A meeting between industry representatives and top government officials on Friday revealed that serious differences still persist between the two on who should be the beneficaries of affirmative action by the private sector.
While there appeared to be a consensus on providing bank loans on reasonable interest rates, and a re-financing facility to the students from the weaker sections, the two failed to agree on which groups constitute the 'weaker sections'.
While the government suggested that Scheduled Castes (SC), Scheduled Tribes (ST) and Other Backward Classes (OBC) students should be targeted, the industry firmly held that the sole criterion for determining who to help should be economic backwardness.
Industry representatives included all the three chambers of commerce - the FICCI, CII and ASSOCHAM. The government was represented by TKA Nair, principal secretary to prime minister, Vinod Nair, secretary, finance, and RP Aggarwal, secretary, higher education. "It was a brain-storming session where everyone gave suggestions on the different models of cooperation between the government and the private sector that can be adopted for affirmative action in the field of education," a government official said.
In the hour-long meeting at the prime minister's office, some of the industry representatives asked the government to create a Credit Guarantee Corpus Fund, through which the industry and the government could together make up the losses banks would suffer if they gave loans at lower interest rates to the deprived.
A working group of the Indian Bank Association has suggested that the fund should be on the lines of Credit Guarantee Trust Scheme for small-scale industries to provide a cushion to banks on loan defaults. The banks have witnessed major defaults on education loans with Rs 9,419 crore outstanding till end of December 2005.
The annual interest rate for education loan is currently 11 per cent. Loans up to a maximum of Rs 7.5 lakh are given to meritorious students who can provide collaterals to finance their education.
The government suggested the interest rate for the weaker sections be lowered, but industry felt government would have to share the burden of the lower interest rate. "In this, the PPP mode will come into play where both government and the industry can share the burden," a HRD ministry official commented.
Now, the industry and the government will come up with specific proposals on the Public Private Partnership model (PPP) for affirmative action. "The models will be discussed at the next meeting," an industry representative said.
Such an approach has been necessitated with the government's decision to allow more private and foreign players in higher education. "In that scenario the fee structure would be same for one and all. The students from economically weaker families would find difficult to seek admission in the top private universities.
Hence, there will be a need for easy education loan facility for them," a senior Planning Commission official said. The commission earlier this year had prepared a concept paper on a need for easy availability of education loans to poor students.
Industry representatives, however, said the issue of covering Scheduled Castes, Scheduled Tribes or Other Backward Classes under the PPP mode of affirmative action was not discussed at the meeting.
"We are for affirmative action on the lines of economically backwardness and not on the caste lines," said an industry representative, who participated at the meeting.