Izzuddin Qassam

Source: The Hindu

Abstract: This article advances a policy-based critique of the Delhi School Education (Transparency in Fixation and Regulation of Fees) Act, 2025. It argues that the Act falls short of the NEP’s broader objectives on two grounds. Firstly, by conferring disproportionate regulatory powers on the Directorate of Education, the Act fails to resolve the conflict of interest between public and private education. Secondly, it fails to address deeper issues with regard to the state’s failure in providing quality education in public schools. The article concludes by proposing an independent regulatory authority and an outcome-based framework aligned with NEP recommendations

Introduction

The Delhi Legislative Assembly recently enacted The Delhi School Education (Transparency in Fixation and Regulation of Fees) Act, 2025 (“the Act”), joining states that have formulated a dedicated regulatory framework for controlling fee hikes in private unaided schools. The fee regulation regime of school fees in India falls within the concurrent list, provided under Entry 25 in the seventh schedule of the Indian Constitution which gives both the center and states the power to legislate on this matter. Despite this shared jurisdiction, fee regulation in India has been mainly undertaken through separate state-level acts. The National Education Policy 2020 (“NEP”) too, taking into consideration the limits of a one-size-fits-all approach, does not advocate for a national fee regulatory framework for schools.

The Act had been challenged before the Delhi High Court and the Supreme Court on grounds of being arbitrary and violative of the rights of minority educational institutions. The Delhi High Court stayed the notification by the Delhi government for the constitution of School Level Fee Regulation Committees and deferred the implementation of the Act during the pendency of the petitions. The Act and the Rules have also been subjected to critique in the public discourse [see here, here and here].

Earlier, fee regulation in Delhi was governed under the Delhi School Education Act, 1973 (“DSEA”) and the Delhi School Education Rules, 1973 (“The Rules”). The DSEA, however, proved inadequate in curbing unwarranted fee hikes by private schools, largely due to the absence of any criteria in fee fixation provided to schools [§17]. This accorded schools a near-complete freedom to introduce unchecked fee hikes under the DSEA. In 2009, due to unjustified fee hikes in several schools, a PIL was filed in the Delhi High Court, which led to the constitution of the Justice Anil Dev Singh Committee in 2011. The Committee, through several interim reports in subsequent years, recorded multiple instances of fiscal misuse and financial irregularities in the nearly 1000 schools it reviewed. The Act incorporates several of the Committee’s recommendations, and represents the first dedicated, comprehensive fee regulation legislation in Delhi.

In what follows, I advance a policy-based critique of the Act, arguing that the Act does not fully incorporate the NEP’s broader objectives of attenuating conflict of interest. It does so by giving extensive power to the Directorate of Education (“DoE”), which runs the public education system, to regulate the private education sector, its direct competitors. The Act fails to address underlying systemic issues pertaining to the government’s failure to provide quality education in public schools. I first provide an overview of important improvements in the Act by placing it in comparison to other state legislations. I then present a two-pronged critique. I argue, firstly, that the Act fails to reduce the conflict of interest by delegating disproportionately excessive powers to the DoE, thus failing to resolve the regulatory asymmetry between public and private education. Secondly, I argue that the Act fails to take into account deeper issues with regard to the state’s failure in providing quality education in public schools. Finally, I conclude by proposing changes in the Act, focusing on an outcome-based education system as envisioned in the NEP.

An Overview of the Act

The purpose of the Act that can be gathered from its title and preamble is, aligning with the NEP’s recommendations, to curb the commercialization of education by bringing transparency in the regulation and fixation of fees by schools. The Act, with focus on the representation of parents, formulates fee regulation committees in three stages.

The first stage of the regulatory framework is the School Level Fee Regulation Committee (“SLFRC”) which comprises a chairman who is a representative from the school management, a secretary who is the school principal, eight members, of whom three are teachers and five are parents, selected through a draw of lots, and finally an observer nominated by the DoE. All the decisions of the committee need to be unanimous, with parents having veto power to stall any request for fee hike by the schools [§§4 & 5].

The second stage comprises an appellate body at the district level, the District Fee Appellate Committee (“DFAC”), which would adjudicate disputes between the aggrieved parents’ group, defined in the act as constituting at least 15% of the parents, and the school management. Parties not satisfied with the DFAC’s decisions may appeal to the state-level Revision Committee [§§2(2), 6 & 7]. The Act explicitly bars the jurisdiction of any civil courts over matters pertaining to all three committees [§17]. The Act further confers special powers in the DoE, including the reproduction of any records of the SLFRC, the DFAC, or the Revision Committee to verify compliance and take appropriate measures [§11]. The Act also prescribes stringent penalties for non-compliance [§§12, 13 & 14].

The Act, in comparison with other state legislations, such as the The Tamil Nadu Schools (Regulation of Collection of Fee) Act, 2009 (“TN Act”), has instituted some important reforms. In the TN Act, decisions are taken through a top-down approach by a centralized authority to fix and regulate fees [§5]. On the other hand, Delhi’s legislation is based on a de-centralized functioning mechanism with focus on parent representation, bringing together all the stakeholders concerned. Another important improvement from the previous DSEA Rules [§§35, 37(3), 166(1) & 167 of the Rules] in the Act is the prohibition on taking any adverse measures against the students for non-payment of fees [§13]. This ensures that students do not get affected, particularly in the middle of their academic year, aligning with the broader aim of the right to education under the Right to Education Act, 2009 (“RTE”).

Additionally, Punjab’s Unaided Institutions Act, 2016 (“Punjab Act”), gives the power to any student studying in an unaided private school or the student’s parents or guardians to file a complaint with the Divisional Level Fee Regulatory Body with regard to excessive fee hikes by the school. These complaints only require a self-attested affidavit and must be scrutinized within 15 days, with a mandated final resolving of the issue within 60 days [§11]. On the other hand, Delhi’s Act requires at least 15% of the parents to make a complaint with the DFAC [§2(2)]. This makes the complaints mechanism under the Delhi Act relatively inaccessible as compared to the Punjab Act. This is so because in practice, coordinating 15% of parents, who often lack a common platform to organize and are unaware of each other’s grievances, presents substantial difficulty in filing complaints. It is worth noting that this mechanism may have been deliberately designed to filter out frivolous and isolated complaints. However, this puts a disproportionate collective-action burden on parents to mobilize, making it practically inaccessible.

Reducing Conflict of Interest: Addressing Regulatory Asymmetry in the Act

The NEP flags a considerable conflict of interest in the current education governance model, wherein the DoE performs the dual role of administering both public schools and imposing regulatory restrictions on private schools, which are also its direct competitors. Here, two considerable issues arise: firstly, the DoE’s capacity in providing quality public schooling gets seriously affected and compromised, mainly due to its simultaneous role in administering public schools and regulating private schools, leading to ineffective administration and management of the overall school system. Secondly, private schools face more stringent regulation as compared to public schools, which leads inadvertently to a reduction in overall education quality. The NEP, highlighting this discriminatory approach in governance, calls it “regulatory asymmetry” [¶¶ 8.2, 8.3 & 8.5].

This aspect has also been highlighted by Karthik Muralidharan in his recent work Accelerating India’s Development: A State-Led Roadmap for Effective Governance (2024). Muralidharan argues that the government serves three sets of roles in its relationship with the private sector, namely that of policymaking, regulating and direct provision, and that arbitrary and unpredictable actions against private providers are the result of conceptual ambiguity concerning these roles. The government’s approach varies depending on each role: as policymaker, the private sector is an ally of the government; as regulators, they are treated as equal; and finally, as providers, the government sees the private sector as its direct competitors. Essentially, in practice, the majority of government’s functions are carried out in its role as a provider, which makes it the ‘default’ position and results in a conflation of these three roles at the practical level. Muralidharan gives the example of District Education Officers, which serve as both providers and regulators, and highlights the disproportionate targeting of private schools in their role as regulators as a result of their perceptions of private schools as undesirable in their role as providers (Muralidharan 2024, chap. 9).

The NEP, in order to eliminate issues relating to this conflict of interest and to ensure the delivery of quality education, recommends the creation of an independent, state-wide body – the State School Standards Authority (“SSSA”). The primary role of the SSSA would comprise overseeing the transparent, public self-disclosure of all basic regulatory information, which would include financial and input-based disclosures, i.e., fees, safety, basic infrastructure, etc. The DoE’s function, on the other hand, would get confined to only policymaking and overall monitoring of the public education system. This model prevents the conflict of interest in the current model and decentralizes the DoE’s powers. The NEP characterizes this model as the ‘light but tight’ regulatory approach [¶¶ 8.5 & 26.7].

The Act, however, diverges sharply from these recommendations. § 11 of the Act, titled ‘Special Powers of the Directorate of Education,’ grants extraordinary powers to the DoE, including the suo motu reproduction of records by the SLFRC, DFAC or the Revision Committee to verify their conformity with the Act, and issue “appropriate directions” as it may deem “fit and proper.” These overreaching regulatory powers of the DoE over private schools fundamentally tilt the balance of competition towards the DoE.

This would lead to two adverse consequences. It would firstly lead to de-incentivizing, or rather, dis-incentivizing the private sector, discouraging private schools from investing in improving the quality of education. It would secondly lead to diverting focus from the subpar performance of public schools, providing a pretext to the state to evade investment in public education. The main reason for fee hikes in private schools largely relates to the deficiencies in public education, which creates scarcity of quality schooling, thereby inflating demand for alternative private players. A more expanded critique of these consequences is explicated in the next section.

Consequences of Regulatory Asymmetry in the Act

Employing a critical lens while reading the Act’s provisions reveals an inherently disincentivizing logic against private schools. § 13 of the Act prohibits schools from taking any adverse action against students who fail to pay fees. Although the provision is aligned with progressive goals and the broader right to education, a more nuanced reading reveals two distinct categories of non-payment that carry different normative weight. Where non-payment is triggered by genuine financial inability, the provision serves an important protective function. On the other hand, however, where parents are financially capable but withhold payment strategically, the provision effectively shifts uncompensated costs onto private schools with no mechanism for reimbursement by the state leading to the dis-incentivization of private schools. Also, any existing reimbursement mechanisms under the RTE have proved functionally inadequate in practice.

The financial costs resulting from this could lead potentially to schools cutting back on expenditure on areas such as teachers’ salaries, leading to a decline in overall education quality. Furthermore, the mechanism of fee regulation also creates a deadlock, with an equal number of stakeholders having conflicting interests and no specific and objective mechanism to regulate fees, coupled with several appeal levels, leading to increased bureaucratic over-regulation. This would adversely affect schools incurring justified high costs and receiving no approvals or pending appeals with the committees. Thus, the Act fails to balance the interests of all the stakeholders in the process and implicitly operates to erode the scarcity advantage enjoyed by the schools, obscuring the government’s failure to adequately invest in public education.

The Act also grants veto power to parents to stall any fee hike recommendation with the intention to reduce power imbalances in the negotiation process. However, this puts unreasonable burden on the school administration to justify fee hikes, possibly creating deadlocks, thus forestalling the school’s overall development. This veto power should be done away with, and an objective consensus-based approach through a supermajority model should be adopted as a possible solution. In practice, this would require at least seven or eight SLFRC members to approve any fee hike recommendation. This threshold would ensure that parents have a meaningful voice in approving any fee hike, since parents hold five of eleven seats in the committee and can block any approval if they act in concert, while also preventing a minority of parents from deadlocking the committee. However, the most crucial aspect is that any such approval must be grounded in pre-defined objective criteria such as audited cost data and inflation benchmarks, rather than the subjective discretion of the stakeholders. This would reduce the scope of subjective vetoes and would lend greater predictability to the fee determination process.

The Case for Quality Public Education

The Act, from the start, fails to identify the root cause of the problem that it ostensibly seeks to resolve, i.e., the commercialization of and profiteering in private education. This, if seen in a broader context, reflects the government’s failure to develop a robust high-quality public education system. In the Indian context, education operates in a liberal free-market scenario, where consumers are interested in acquiring the highest quality at the lowest possible cost. This implies that schools are also governed by supply-demand dynamics, where premium prices can be demanded for scarce and high-quality goods. The absence of quality education in the public education sector forces parents to enroll their children in private schools. Thus, fee-hikes are caused by a demand-supply imbalance. According to a recent government survey, nearly 70% of students in urban areas go to private schools despite the fact that private education, on average, can be 10 times more expensive than public education. Hence, if seen through this perspective, the root cause of the commercialization of private education is seen to fundamentally relate to the state’s neglect in providing quality public schooling.

A look at the data available would further substantiate the point. Delhi’s investment in education has been at 1.63% of the GSDP as of the most recent government data of 2021, far below the national average of 4.64%, and substantially lower than the NEP’s recommendation of 6% GSDP. While a per-student expenditure figure would provide a more complete picture in comparison to GSDP, the directional concern regarding underinvestment in public education remains valid.

Investing in the public sector would not only benefit the public education system but would also improve the private sector. Muralidharan argues that private players do not operate in isolation. In fact, they are part of a single market in which private providers respond to changes in the quality of public education. This results in a positive correlation between the quality of private and public providers, such that improving the quality of the latter leads to the improvement of the former. This results in a “cascading effect” which serves as a foundation of improving the overall education system and incentivizes even those who never use public services to take actions to improve public options (Muralidharan 2024, chap. 9).

Conclusion: Towards an Outcome-based Education

The NEP states that the goal of the regulatory system governing school education should focus on continually improving educational outcomes [¶¶ 8.1.& 8.4]. This focus on outcomes marks a shift from the earlier input-based frameworks, where compliance was focused on infrastructure and inputs such as fee levels, minimum land, classrooms etc., which diverted the focus from pedagogy and assessment of whether education is translated into real impact in terms of research, employment etc. To advance towards this outcome-based approach, the NEP recommended the ‘light but tight’ regulatory model which focused on shifting regulatory responsibilities from the DoE to independent bodies. This was based on a logic that focused more on transparency-based accountability rather than active enforcement. Muralidharan also argues for a regulatory approach that focuses more on public disclosure of key school inputs rather than mandating input requirements (Muralidharan 2024, chap. 9).

In the above analysis, I have argued that the Delhi School Education (Transparency in Fixation and Regulation of Fees) Act, 2025, while establishing a much-needed regulatory framework to enhance transparency in fixing fees for private schools, fails to fully incorporate the recommendations of the NEP, thus falling short of addressing systemic issues underlying the commercialization of education. To attain its stated objectives, the Act must focus on establishing an independent SSSA body and shifting the current regulatory powers under the DoE to the SSSA. Also, objective consensus-based frameworks should be developed in the Act to mitigate conflicting interests in SLFRC. Finally, a state policy focused on improving the quality of the public education system must be prioritized.

Izzuddin Qassam is a first-year student at National Law School of India University with a keen interest in evolving questions of public policy.