The Uttar Pradesh Right of Children to Free and Compulsory education Rules , 2011, Rule 11 requires fulfilment of the condition(among other conditions) that the school is not run for profit to any individual,group or association of individuals or any other persons. A school has to be Not for Profit.In other words , profit is a dirty word as far as school education is concerned.The Model Rules circulated by Government of India under the Right of Children to free and compulsory Education Act ,2009 in Rule 11 carries the same provision .This has been carried as such in the RTE Rules of the states Uttarakhand,,Orissa,Karnataka,Maharashtra,Kerala ,Delhi ,Punjab,West Bengal and Chattisgarh.The three states Gujrat,Haryana and Himachal Pradesh have not included this provision in their State RTE Rules , indicating that in these states for-profit schools can legally operate.
One issue which is likely to dominate the education debate for some time to come is whether schools should be run for profit.Should profit making firms be allowed to run failing schools?Introduction of for profit schools has the great potential of bringing new investors into education , thereby increasing the much needed capacity.Permitting profits can promote competition between schools, provides extra incentive to improve results.It can also encourage schools to seek efficiencies,There are philosophical objections to for profit companies to make profit from education , which is publicly funded.Education is regarded as a public good , rather than an industry, to be used to earn profit.Many people think that for-profit schools will channel money from students into private pockets.
For profit schools are being run int USA,Sweden , the UK and many other countries but with mixed results. In these countries , private schools are generally set up in one of two ways:As for profit entities, or not for profit entities.The for profit version is used by either a corporation or a private individual in order to make a profit but they will not be eligible for contributions which are permitted by law to be tax-deductible.Not for profit schools can make money but also receive contributions which the law permits to be tax-deductible.They are also exempted from federal . state and local taxes . It is not that they are not allowed to generate surplus or that they cannot hire salaried staff.It is that they cannot permit their surplus to be distributed as dividends to the owners or promoters .This means that the promoters of schools have to be persons whose predominant needs are the needs of esteem , respect, recognition and self-actualisation(to quote Maslow's hierarchy of needs.)Both types of schools , for-profit and not for profit , are legally permitted in these countries . It is not possible to say which type of schools gives better education.It depends how well the school is managed educationally , financially and strategically.
But what is surprising is that many state governments in India ,through their RTE Rules , have made for -profit schools illegal.This is not in the interest of attracting new investment in education sector.A review of this policy is needed in the context of ever expanding but deteriorating school education in these states of India.