tain let alone upgrade laboratories, buildings or libraries, or sufficient for pursuing research. Therefore, the National Knowledge Commission has requested—and the government has approved—a 190% increase in such funding from 2008 to 2009. However, it is not clear whether the Indian government has any additional funds to spend especially because the Indian K– 12 education system requires even more urgent attention.

According to the University Grants Commission (UGC) of India ( www.ugc. ac.in), the number of engineering colleges increased from 571 in 1998 to 1,645 in 2008, which represents an annual growth rate of 11.2%. Currently, out of these 1,645 engineering colleges, approximately 85% are privately owned, 10% are government colleges, and others are parts of universities that are wholly or partly funded by the central, state, or local governments. Approximately 88% of students graduate from private colleges, whereas others graduate from government-owned or govern-ment-aided colleges.

Broadly speaking, private engineering colleges can be classified into two categories. Less than 10% of colleges belong to the first category whose management and advisory boards comprise eminent and experienced individuals with substantial knowledge of technical education systems worldwide. More than 90% of private colleges belong to the second category and were mainly started for making profits. These colleges typically do not provide high-quality education and are therefore often unable to enroll enough students or attract

underwriting loans by
the indian government
will allow the banks
to become more
liberal in giving loans
and also reduce the
carrying costs for
students.

good faculty. Since earning profit is their main motive, many Indian citizens feel such profit-making institutions should not be allowed; others welcome this private initiative because it fulfills an otherwise-unmet need.

Only 12% of students graduate from colleges that are partly or wholly funded by the Indian government; most others resort to taking education-related loans from Indian banks. The amount of such education-related loans has grown from $110 million in 2001 to $3,450 million in 2007. Moreover, the educational loan as a fraction of total bank credit has also increased from less than 0.2% in 2001 to 1.1% in 2007, and the number of student borrowers has grown ninefold, from approximately 110,000 in 2001 to more than one million in 2007. Such a rapid increase in the number as well as the amount of loans is causing substantial discomfort within the Indian middle class, especially because the previous generation had to pay almost no tuition fee for college education (because all colleges used to be funded by the Indian government).

Keeping this in mind, the Indian government has recently announced establishing the National Student Loan Guarantee Corporation, which will underwrite most student loans and would also have a provision for waiving off loans if a student works for a government agency or in an underserved region in India for a predefined amount of time after graduating. Underwriting loans by the Indian government will allow the banks to become more liberal in giving loans and also reduce the carrying costs for students. However, this may also imply a bigger fiscal deficit for the Indian government, which is already reeling from a burgeoning deficit.

The All India Council for Technical Education (AICTE; www.aicte.ernet.in) is a part of the Indian government and approves new colleges after these colleges have fulfilled certain criteria. The National Board of Accreditation (NBA) is an autonomous body constituted by AICTE and provides accreditation to individual programs run by engineering colleges. Although NBA accreditation is mandatory for all engineering colleges, because of certain loopholes in the system, more than 80% of Indian engineering colleges currently do not have proper accreditation. From the colleges’

perspective, however, many find it extremely cumbersome and frustrating to get all approvals and accreditation from AICTE and NBA. Hence, the National Knowledge Commission has requested the Indian government to establish a separate regulatory authority that is autonomous and devoid of any direct control by the Indian government.

Limited numbers of qualified faculty is currently the biggest challenge for engineering and IT education colleges in India. A recent report, Faculty Development in Technical Education, by Rama Rao et al. ( http://www.isteonline.in/) estimated that currently there is a shortage of 75,000 faculty members (who have a minimum of master’s degree in engineering or IT) and this shortfall is likely to exceed 100,000 by 2011. Moreover, approximately 95% of the 1,645 engineering and IT institutions in India do not have research programs, and in 2005, all the engineering and IT institutions combined awarded only 968 doctoral degrees. Multinational companies (IBM, Microsoft, Google, Yahoo) are exacerbating this shortage by opening research centers in India and paying their employees three to five times more than the corresponding universities and institutes.

Because private institutes are mainly looking to make profits and govern-ment-funded colleges and universities can only provide similar salaries as those provided to other employees of the Indian government, very few colleges in India are able to match the salaries being provided by multinational companies. Given these circumstances, even premier institutes like IITs have 10%–15% unfulfilled faculty positions; the situation is worse for second- and third-tier colleges. Moreover, a recent Evalueserve survey regarding the preferences of IIT graduates indicates fewer IIT graduates are likely to pursue academics, which would further decrease the availability of such faculty members. Hence, to mitigate this shortage, many colleges have started requesting retired faculty return and teach; others are hiring recent graduates (with only a bachelor’s degree) who are not able to find jobs elsewhere.

Since there is an acute shortage of faculty and because previously retired faculty members or those with substandard skills are being recruited to teach