If India can, why can't we?

You may think that we have nothing to learn from some of the poorest people on the planet. But when

In 1980, the NBC News report "If Japan Can . . . Why Can't We?" sent shock waves through American corporations. The programme revealed how the Japanese captured global car and electronics markets by reorganising from first principles. Many believe this was also a wake-up call to British manufacturing. I think that a similar wake-up call is due here in education - not from Japan, but from India.

Many will be surprised to hear that we have anything to learn from the Indians, just as in 1980 the last people the Americans thought they needed to learn from were the Japanese. And it is true that, in many respects, India's state education is in an even worse condition than ours. When government-sponsored researchers called unannounced on a random sample of state schools for the poor, they found "teaching activity" in only 53 per cent. They saw cases of teachers "keeping a school closed . . . for months at a time", of habitual drunkenness, of head teachers who asked children to do domestic chores. The lack of teaching was noted even in those schools with relatively good buildings, equipment and pupil-teacher ratios. "Inactive teachers were engaged in a variety of pastimes such as sipping tea, reading comics or eating peanuts . . . it has become a way of life in the profession."

So do the poor in India sit idly and listlessly? Do they remain, to use the adjectives favoured by the British liberal elite, dispossessed and disenfranchised? Do they acquiesce in their government's failure? No, some of the most disadvantaged people on this planet vote with their feet, exit the state schools and move their children to private schools, set up by educational entrepreneurs to cater to their needs.

When I worked in India, officials were chary of introducing me to any of these schools. So I set off alone one day, first by auto- rickshaw, then on foot, into the slum areas of Hyderabad, and there they were, almost at every street corner, down every alley. I found one where the head teacher spoke English; he introduced me to the Federation of Private Schools' Management, which covers 500 private schools serving poor communities.

The entrepreneurial spirit within these schools was extremely impressive. They were not dependent on state handouts or philanthropy; they were all run on commercial principles. But this didn't undermine their spirit of dedication. A typical comment came from Mohamed Wajid, the director of Peace High School. His mother, when about to retire, had taken him to one side: "She showed me pictures of the poor people living here, and reminded me that life must not be lived for oneself, life must be lived for others. So I took over the running of her school."

The federation's schools charge around $20 a year. Even fees as low as this are not affordable to everyone, but typical parents include rickshaw-pullers and costermongers. And most schools offer a significant number of free places - up to 20 per cent - for the poorest students, whose claims are checked informally in the community. Thus, the poor help subsidise the poorest, bound together as refugees from a failing state system.

The government-sponsored report conceded, rather reluctantly, that the problems it found in the government schools were not found in the private schools for the poor, where there "was feverish classroom activity" and high levels of teacher dedication. The private schools, the report said, were successful because they were more accountable: "The teachers are accountable to the manager (who can fire them) and, through him or her, to the parents (who can withdraw their children)." Most crucially, other research shows that private schools achieve higher grades at maths and reading (even when account is taken of the pupils' family backgrounds), but do so at half the cost of the state schools.

So that is the first lesson from India. What is wrong with our deprived neighbourhoods is not a policy vacuum that needs more government money and intervention, such as new Labour's hit squads. No, in Britain there is an entrepreneurial deficit and a crushing culture of dependency. And that cannot be mended by politicians who, by their very presence, will crowd out any last traces of enterprise.

The second lesson is that the delivery of education is an industry, not an office of government. The Indian software engineering revolution is a remarkable phenomenon. Of all the new firms publicly quoted in Silicon Valley, 40 per cent have an Indian founder. Nearly a fifth of research and development staff in American knowledge companies are Indian. Within India itself, the software industry has grown at an extraordinary rate - from around $150m in 1992 to $3.9bn last year, a compounded annual growth rate of 61 per cent. India is second only to the United States in its number of Microsoft-certified professionals. All the major telecom companies have opened research and development centres in India.

To explain this success story, some might point to innate Indian mathematical superiority, to cheap labour or, at a push, to government investment. But there are plenty of other places with the same ingredients that achieve nowhere near India's success. What matters is India's IT education and training market. It is estimated that there are over 700,000 students in more than 3,000 training centres. But two companies stand out in the way they have redefined education as an industry - NIIT and Aptech - and together they share just over 70 per cent of this market.

Take NIIT. It has 40 wholly owned centres in the metropolitan areas, but has franchised its highly innovative model to 1,000 centres across India. And, in a nice twist on global capitalist imperialism, it has expanded its operations into the US and UK, as well into Asia and Africa. NIIT, which began in a cramped, leased office in downtown Bombay nearly 20 years ago, realises the power of brand names in the education industry. Its brand is so successful that, just as we say we are "doing the Hoovering" when we mean we are vacuuming, so students in India say that they are "doing an NIIT" when they mean they are doing any computer course. You'll even find parents advertising in the matrimonial pages of the Times of India for a GNIIT (graduate of NIIT) as a suitable spouse for their son or daughter.

The company has a research and development department to develop teaching methods that capitalise on effective teacher- contact time, carefully utilise space and learn from the most effective pedagogy worldwide. One of its guiding principles is: "If we or a competitor can teach this course in two weeks, how can we teach it in one week?" Another is: "If it takes us or our competitors six months to develop this course, how can we develop a similar course in three months?" They use rooms 14 hours a day, so that just 30 computers can serve 1,260 students.

But it isn't all so prosaic. The director of research, Sugata Mitra, experienced what many parents feel when he first saw his children on the family computer: "My children have easily taught themselves to access the internet. They must be brilliant!" But then he thought: "Perhaps there's nothing special about my children, but rather something particularly easy about accessing the internet." The NIIT headquarters borders the slum area of Kalkaji, where there are many children of all ages who don't attend school. Dr Mitra wondered whether these children, unschooled and largely illiterate, could also learn to access the internet without tuition.

His team constructed an "internet kiosk" in the NIIT boundary wall, with the monitor visible through a glass plate. The PC itself was on the other side of the enclosure, which was linked to the NIIT's network and to the internet through a dedicated connection. There was a touch pad instead of a mouse, later modified to an unbreakable joystick. The kiosk was made operational, without any announcement or instruction, in January 1999.

Within weeks, the children learnt to become "internet literate". The Disney website became especially popular, with children playing computer games, and navigating stories and cartoons. Those literate in Hindi learnt to access news, horoscopes and short-story sites. These underprivileged children, without any planned instructional intervention, could achieve a remarkable level of computer literacy. Language, technical skills and education, it seemed, are not serious barriers to accessing the internet, providing that simple resources are available. And that's Mitra's next venture: he is rolling out the idea commercially, to rural and slum areas, further harnessing the power of the private sector.

Again, the lessons for the UK seem self-evident. The Blair government wants every person in a disadvantaged community to become IT literate: it has allocated £252m to start around 700 learning centres across England, and another £230m for teacher training. But it's all government activity. And it's all crowding out private entrepreneurs. Why is there no British equivalent of NIIT, franchising its expertise in every town, its brand name as recognised as Gap or Coca-Cola? Perhaps there would be, if only government would stop thinking that it has to do everything.

And so to the third lesson: expand higher education, charge realistic fees and don't crowd out commercial student loan schemes. NIIT has linked up with Citibank so that all its advanced students can take out a seven-year loan towards repayment of fees. Since it does not require any collateral, the loan is open to students from any socio-economic group, provided they can pass the entrance test. The theory is that any student who gains NIIT advanced qualifications will be more than able to repay the loan, given the demand for young people with internet-related skills. And loyalty to NIIT will ensure that there are few defaulters, if any.

There are dozens of similar student-loan schemes in India, all offered by commercial banks: the Central Bank of India, GE Countrywide and the Housing Development Finance Corporation, for example. They cover up to 90 per cent of higher education costs, including tuition fees, maintenance, books and equipment and travel - or up to 100 per cent for specified disadvantaged groups. The Allahabad Bank promises that the loan application can be submitted and sanctioned online within two days.

In India, the education industry is burgeoning. It is reaching out to the poorest, refugees from the failing state system. It makes an enormous contribution to the booming IT industry. Not everything in the garden is rosy. There is still a high rate of illiteracy (50 per cent in some states), and the Indian government could still overwhelm the entrepreneurial spirit in education with stifling regulation and red tape. But my view is that the enterprise of education will go from strength to strength. And if it can in India, why not here?

James Tooley is professor of education policy at the University of Newcastle-upon-Tyne