Supply, Demand and Perils of the Higher Education Market in India

Supply Demand Problems of Higher Education market In India

This is the second in a three-part series by Prof Ashish Kulkarni called “Understanding the Market for Higher Education”. In the first part, titled The Market for Higher Education is Not for Learning, the author talks about what makes up a market, and how the market for higher education has a lot of blurry lines. For instance, what is the good or service that is being sold in higher education? Learning, you might say. But ask yourself this: does the certification matter at least as much, if not more? Would you pay the same amount of money if you didn’t get a degree at the end of your college, but just the experience of being there and learning? Probably not. The first part of this series is an essential backgrounder to what the higher education market looks like. For a holistic understanding of where exactly problems lie, we highly recommend reading the first part before proceeding with this piece.

What is being supplied?

Two things are supplied for certain when it comes to higher education: sorting and learning.

What is sorting? Higher education institutes signal to society that certain students are better than others. Those, for example, that make it through an entrance examination are deemed to be “better” than those who don’t. This may or may not be true, of course, but society uses this distinction very often.

“Oh, an MBA from IIM!” or “Achcha, IIT se hain aap!” is what sorting means in this context.

Sorting happens within colleges as well, of course.

“Gold medalist from IIT” is sorting squared, if you will. Not only are you “better” than the folks who didn’t make it through IIT, but you are the best of the lot that did. And for better or for worse, sorting is immensely valuable in our society. What you learn, and what you know, isn’t intrinsically good in and of itself. It always has to be benchmarked against Sharmaji ka beta.

That’s sorting.

And again, if you believe that sorting can only take place after learning takes place, please consider buying that monument of marble in Agra. I’ll get you a good price!

Which brings us to the second thing that higher education provides: learning. But we, as a society, simply don’t value this all that much. Don’t agree? Here’s a simple question: as a society, have we spent more time in 2020 figuring out how to teach online, or how to conduct exams online? This question applies to everybody – students, professors, administrators,
policymakers, parents and the media.

Society values the sorting function more than it does the learning function in higher education.

What is being demanded?

Three things, if you ask me, are top of the list. Learning, certification and peer networks. College is a bundle!

Yes, one goes to college to learn, but for reasons described above, one also goes to college for the certification. In fact, I would argue that if learning was the only reason to go to college, one should in fact not enroll in college, for you’re all but guaranteed to get a better professor online than you will in your own college. There’s always someone better online is one of the better definitions of the internet!

But hey, if it is certifications you want, colleges and universities are still the places to go. Remember the sorting function? Nobody does that better than colleges, and if you want to be sorted (pardon the pun), then college it is.

So folks want sorting, and college provides it. And folks want learning, and college (kind of) provides it. So far so good.

But here’s a major, major problem: effective sorting is at odds with cheap (or free) learning. Sorting, by definition, requires the presence of gatekeepers. Entrance examinations and qualifying examinations are stringent gatekeepers that not everybody can get past. And because only a select few can – and because their value goes up precisely because only those select few can – education must be an expensive proposition.

The more efficient you want the sorting to be, the more tolerant you must be of higher prices for learning. Everybody and their neighbour has Coursera certifications in 2020, but how many have admission into Harvard? Which certification is more valuable: Coursera or Harvard?

I said at the start of this section that a student demands three things from college: the learning, and the certification (or sorting) are two that we have spoken about so far. But to me, the third is the most important, the most misunderstood and perhaps the most underrated.

Peer networks.

You learn best, if you ask me, at 3 in the morning the night before the exam. Now, that may or may not be true in your case, but here’s what’s almost certainly true for everybody – the lessons that stick in your mind the longest are the ones you learn about by arguing with your friends.

The Monty Hall problem, that devilishly difficult to understand piece of logic, finally went in my head – and has stayed there ever since – only after an extremely heated argument with one of my best friends.

Crosswords solved while sitting on the last bench, classes bunked together, arguments, fights, trips, and at the risk of sounding un-professorial, vellapanti – these things help you form the kind of bonds that stay thick and true for life. Thirty years after graduation, you can still pick up the
phone and ask a classmate for a job reference, and chances are you’ll get it.

It is an externality, yes, but an oh-so-important one. The best colleges are the ones that internalize peer networks as best as they can, and I maintain it is perhaps the most important part of learning.

Houston, we have a problem!

So what is the problem? It is this: folks on the demand side, and the supply side, are unclear about what is being bought and sold. In addition, I’d argue that sorting is being done along dimensions that nobody really cares about, or finds relevant.


  1. Higher education today is more about sorting than anything else.
  2. Learning, like it or not, happens through peer interactions and online courses, and this is increasingly true with every passing year.
  3. Sorting based on rote memorization or badly designed tests leaves recruiters dissatisfied.

So, are there any substitutes to this current scenario? If yes, can they be possible solutions as well? What might the future of education look like? To get answers to these questions, read the final part of this series titled “Can There Be a Substitute for Higher Education?”


The views expressed in this article are the author's own.

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