Private Engineering Education in India: Market Failures and Regulatory Solutions

Engineering education in India has seen tremendous growth over the past decade, both in number of students and number of colleges (see Table I), however the average quality of the colleges and graduated students has become suspect (Sengupta, 2006). A survey of human resource professionals at multinational corporations in India revealed that only one quarter of engineering graduates with a suitable degree could be employed irrespective of demand (Farrell et al., 2005). Another survey of employers shows that only a handful of the 1400 engineering schools in India are recognized as providing world-class education with graduates worthy of consideration for employment (Globalization of Engineering Services, 2006). These results suggest that engineering degrees from most Indian colleges do not provide signaling value in the engineering labor market. Hence, low quality (in the labor market sense) engineering schooling has come to predominate in the education market. The current situation, with an abundance of low quality engineering schooling, is considered objectionable by many in the Indian polity and is also projected to stifle growth of the Indian economy (Globalization of Engineering Services, 2006). It is our purpose to investigate the factors that lead to the current state of technical education in India and to suggest public policies that would rectify the situation. Since the recen