The price of leaked AIEEE (All India Engineering Entrance Examination) in Uttar Pradesh is reportedly Rs 6 lakhs (around US$13.5k). Around 1.2 million high school students compete for 27,000 seats in a specific set of engineering colleges across India. That’s an admission rate of 2.25 percent. That 2.25 percent explains the price of the leaked exam question papers. The bigger story is worth recounting. It’s a story of shortage, corruption and government control. It’s the story of India, in short.
The price of something is determined by the interaction of supply and demand for it. Increase the supply and/or decrease demand and the price falls; and vice versa. That’s at the aggregate level. No individual consumer actually has the “market power” to determine that price. Individuals can only take the price that the market determines as a given and they choose whether or not to consume at that price. Only if their perceived benefit exceeds the price (which is their cost), they buy the product or service. End of review of basic economics.
Seats in engineering college far exceed the demand. Demand far exceeds the supply in engineering colleges. The government controls the supply. The demand is derived from the benefits of getting a seat in an engineering college. If you have a degree, you can compete for the limited number of jobs. The government (indirectly) controls the supply of jobs. Briefly, the formal sector employs engineers. The formal sector is small — only about seven percent of the labor force is employed by the formal sector. The formal sector is kept small by government action.
Formal sector employment depends on the level of education attainment of the population. India has the largest number of illiterate people in the world. Getting educated is quite an achievement for the average Indian — most people are not even high school graduate. Tertiary education is even harder challenge. Government control of schools and colleges have ensured India’s distressed educational system.
Shortage of colleges to study in and the shortage of jobs for college graduates are not good for the economy, naturally, but it has to be good for someone — otherwise why would this situation persist for decades. Those are the people who are in the government and others associated with the government.
The chief minister of one states of India is reputed to have amassed billions of dollars of wealth just from the educational sector. (He also has interests in all other sectors that the government controls, of course, including cricket, real estate, sugar, power — you name it.) Power comes from control. Which explains why the government of India used the “licence permit quota control” mechanism. Governmental power allows wealth extraction. The opportunity to extract wealth as a government official fuels the extreme competition for political power.
It is all of a piece: government control –> power to extract rents –> competition among the most corrupt to gain power –> kakistocracy (rule by the least principled and the most corrupt) –> corruption in every sector of the economy (telecom, building of infrastructure for games, defense purchases, ad infinitum) –> more government control –> . . . the vicious circle of poverty, ignorant, corruption, and underdevelopment goes round and round.
Massive public ignorance and public corruption are related. Take the case of Antonia Maino, aka Sonia Gandhi. She is one of the most powerful people in a nation of 1.2 billion people. India is a democracy — meaning that Antonia’s power has to come from the support of a significant segment of the Indian population. It is impossible that this support would exist if people were not ignorant of the facts about Antonia’s corruption.
She has to be one of the most corrupt Italians ever — and that’s saying something if you know about Italian corruption. The mafia is one of Italy’s best known exports. Only if you have been living the life of a rather reclusive hermit on the far side of the moon, have you not heard about Antonia Maino’s shenanigans. But we don’t really know the full extent of the malfeasance. For that, we have to be grateful to people like Dr Swami. Go read “Sanction to Prosecute Ms Sonia Gandhi“, a letter by Dr Subramanian Swamy to Dr Manmohan Singh (the most despicably dishonest man in India.) It is a long letter and makes compelling reading. I doubt that Dr Singh is going to do anything about it, though. The Janata Party press release says:
April 15, 2011
Dr.Subramanian Swamy, Janata Party President and former Union Cabinet Minister for Law &Justice, today submitted a Petition of 206 pages, seeking from the Prime Minister Dr.Manmohan Singh the required Sanction to prosecute Ms. Sonia Gandhi under Sections 11 & 13 of the Prevention of Corruption Act. Sanction is required under Section 19 of the Act because she is Chairperson of the National Advisory Council with Cabinet rank.
In his Petition to the PM, Dr.Swamy has made out a prima facie case on documentary circumstantial evidence that Ms.Gandhi abetted Italian businessman and close family friend Ottavio Quattrocchi to obtain an illegal commission in the Bofors Gun Purchase deal, and then influenced the government of Prime Minister Narasimha Rao to enable Mr. Quattrocchi to escape from the country in July 1993. Thereafter she directed the Union Law Minister in 2005 to enable Mr. Quattrocchi to get his London accounts de-frozen and decamp scot free with over $ 200 million [about Rs 1000 crores].
Dr.Swamy has also made out a prima facie case that Mr. Gandhi has illegally held in Swiss bank accounts illegal monies of about Rs. 10,000 crores received as a legatee in 1991 following Rajiv Gandhi’s assassination. He also produced an admission on record of the spokesperson of the Russian government that KGB had provided funds to Ms. Gandhi and her family, as also evidence that she had received commissions on Indo-Soviet trade, which were illegal under Indian law.
In his Petition, Dr.Swamy has also catalogued a list of offences prima facie committed by Ms.Sonia Gandhi since 1974 which shows that she is an habitual offender who deserves to be prosecuted and punished.
It will be a while before Dr Singh even acknowledges the letter by Dr Swamy. I guess he is afraid for his life since his survival depends on his continued usefulness to The Family.
Anyhow, as I was saying, massive public corruption is ultimately enabled by public ignorance. I refuse to believe that if the Indian voters actually knew how absolutely corrupt Antonia Maino and her family are that they would not hound her out of the country. She has turned India into the laughing stock of the world but not without help from the other crooks who surround her. We have to wake up the people and tell them that they have to change their votes if they want to stop India being a Third World country.
Getting back to the matter of leaked papers: leaked papers is a symptom of the corruption that has spread to every sector of the economy and every segment of the population. Students who are morally and ethically weak see all the massive corruption being reported in the media. They cannot see how it can be wrong to buy leaked exam papers when apparently stealing by the billions is not wrong.
It’s all karma, neh?
Atanu Dey : Life is a Random Draw 
Atanu
The problem is that the masses are too stupid or occupied to think systemically. Everyone thinks getting rid of corrupt people removes corruption. A complex systemic analysis involving economic incentives, and political economy is not easily transmitted for street agitations. I don’t know how this divide will ever be bridged. Demagoguing for socialism is the easiest thing in politics. How does one counter that in a country with hundreds of millions of poor, illiterate voters?
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“It is impossible that this support would exist if people were not ignorant of the facts about Antonia’s corruption.” Oh yeah? I think not. As long as guaranteed employment and TV sets are doled out who cares half a turd how corrupt madam or her eunuch are? You have an exalted view of Indians. They fully deserve what they get.
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I have no clue why the sycophants of Sonia Maino are trying to kiss her bu++ even though she is anti-national?
Do they not have an iota of patriotism in them? Hard to imagine people like this exist on earth..
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@Santosh, as for the sans-coulot, if you live on 2USD a day, patriotism takes a hike. As for other politicians and rich people, money has always been more important than any notion of nation.
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“Demand far exceeds the supply in engineering colleges.The government controls the supply.”
You must be living in some other country.
Open your eyes. Today in India, it is easier to get admission into a B.E./B.Tech course than a B.Sc.course thanks to mushrooming of numerous private Engineering colleges. In fact if you are an engineering aspirant, you might be chased by some private engineering college for taking admission.
Number of seats is certainly not the problem today. It is the brand value of the college (IIT/ NIT) that is causing the intense competition. And had you not been into mindlessly force fitting your demand/ supply model everywhere, you would have noticed that the brand value of government run engineering colleges is almost invariably superior to most of the private run colleges.
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@ Vickram Crishna
You are pretty clueless about what you are talking . Engineering education might no longer be controlled in terms of who can open institutions, but regulatory bodies like UGC and AICTE have such a damaging chokehold on the kind of curriculum/syllabus colleges can follow . Private colleges need to be very very afraid while even experimenting with things like openbook exams else they face the threat of de-recognition . If I’m not mistaken its this kind of “government control” which is being referred to here .
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PrashB:
OTOH it is you who are clueless about what you are talking.
No one forces you to get approval from regulatory bodies like UGC/ AICTE for your degree. FYI, one of the finest management schools in India i.e. ISB does not have its degree recognized by either UGC or AICTE. If people still throng the gates of ISB, it is because ISB has created a brand value for itself without UGC/ AICTE tag. So go ahead and open your own engineering school as per your curriculum and award your own degrees. No one is going to stop you. But whether your degree will be valued by prospective employers and students without UGC/ AICTE tag depends entirely upon your own capability and the quality of education you can provide.
And before you start ranting again about “government control” just reflect on why government colleges are almost invariably better ranked than even the priciest private colleges.
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