Post Diwali Modi has exploded the biggest bomb on the nation. In a televised address PM Modi informed the nation that bank notes of Rs 500 and Rs 1000 would cease to be legal tender from 8th November midnight. While honest taxpayers have nothing to worry, people with illegal money stashed away are in a state of shock. In one fell swoop Modi has undertaken to do away with black money in the country.
One of the major propagators and hoarders of black money are sadly our educational institutions. In earlier times, not so very long ago, education was a dignified profession. At that time, the creation of a school or college was a selfless and virtuous act to benefit society. There were neither contribution fees nor even donations or high fees. Today however, education has become big business. Institutions function as cash cows and attract mostly mercenary people towards their creation.
Right from nursery schools to elite higher education institutes including medical colleges, most educational institutes are indulging in practices to create money illegally and evade taxes putting the establishment of education to shame.
This is mostly done through capitation fees, which refers to the collection of a large payment made by students towards the educational institution usually in exchange for admission to the institution. Capitation fees are not included in the prospectus of the institute, and are over and above the normal legit tuition fees and other fees declared by it.
This extra sum is sometimes collected as a ‘donation’ towards the school building. Sometimes, the degree is held back and the student asked to contribute towards his alma mater to get it. This leaves no choice to the student than to come up with the money anyhow just to get his degree and is not less than a form of extortion.
In whatever form it may be collected it is illegal under the Prohibition of Unfair Practices in Technical Educational Institutions, Medical Institutions and Universities Bill 2010. However, this does not stop these institutions from openly and blatantly defying the law and asking for capitation fees from students whose parents are willing to go to any lengths to get their ward a good education.
Ample evidence to the collection of capitation fee exists. Only recently, income tax officers recovered Rs 43 crore in unaccounted cash in raids on the DK Adikeshavulu group of companies, including Vydehi Medical College and Hospital in southeast Bengaluru, and Mallya Hospital.
Prior to this in a raid in Puducherry, Rs 82 crore was seized from a private medical college. The money was related to cash donations collected from students during admission. Apart from the cash, a large number of incriminating documents and evidence pointed out to unaccounted income of more than Rs 265 crore.
Private medical colleges are amassing crores of cash by selling medical seats. A medical college near Yeshwanthapur raided recently had an unaccounted income of Rs 275 crore.
Capitation fee has been one of the major contributors to corruption in education and society. To give an idea of the extent and scope of these fees here are some figures:
Just to get admission into primary school a donation is required. Junior Kindergarten charge capitation fee of Rs 30,000 upto 5 lakh rupees. Parents are willing and often more than happy to cut through the admission processes to secure admission for their child into a renowned or English medium school with the help of donation.
Considering that 2.5 crore children are added to the population each year and that at least 20 percent of these would be paying capitation fees the estimated black money generated comes to an astounding minimum of Rs 15,000 crore in this education sector alone.
Things do not get better with higher education. In fact, the capitation fees expected gets only higher and higher. A college of choice costs Rs 2-5 lakh. If we take the lower figure of Rs 2 lakh, and the number of students in cities the amount comes to over Rs 10,000 crores a year in black money.
Let’s take a look at admissions into undergraduate medical courses. At the average rate of Rs. 45 lakhs per seat, (20 to 60 lakhs capitation fees) the illegal money collected in the form of capitation fees from around 20000 students becomes Rs. 9000 crores per year. This is only for MBBS.
For BDS, MDS, BHMS, BAMS, BPT, MPT, D Pharm, B Pharm, M Pharm, B.Sc, PBC, GNM, M.Sc (Nursing) the capitation fees vary from Rs 3 lakh to Rs 8 lakh.
In engineering the fees range from 2 lakhs to 9 lakhs, and the illegal money thus amassed amounts to Rs 9,000 crore per year.
In management seats are sold for Rs 2 lakh to Rs 10 lakh each. Estimation of the black money generated is Rs 600 crore.
The demands become much higher for admissions into PG courses in medicine. For MD and MS around 2,800 seats are sold in the range between Rs 1 crore and Rs 4 crore. Total unaccounted money is Rs 2,800 crores.
For PG in Management (MBA/PGBDM/) 20,000 seats are sold for Rs 8-20 lakh. The director of one institute was raided thrice and every time money was recovered, but in a few days, the activity resumed again. This generates about Rs 2000 crores even at a rate of Rs 10 lakhs per seat.
So we can clearly see how business and exploitation is being done in the name of education. The total sum calculated till now, only for capitation fee or donation per year becomes a figure above 36400 crores. Not a mean amount surely. This is the amassed wealth that will be impacted by Modi’s move.
Officially this money does not even exist. This money is what is usually termed, Black Money. Speculations are that a big part of this money goes to politicians and bureaucracy as a large number of institutes are owned, controlled and managed by politicians and business houses.
Much of this money is probably lying in cash somewhere but will become mere paper as it is undeclared. Hopefully with this new measure the ill-begotten gains of these institutions will come to nought.