Performance and efficiency in Indian universities

While the evaluation of university efficiency has become commonplace in developed countries, exercises of this kind have rarely been conducted in the context of developing economies. We use frontier methods to analyse the determinants of costs in higher education institutions in India. Results obtained using the standard stochastic frontier model are compared with those from a latent class cost frontier model. Average incremental costs, returns to scale, and returns to scope are evaluated. Despite the relatively small size of average institution, we find that economies of scale are largely exhausted. The implications of various models for the evaluation of institution-level measures of efficiency are highlighted. The results differ in a number of respects from those obtained in more developed countries. Implications of the analysis for policy and practice are highlighted.