Fee Regulation in Private Schooling: The case of

Gujarat
Athena Chowdhury – Sec A – PGP13047
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Questions:

1. What is the decision focus in the case or summary of the case?

2. What is the impact of Price ceiling on the market for educational services?
3. What is the impact of FRA implementation on various stakeholders?

Answers:

1. Education is one of the most essential part of a child’s future. School selection is often based on
status, fees, quality of education, extracurricular facilities and quality of teachers, even though it
should be primarily based on the opportunities and quality of education provided by the school.
In Gujarat, the students were facing an issue. Due to the high demand of reputed schools,
private schools had started charging exorbitant amounts, due to the fees being equated to quality.
The system was divided into affluent families who could afford that quality, and those who
couldn’t, therefore cutting expenditures on healthcare and other important factors, just to educate
their children. Education is a public good and every child has the right to good education – hence
govt. intervention was demanded by the people of Gujarat. This is the main focus in the case.

2. There are several impacts of price ceiling that was imposed by the govt.:
-Tuition fees were significantly reduced, hence more people could demand for better quality
education
- Due to the cutting down of fees, many schools started cutting down on their expenditures
for extracurricular, and other activities and charged separately for those by making them optional.
Similarly, quality of education also reduced when high salaried teachers were let go for
inexperienced lower salaried teachers
- Several private companies could choose to walk out of the education business, hence,
reducing the quantity of seats available, and further lowering the access to good education
- Schools which were charging lower, could now increase their prices to match the ceiling
even though they might be of poor quality

3. Impact of FRA on stakeholders (Schools, Teachers, Students and Parents):

Schools:
 Some schools charged separately for activities and made them optional (de-bundling)
 Parent-school relationships were hampered due to suspicion from the parents’ side
 Some school divisions shut down due to lack of support, and quality dropped further
 Increased overheads due to increased paperwork regarding cash flows
 Uncertainty for future income resulted in budget slashes and even dropping of developmental
programmes
 Teachers:
 Several teachers were let go due to shutting down of divisions
 Reductions in salary and annual growth impacted them. Many good quality, experienced
teachers would look for better opportunities
 Schools would hire teachers with less experience and lower qualifications to justify the lower
salaries, resulting in a reduction of quality
 Teachers were also burdened with administrative tasks and several administration staff were
let go
 More focus was given to higher education, and activities in primary and pre-primary education
were reduced, along with reduction in staff, burdening the teachers more by decreasing the
ratio of teachers to students
 These reasons would also result in a lack of motivation in several teachers

Students and Parents:

 Parents believed that quality of education and schools would drop, which would impact their
children negatively, and general distrust of schools increased
 Parents had to bear more stress as they now had to make separate payments for their children
to develop extracurricular qualities and even enrol their children in different organisations for
an all-round development
 Due to this, students were also burdened with extra tasks and time-commitments
 This would also lead to a reduction in play-time and creativity, which is essential for the overall
growth of developing children

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