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Significant work has been done on de facto operations of state functionaries (World Bank 2004; Posani and Aiyar 2009; Aiyar, Chaudhuri and Wallack 2010; Pritchett 2018; Centre for Civil Society 2019). But there is limited research on the de jure framework for K-12 education in India, especially for private schools. Information on roles of state education functionaries for public and private schools is scattered. Clarity on these roles is necessary to establish sharp lines of accountability. This is crucial, especially since private schools have to compete with the government that sets the rules for all schools and operates its own schools.

We dive in and examine the rule-sets for Maharashtra, Delhi, Haryana, Jharkhand, and Uttar Pradesh. In particular, we analyse the language of the legislation and identify responsibilities of functionaries. Alongside the Right of Children to Free and Compulsory Education (RTE) Act 2009, we study 26 state Acts, corresponding rules, and School Codes wherever applicable. School Codes contain subordinate legislation (executive orders, notifications, circulars, and court judgements) that pertain to school education. We also study the implementation framework for the Samagra Shiksha Abhiyan as it allocates responsibilities to state education functionaries.

What do we find in common across states? The government regulates private schools at multiple touch-points. Schools need to obtain recognition in order to operate. They can only hire employees with minimum qualifications as prescribed by the government or after obtaining permission from the state Department. Private schools need to operate “in public interest” to avoid losing control over their management. They are also subject to caps on fees that often do not account for investment in new facilities or expansion of schools. The regulatory framework also lacks a systematic dispute resolution system with clear distinction between the disputants (parents, schools, and government).

States also fare poorly on frameworks that examine the regulatory environment for private schools, including the Systems Approach for Better Education Results - Engaging the Private Sector (SABER-EPS) of the World Bank (2014) and that of Vidhi Centre for Legal Policy (2017).

After comparing the language of the legislation for private schools with that for government schools, we find a striking absence of accountability mechanisms for the latter. While private schools are subject to clauses such as “shall cease to function” or “may take over”, government schools do not face any such enforcement actions. We also find that state functionaries are vested with multiple and overlapping functions, including regulatory, service delivery, financing, and assessment.

When the rule-writer is also the service provider, day-to-day pressures of management compromise its attention to on-ground outcomes. The administration tends to become insular and conceal mistakes (World Bank 2004). We need to implement thoughtful separation of powers in K-12 education administration. Uncoupling roles of functionaries and determining who should be accountable to whom and for what, makes for efficient outcomes and clear lines of accountability (World Bank 2004; Posani and Aiyar 2009).


Restrictions on for-profit education in India mainly stem from Supreme Court verdicts, Model and state Right of Children to Free and Compulsory Education (RTE) Rules, and board affiliation norms.

Supreme Court Verdicts

For both K-12 and higher education, the following two court judgements regulate the ability of educational institutions to run for-profit.

Unnikrishnan v. State of Andhra Pradesh, 1993: The Court established education as a symbol of charity and disallowed educational institutions from engaging in “profiteering.”1

T.M.A Pai v. State of Karnataka, 2002: The Court directed that educational institutions could make a “reasonable surplus”2 but disallowed profiteering and charging capitation fees. It argued that “reasonable surplus” to meet the cost of expansion and augmentation of facilities did not amount to profiteering.

Higher Education Legislation

University Grants Commission

The University Grants Commission (UGC) Act 1956 does not explicitly restrict for-profit education. But Section 26(1)(g) of the Act grants UGC the power to regulate the “maintenance of standards and the coordination of work or facilities in Universities.” This can potentially allow UGC to regulate fees in higher education institutions. Recently, UGC released draft regulations governing the fee structure in private aided and unaided institutions under this provision.

School Education Legislation

Model RTE Rules

For K-12 education, the RTE Act 2009 requires private schools to fulfil certain norms and requirements to obtain a Certificate of Recognition. These schools cannot operate without this certification. Though the RTE Act 2009 does not mention restrictions on schools run for-profit, its Model Rules require schools to be non-profit in order to qualify for recognition. According to Rule 11(1)(b), every school applying for recognition should submit a self-declaration showing that they are “not run for profit to any individual, group or association of individuals or any other persons.” This restriction is replicated in several state RTE Rules.

State RTE Rules and fee regulation Acts

States restrict the kind of schools that can apply for recognition through their RTE Rules. Schools that can apply for recognition generally have to be run by the following entities:

  1. Societies registered under the Societies Registration Act, 1860 or under state government Acts for educational, religious or charitable societies
  2. Registered Trusts or
  3. Companies registered under Section 8 of the Companies Act 2013 having education as one of its objects

Only Haryana has allowed for individuals or a group of individuals or companies registered under the Companies Act 2013. Rule 12(1)(a) of the Haryana RTE Rules 2011 states that the following entities can open a school in the state

  1. Individual/association of individuals/firm/society registered under the Societies Registration Act 1860
  2. Trust created under the Indian Trusts Act 1882
  3. Company registered under the Companies Act 1956

States such as Maharashtra (Section 11(1)(b)) and Delhi (Section 14(1)(b)) also clearly mention that schools should “not run for profit of any individual, group or association of individuals or any other persons.”

While many states pass orders and notifications to regulate fees in schools, 11 states in India have stand-alone Acts that govern school fees. The Punjab Regulation of Fee of Unaided Educational Institutions Act 2016 is the only such Act that explicitly regulates profit-making by schools. It constitutes a Regulatory Body for regulating fees at the divisional level. Under Section 7, one of the functions of this Regulatory Body is to “check excessive hike in fee by an unaided educational institution with the motive to earn profit.”

Board Affiliation Norms

Affiliating boards such as the Central Board of Secondary Education (CBSE) also impose restrictions on how schools can operate. We look at two such examples below.

Central Board of Secondary Education (CBSE) Affiliation Norms

Similar to State RTE Rules, Section 2.1.8 of CBSE Affiliation Bye-laws 2018, states that the CBSE may affiliate the following categories of private schools established by:

  1. Societies registered under the Societies Registration Act 1860 of the Government of India or under the Acts of the State Governments as educational, religious or charitable societies
  2. Registered Trusts or
  3. Companies registered under section 8 of the Companies Act 2013 having education as one of its objects

Council for the Indian School Certificate Examinations (CISCE) Rules for Affiliation

Rule 2(a) of the CISCE Rules for Affiliation 2016 states that the school should be “run by a Registered Society, a Trust or a Company (under Section 25(1)(a) of the Companies Act 1956 or as amended) for educational purposes. It must not be run for profit.

*Akash Pratap Singh works at Central Square Foundation
*1 What constitutes profiteering is unclear in the judgement.
*2 Reasonable surplus is not defined in the judgement.

Education in India is a concurrent subject. Both Union and state governments can regulate school education. This has led to varying rule-sets across states. We compiled existing rule-sets for all states in India using legislation listed on the state Department website and online sources including Laws of India, Manupatra, Bare Acts Live and Latest Laws.

We collated 145 Acts and 101 corresponding rules across all states. On average, each state has 4 Acts and 3 rules approximately. Uttar Pradesh has the highest number of state Acts at 11 and Karnataka has the most number of rules at 17. Arunachal Pradesh, Chhattisgarh, Chandigarh, Kerala, Nagaland and Uttarakhand have 1 state Act each. Generally, southern states have a higher number of rule-sets than northern states. We could not find any rule-sets for Andaman & Nicobar Islands, Dadra & Nagar Haveli and Lakshadweep.

We also classified all rule-sets as per the touchpoint they were meant to regulate. For instance, we categorised the U.P. Self-Financed Independent Schools (Fee Regulation) Act, 2018 under “fees in private schools.”

For all states with rule-sets, we found legislation regulating the process for opening a school. Most states have Acts apart from the RTE Act 2009 that still apply to this process. A few examples are the Delhi School Education Act and Rules 1973, Orissa Education Act, 1969 and Gujarat Educational Institutions (Regulation) Act, 1984. Rajasthan Non-Government Educational Institutions Act, 1989 also lays out recognition norms but Rajasthan RTE Rules 2011 mandate recognition only under the older Act. Similarly, all states with rule-sets apart from Tripura, regulate employment of teachers in private schools.

Currently, the regulatory framework for K-12 education in India is ridden with obstacles for edupreneurs. In order to build an effective regulatory environment that allows the best-placed edupreneurs to enter the education sector, we need to facilitate the shift towards principles-based regulations.

There are inherent information asymmetry problems in education that are characterised using the lens of the principal-agent framework. Principal-agent problems exist when the principal hires an agent to act on her behalf but the interests of the principal and the agent are not perfectly aligned. This necessitates that the principal has information to monitor the agent’s effort. Typically, in education, there is information asymmetry between parent-child, teacher-child, parent-school/teacher, parent-administrator, administrator-administrator, and administrator-teacher. Administrator means administrator at different units—school, block, district, state and nation (Bergbauer, Hanushek, and Woessmann 2018). These principal-agent problems can be linked to different uses such as child diagnosis, child progression into university, school information to parents, school regulation, teacher evaluation and so on (Figure 1).

Design of SSRA
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Figure 1: Tree of principal-agent problems and different information uses; Adapted from Bergbauer, Hanushek, and Woessmann 2018

A common solution to some of these information gaps is to use learning outcomes assessment. In the two decades preceding 2020, India has had some measures of learning outcomes. These include initiatives by the government institute, National Council of Educational Research and Training (NCERT); non-governmental organisation, Pratham; state governments; and private organisations such as Educational Initiative. In addition to national assessments, Tamil Nadu and Himachal Pradesh also participated in the OECD’s Programme for International Student Assessment (PISA) in 2009. Besides these, we also have in-class assessments.

Although the proliferation of multiple assessment organisations and tools is commendable, the assessments have had a limited impact on driving change in school or administrative practices. There is a lack of systematic thinking on the question of the right tool and the right use. This is evident by the low learning outcomes across the country, despite years of assessments pointing in the same direction. This requires a rethink of the assessment framework—what are the different tools and tests available currently, how may they be best used to fill the existing information gaps and what gaps remain to be filled with new tools.

Assessments that solve one kind of information problem may not be suitable for another. For example, tests that evaluate children for progression to university, such as board exams in India, are different from tests that evaluate schools or tests that evaluate teacher performance. The conflation of multiple uses in one is seen for assessments such as Board exams. Board exams are designed to assess child performance for progression but have been at times used as indicators of school performance. Unless we isolate the child effort and background from school effort, board exam results are not valid indicators of school effort.

The latest draft of the National Education Policy released in 2019, led by Dr Kasturirangan, proposes multiple ideas to reform existing assessment practices and also introduces new ways to employ assessments. The document lays out a number of new test uses—low stakes assessments to personalise teaching, national achievement survey for periodic health check-up, census assessment for disclosing school performance and board exam reforms for student progression. Yet, even as the draft policy lays out these different tests, it lacks lucidity on the problem each of these tests solves, the information gap it fills, and the use it will be put to. Critical terms such as ‘developmental purposes’ and ‘health check-up’ remain vague and open for interpretation. In light of these developments, it is critical to identify clear and plausible objectives of each test that we carry out currently. What are the principal-agent problems NAS can solve? What are the principal-agent problems board exams solve? What is the role of in-class tests? How can census assessments be used for school accountability? To answer these, we need to tackle each principle-agent problem systematically—parent-child, parent-teacher, teacher-child, parent-administrator, administrator-teacher.

This brief looks at three uses of information, i.e., school information to parents, school regulation, and system health, and explores the role of assessments in each.


The Kasturirangan Committee Report 2019 proposes that “the three distinct roles of governance and regulation, namely, the provision/operation of education, the regulation of the education system, and policymaking, will be conducted by separate independent bodies, in order to avoid conflicts of interest and concentrations of power, and to ensure due and quality focus on each role.”

In our view, separating the regulatory and service delivery functions performed by state school education departments/directorates and creating state-level independent regulators for all schools is the most significant reform proposal in the Report for school education.

As per the Report, each state should set up a State School Regulatory Authority (SSRA) to regulate all schools, public and private, on the same set of minimum standards to assure quality education for all. The revised state education administration structure envisaged under the Report is:

  • the existing Directorate of School Education (DSE) to oversee government schools operations;

  • a newly-formed State School Regulatory Authority (SSRA) to have exclusive responsibilities over rule-making for all schools, public and private, and ensuring compliance;

  • the Department of School Education to be the primary institution for overall monitoring and policymaking (without any involvement in service delivery or regulation).

Design of SSRA
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Figure 1: Governance and regulatory architecture of School Education post-NEP 2019

Promise and perils of State School Regulatory Authority

Independent regulation will likely bring competitive neutrality, focus and efficiency. A dedicated regulator for a marketplace of a variety of suppliers, public and private, is an approach increasingly followed in India and several other countries. Conflicts of interest that currently exist between a government service-provider regulating itself and other service providers will be contained. SSRA, as a regulator, will function separately from any government department. As a result, the role played by discretion and quid pro quos in licensing, school recognition, inspections and fee regulation can be minimised. SSRA will be mandated to draft specialised rules only for the K-12 sector. This can encourage a symbiotic relationship where the regulator receives feedback on the efficacy of its rules from regulatees and consumers.

However, an independent regulator makes rules, checks compliance, and enforces the rules. This fusing of powers vests extensive authority in unelected officials. It needs to be countered by assigning the regulator a limited and well-defined mandate and developing an agency design accountable to Parliament/Legislature, regulatees, and parents and children whose interests it is to protect.

Design Elements for an effective State School Regulatory Authority

In this How To Note, we discuss the five design considerations that should go into the setting up of SSRA:

  1. Defining clear and narrow objectives: Assessment of SSRA’s performance, metrics to hold it accountable, governance structure, and management processes, all hinge on a clearly articulated objective. This objective should be limited and measurable, and subscribe to the principle of regulatory neutrality.

  2. Preparing a legislative framework delegating authority to the regulator: Since SSRA will be at the state-level, the state Legislative Assembly has to pass the Act enabling its creation. Furthermore, the powers relating to K-12 education are currently scattered across numerous Union and state Acts, and enforced by different officers and agencies. These need to be brought under the purview of SSRA to avoid regulatory cholesterol from building up.

  3. Structures that ensure independent functioning of SSRA: Independence will insulate SSRA from regulatory capture while making room for guided discretion. Moreover, it will allow SSRA to be held accountable for its decisions. This can be achieved by making appointment process for its Board members transparent, maintaining a balanced and lean Board composition, instituting working processes that incentivise performance, and imposing term limits on Board members to minimise conflicts of interest.

  4. Setting up accountability measures for performance via internal separation of functions and information disclosures on processes; and

  5. Establishing checks on executive discretion and against the abuse of power: Since SSRA will be formed by fusing quasi-legislative, executive and quasi-judicial powers, fail-safes against potential abuse of power must be instituted. Only its Board must hold rule-making powers. An internal adjudication body, and an external Education Appellate Tribunal are necessary. The rules governing SSRA also must lay out procedural and substantive guidance on applying administrative actions.

The proposal of the Kasturirangan Report to establish an independent SSRA is a promising reform for K-12 education in India because it tackles the key impediments to improvement—conflicts of interest between service-delivery and regulation, absence of accountability, violation of natural justice, and unchecked discretionary power of officers. Embedding the above-mentioned design elements in an SSRA may not guarantee a world-class regulator, but their absence will certainly result in an ineffective regulator that compounds the problems in K-12 education.


Separation of Powers is one of the foremost principles of good governance, and states that the rule-maker, rule-executor and adjudicator should be distinct from each other. Such a separation installs checks against conflicts of interest and abuse of power by regulatory authorities and increases institutional accountability for outcomes.

We need to separate the functions exercised in governing the school education sector of India, particularly at the state level. A state government's Education Department is responsible for the construction of schools, teacher hiring and management, distribution of funds for school activities and formulation of state-level education policy.

The blueprint identifies three key-problems with the current governance structure:

  • Violation of natural justice;
  • Ineffective performance monitoring and rule compliance; and
  • Differential laws for government and private schools.

To address these three problems, the blueprint proposes separating the functions of service-delivery, assessment of learning outcomes, and adjudication of disputes (from the state departments of education) into three independent bodies.


Prior to the passage of the Right to Education (RTE) Act 2009, government registration or recognition of private schools was not mandatory in most Indian states. The Act has drawn heavy criticism for its impact on recognised and unrecognised private schools across India. Its uniform input-oriented regulatory approach does not pay attention to the fact that children from all socioeconomic classes attend private schools. Application of uniform principles to all schools, irrespective of the fee charged, ignores the costs of compliance with the mandated input norms, and the implicit penalty imposed on low-income parents. Worst of all, the enforcement of the Act threatens to shut down well-performing schools who may not have the means to comply with input norms.

Nearly 10 years after the passage of the Act, we are yet to have credible estimates from the government on the regulatory impact of RTE, particularly on children attending low-fee private schools.

Against this backdrop, the report provides estimates on the extent of school closures as a result of enforcing private school recognition norms prescribed under RTE.


The debate on low learning levels has spurred several actions by the state. India has enrolled to participate in the 2021 round of PISA. The NCERT has defined grade level learning outcomes for languages (Hindi, English, Urdu), mathematics, environmental studies, science and social science up to the elementary stage. NITI Aayog is developing an index to `institutionalise the focus on improving education outcomes' including learning, equity and access based on information generated by NAS, the largest national assessment survey in the country. NAS coverage has been expanded to include government-aided schools and the sampling unit is changed from state to district level. The moot question is: Are these reforms sufficient to bring improvement across schools or are we still just tinkering at the edges?

Taking note of the crisis and recent developments, this brief urges the government to use the power of information to strengthen its ability to hold individual schools accountable, parents' ability to choose, and schools' ability to improve.

For more information on the project, to share your feedback or to get involved, get in touch with us at


The government has the power to write rules, apply standards, recognise schools, withdraw recognition, and resolve disputes. Our paper teases out the discretionary powers conferred to the state governments for the regulation of education. We study the use of discretionary powers at three touchpoints—the government as a licensor, fee regulator and inspector of private schools.

What did we find?

We find evidence of excesses in the exercise of discretionary powers by the executive—the state education department. Below, we have listed a few instances:

Rigid and intrusive rules that some would argue are ultra vires: There are three key regulatory requirements to open a school in Delhi (Figure 1). Rule 44 of Delhi School Education Rules 1973 authorises the state Administrator to decide if the new school is necessary for the area. This objective has taken the form of an Essentiality Certificate. The Essentiality Certificate, however, does not have a statutory basis in Delhi School Education Act 1973, nor in the Right to Free and Compulsory Education Act 2009.

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Figure 1: Three regulatory requirements needed for opening a school in Delhi

Proving that a school is essential in an area does not feature in DSEA 1973 or RTE 2009. It only finds a mention in DSER 1973, a glaring instance of quasi-legislative discretionary excess.

Ad-hoc and arbitrary rule-making: Rule 192 of DSER 1973 states that every inspection should 'be as objective as possible'. A close reading of the proforma that objectivity is a far fetched dream, especially when it comes to academic supervision.

Figure 2 highlights some of the constructs used to evaluate the academic quality of the school.

The first principle of a good questionnaire is to avoid ambiguous/abstract and loaded terms. The question "Were the questions put to the students thought-provoking and well-distributed?" is an example of the former and "Is it (homework) regularly corrected and followed-up?" is an example of the latter.

The absence of objective measures and defined standards for compliance raise many questions: Is evaluation solely dependent on the interpretation of the inspecting officer? If a school gets positive notes on some aspects and negative on others, where does that leave a school? Are reports of different schools comparable?

Poor procedural fidelity and absent transparency on procedures followed: Higher courts in India have in many judgments pronounced an aversion to the commercialisation of education but allowed schools to retain a 'reasonable surplus'. By default, the determination of what would count as a reasonable surplus is left to the administrative machinery.

In 2018, the Directorate of Education in Delhi passed an order instructing all districts to form a Fee Anomaly Committee, as a forum to attend to the complaints of parents. Yet, Fee Anomaly Committees have either not been formed or are defunct.

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Figure 2: Inspection proforma — Constructs evaluated and ways of measurement

Parents report that officials often fail to register complaints or take punitive action against schools who do not comply with orders. Given the lack of any codified procedure for processing complaints and limited transparency, it is often difficult for parents to establish a clear complaint trail and follow up.

The Uttar Pradesh Self-Financed Independent Schools (Fee Regulation) Act 2018 regulates fee for schools that charge an annual fee of over Rs 20,000. We found that the fee regulation committees only make decision summaries of its decisions available rather than the full minutes.

Inconsistent and subjective exercise of punitive measures: Section 24(3) of DSEA 1973 authorises the Director to issue instructions to the school manager 'to rectify any defect or deficiency found at the time of inspection or otherwise in the working of the school'. If the 'manager fails to comply with any direction given', then the Director may take any action including— (a) stoppage of aid, (b) withdrawal of recognition, or (c) except in the case of a minority school, taking over of the school'. From this, two challenges emerge.

First, the Director has a free hand in taking any action as deems fit to her if a school fails to comply with any direction. Further, there is no escalation—one mistake and your recognition may be at risk. Second, implementation is skewed—although the Act gives the power to the Director to act as she wishes, measures higher up on the penalty ladder are rarely used.

Learnings for future

Part of these excesses is borne of the lack of documented guidance on how the department should exercise its functions. Others are violations of the letter of the law, sometimes for the understandable reason of limited state capacity. These necessitate the establishment of norms that constrain the actions of those in positions of authority and determining who should be accountable to whom and for what (Posani and Aiyar 2009).

The administrative architecture needs to distinguish and separate the government's role as regulator, service provider, financier, and assessor. Even if full functional separation is a long term endeavour, an independent grievance redressal mechanism is an immediate need to balance executive discretion (Centre for Civil Society 2019).