA, the AICTE has argued that it cannot allow unauthorised and unaccredited foreign institutions to access Indian students. But if it isn't broken, why seek to fix it?

From 1963 (when the CFA designation was first awarded) to 2007, around 100,000 people from at least 126 different countries have been awarded the right to use the CFA designation. India and China have shown some of the highest growth from 2005-2006, with increases of 25 per cent and 53 per cent, respectively, in the total number of charter holders. The exams are challenging, with only 40 per cent passing the Level I and II exams and 50 per cent passing Level III in June 2007. Moreover, premier institutions in countries across the globe such as the Securities and Exchange Commission in the US and the New York Stock Exchange have recognised the rigour and quality of the CFA programme. In India, institutions such as the Reserve Bank of India and State Bank of India have sponsored their high-ranking employees for pursuing the course.

The AICTE has argued that it is empowered to control technical education in the country. That is of course correct, because it has a legal mandate. But the certification process is mechanical in the extreme (the AICTE's way of ensuring quality is to count the square metres of built-up area per student, for instance), and even these parameters don't apply to CFA, which offers neither a degree nor a diploma, nor is it running an institute or university in the country.