Telcos deserve a better deal

The telecom sector is the most significant and visible success story of economic liberalisation in the country. However, its sustainability and continued growth can only be ensured with firm but soft-touch regulatory measures. This writer recently had the opportunity to interact with major fund managers of asset management companies likeFidelity, Blackrock, Capital World, UAB, RCM and HSBC.

The concerns expressed by the asset management groups on regulatory uncertainties in telecom sector were genuine and any future foreign investment in the sector would be largely determined by the manner we address the present upheaval.

Unlike many developed countries, the regulatory function in India is performed both in the government, ie, department of telecom, and the regulator, Telecom Regulatory Authority of India (Trai). Given present functional jurisdiction, the answers to most regulatory issues lie with the government.

The paramount need for functional efficiency and financial health of telecom service companies is the process of consolidation. The international experience says that 5-6 licences are adequate for both quality of services and also competition in the sector.

Even if we account for the population of the country, there is no viable case for having a dozen licences in each service area. The truth is that many licence-seekers in 2007-08 were in the queue for unearned gains. This became evident when some foreign companies invested on hugely-appreciated script value of newly-licensed companies.

By 2012, there is already a clamour for incentivised merger and acquisition policy and friendly exit policy. Fortunately, the issue got partly addressed by the recent judgment of the Hon’ble Supreme Court. However, the government would be repeating the mistake if the number of licences are not rationalised.

It is imperative that the need and timing for new licences should be considered by the regulatory authority on reference from the government. No one is making a case for pre-determined numbers or any form of capping of licences. However, the process of granting licences can be initiated in phases to assess the felt need.

The government has announced the draft National Telecom Policy, 2011. The finalisation and its announcement deserve highest priority to dispel regulatory misgivings. There are important recommendations from Trai that deserve to be accepted by the government and incorporated in the NTP 2011.

The most critical structural recommendation is regarding unified service licence with freedom to use any technology and separation of spectrum. The acceptance of this policy would also require a defined path for the migration of present unified access services licence-holders. This should be addressed along with the licence-renewal policy as many of the incumbents would be completing 20 years beginning year 2014. It also entails determination of renewal fee.

There is another pending issue bothering investors in the telecom sector. It is regarding the determination of spectrum price beyond 6.2 MHz presently with the major telecom service providers. Trai has made certain recommendations on this subject.

However, the government would soon auction 2G spectrum band as per the orders of the Supreme Court. Therefore, a balanced view needs to be taken so as to avoid any situation of litigation and irrational bid conclusions.

Another recommendation of Trai is about reframing spectrum in 900 MHz band. It may be desirable to consider the monetisation of the spectrum value in 900 MHz band among the possible solutions to resolve this issue.

There are also technology and interconnect issues. Trai has already recommended permitting voice on internet protocol. In future, LTE technology will be a major challenge to the existing telecom service providers. The issue of interconnection within and outside the service area in different spectrum bands is already before the appellate court. There are official announcements of one India circle and consequent abolition of roaming charges.

This deserves serious consideration on grounds of technology, tariff and resolution of national long distance licences. Lastly, the rationalisation of tariff must remain with the telecom service providers. The need of the hour is to seek the view of telecom service providers and evolve regulatory policies in the larger national interest without any tag of winners and losers.

(This article was published in the Economic Times on 15th March, 2012, and in Business Standard on 11th March, 2012)

School results are in…

The preamble to the historic ‘Right of Children to Free and Compulsory Education Act, 2009’ (RTE) reads ‘… An Act to provide free and compulsory education to all children of the age of six to fourteen years.’ So how realistic is the target set-out by this Act?

Since the very inception of our Constitution in 1950, Right to Education was kept under the category of Directive Principles of State Policy. These Directive Principles act as important guidelines towards making laws to establish a just society in the country. But unlike Fundamental Rights, these are non-justiciable rights of the people.

In 2009 the historic legislation of the ‘Right of Children to Free & Compulsory Education Act’ was enacted, and thus moving it to the Article 21 of the Chapter III of the Constitution. With the RTE Act (RTE) coming to force on the 1st of April 2010, India has joined the league of over 130 countries all over the world which have legal guarantees to provide free and compulsory education to children.

In April 2011, we are going to complete one full year since RTE Act came into force. Thus as would be expected, various credible institutions have come out with analytical reports on the performance of the RTE Act in the year 2009-2010. ASER the research division of the NGO Pratham working primarily in the sector of promoting elementary education, has come out with the Annual Status of Education Report (ASER) 2010. This report evaluates the execution of the RTE Act on various parameters like pupil to teacher ratio, teacher to classroom ratio, school facilities, student-teacher attendance etc. Based on thirteen such parameters picked up from the RTE Act when various states were ranked for their compliance with the RTE norms, this report revealed that Puducherry, Kerala, Daman & Diu, Gujarat and Punjab complied the highest as of now with the various RTE norms; whereas the seven North-Eastern states ranked the lowest. But one of the main criticism of the RTE that comes out through this report is that the Act does not account for the outcome achieved and end-result aimed to be achieved through this legislation, which is of qualitative rise in the learning level of the targeted children.

Yet another important report of 2011 which provides a quality peep into the execution of RTE Act is the District Information System for Education (DISE) flash statistics on the progress of the universalisation of elementary education in India for the year 2009-2010. As far as the DISE reports are concerned, it analyzes the implementation of the RTE Act across all the states of India taking into account various components like access, infrastructure, teachers and outcomes. States were ranked in order of their compliance to these components by DISE, Puducherry, Karnataka, Kerala, Andaman & Nicobar Islands and Tamil Nadu ranked the highest, whereas Bihar, Jharkhand, Meghalaya, Assam and Arunachal Pradesh ranked the lowest. The points of concern that got highlighted through this report are that since 2005 many important indicators of universalisation of elementary education have stagnated. The National Apparent Survival Rate and the Retention Rate at primary level has been stagnant at 70-78% since 2005; Transition Rate from primary to upper primary has also come to a stand-still at 83-84% since 2005. Moreover the discrepancy in the performance between the better performing states and the not so-well performing states on the above mentioned parameters is quite large.
The Public Interest Foundation filed applications under the Right to Information Act, 2005 to all the 28 states seeking information on the level of execution of the RTE Act within the states. Some the states that wrote back informing on the status of its implementation were Delhi, Uttarakhand, Kerala, Gujarat, Himachal Pradesh and Jharkhand. An analysis of the data provided by these above mentioned states shows that in none of the above states the ‘state advisory council’ has been constituted as yet; data mapping exercise for the neighbourhood schools has only just started in Gujarat and Himachal Pradesh, whereas others states have not even begun with this basic exercise; even on the front of preparation of financial estimates within the states required towards the provision of the fundamentals of this RTE Act have not been prepared by Jharkhand. This goes on to suggest that little has been achieved in terms of concrete steps towards adoption and implementation of the RTE Act at the level of state governments.

Further, closely following the trail from the above reports another alarming pattern that calls for urgent attention and re-addressal within the RTE Act is that besides having parameters to measure the inputs made available to ensure the universalisation of elementary education, there is an unequivocal requirement for ensuring the quality of the outcomes achieved through this Act.  Quality of outcomes refers specifically to the learning levels of the kids, the difference which has come about in retention and survival rate of kids, and whether or not the coming about of this act has had any positive impact on the transition rate of kids from primary to the upper primary levels. That is to say that a direct co-relation needs to be established and strictly monitored periodically as to how does input in terms of infrastructural guarantees, accessibility to neighbourhood schools, availability of qualified teachers assures that the certificate issued on the finishing of eight years of free and compulsory education actually reflects on enhanced reading and writing skills of the children between the age of 6 to 14 years.

Another point of caution in relation to this Act is that these parameters of retention, survival and transition of school children need greater monitoring and improvisation in regards to government managed schools rather than private schools. Private schools already have an established way of operating which is performance and efficiency oriented, along with a defined group of end-users who are more or less satisfied by its demand-supply mode of operation. RTE Act as a tool for quality intervention should focus more on the defined area of government schools because this is where more of enrolments are happening in the not so-well performing states in terms of literacy rates like Bihar, Jharkhand and Uttar Pradesh. A focussed target based approach towards working efficiently to address these problems of survival, transition and retention of children in government schools will not only help in improving the national literacy rate but will also go a long way in bridging up this huge gap which exists in the performance between the well performing states and the not so well performing states in terms of the parameters used to check the implementation status of the RTE Act.

Thus the assessment of the year ‘one’ clearly shows the huge gap that still needs to be covered if we are to translate the historic vision of this Act of elementary education to all children between 6 to 14 years, into ground reality. First and foremost there is an urgent need to expedite the execution of the provisions of this act, which is primarily the responsibility of the central government and the state governments working alongside the local authorities. Secondly, there needs to be an in-built mechanism to ensure that the adoption of the provisions of the act is done with reference to a concrete end-goal. And the concrete end goal needs to be ascertained in terms of the minimum learning level that we aim to achieve for the targeted children at the end of the eight years of elementary education; the rise in the survival & the retention rate of the children at the primary and the upper primary level that we are targeting towards through this Act; the increase in the national transition rate of the children from the primary to the upper primary level which can realistically be achieved through the inputs being fed into the system by the means of the RTE Act.

(This article was published in Financial Express on 18th March, 2011)

We Want Good Grades

The Right of Children to Free and Compulsory Education Act, 2009 became effective from April 1, 2010. It is one of the most ambitious and commendable pieces of legislation piloted by the present Government.  The Act promises free and compulsory education to children from the age of 6 to 14 years.  As Dr. Amartya Sen has observed that the imposing tower of misery which rests in the heart of India has its sole foundation in the absence of education.

Caste conflicts, religious tensions, lack of work culture and precarious economic conditions, all centre on this simple fact. According to the Nobel Laureate, the ‘ Right to Education’ offers a much awaited social recognition of the centrality of literacy as a basic human capability.

India fares poorly in the basic human capability index.  A quarter of our people are illiterate.  There is a disturbing gap between the literacy of men (75%) and women (54%).  No industrialized country has a literacy level below 80%.  China has more than 90% literacy rate.  There is an important link between healthy human capital and rapid economic development as evident from the empirical results on comparative growth of East Asian, South Asian and African economies.  The right to education is a significant first step in our country.  It commits to provide elementary education to every child.

Often our good policy, projects and programmes suffer from tardy implementation. We need to guard against this noble vision meeting the same fate.  It is with this commitment that the Public Interest Foundation has decided to adopt this programme as part of its work agenda.  The Act emphasizes that the local government should monitor the enrolment and compulsion of elementary education to all.  The Act has dealt, in great details, with the normative standards for a school and also the upgraded skills for teachers.  It envisions inclusive education through special provisions for children belonging to the weaker sections, disadvantage groups and also physically challenged children.

The challenges of implementation are many.  There are numerous players identified in the Act for effective delivery.  The role of the local governments is crucial to the success of the programme.  More than identifying financial resources the delivery mechanism of reaching out to the children and their parents is a gigantic task.  The capacity of the State Government to mobilize resources before qualifying for central assistance will depend on political commitment.

The Public Interest Foundation has evolved a framework that will identify critical measurable milestones at the kick off stage. The mammoth task has been broken into specific steps for effective measurement and analysis. The objective is to appreciate the intermediate steps for the successful launching of the programme. In our view there are critical issues relating to governance, finance, technology, database lining and infrastructure for the take off.

The Act envisages the constitution of a ‘National Advisory Council,’ to oversee the implementation. The union government has already announced the composition of the Council. A similar body is envisaged under section 34 of the Act at the state government level.Only few state governments have taken this important first step towards the implementation of the Act.

The mobilization of the programme to some extent has been possible as the Sarva Shiksha Abhiyan has been subsumed in this large national goal. As per theAct,the estimates of the capital and recurring expenditure would be prepared under the overall guidance of the union government. The contribution from the state governments is through consensus building. Further, section 7(3) stipulates that funds should be released to state governments as grants-in-aid in consultation with state governments. There is a better estimation at the central level regarding the requirement of the funds. The Finance Minister recently   announced that the Government would allocate Rs. 231,000 crores over the next three years for the implementation of the act. However, there seems to be a lack of progress in consulting with the state governments, agreeing on a mutual acceptable formula for providing central support and a time table for the release of funds. We already hear dissenting comments from the state governments regarding funding the implementation of the act; for example, the recent comments by the minister from U. P.  So this area clearly requires a push from both, the central and the state governments.

The local governments are to monitor admission and imparting of elementary education. They are expected to maintain the record of children from birth till the age of 14 for free and compulsory education. This data is to be annually updated and kept in the public domain.  This record is the basis to establish the outcome of the act. While statistics are available from the supply side i.e. how many schools, the number of children attending such schools etc, this record from the demand side, i.e. the number of children in different neighborhoods and their status vis-a-vis their attendance at school, is not uniformly available.  To set up a mechanism to gather this data, publish it in the public domain and update it regularly, is a major challenge for the local and state governments. Given the level of competence and the inadequate staff support of the local bodies, there are serious concerns about the delivery.  This also throws up an opportunity to leverage the technology to set up a database nationally and monitor the status of the school attendance transparently and in a timely manner.It may become feasible with the support of appropriate technology and infrastructure.

Section 23(1) of the Act stipulates that the state government would appoint teachers only with the minimum qualification as established by the academic authority, to be appointed by the central government. This has multiple layers, with some relaxations for the existing teachers to be trained. The State governments need to estimate the number of teachers required and the central government may relax this requirement if there is a shortage of teachers. However, the objective of the section is to ensure qualified teachers. Given that the quality of teachers is the single most important variable in determining the quality of education; this is an important step. It requires the correct standards to be set up atthe national level, implementation of the policy at the state level and the establishment of a teacher training infrastructure to train the existing teachers.

The Foundation is committed to co-operate and contribute, so as to convert the noble objective into reality. The metrics developed by the Foundation would greatly rely on the monitoring infrastructure system of the union and the state governments. While it is not necessarily the most comprehensive chronicle of all steps, it certainly offers a beginning and can be leveraged for gauging delivery. PIF proposes to bring out the assessment of progress in the public domain so as to effect mid-term correction incase required.