International Journal of Management Studies ISSN(Print) 2249-0302 ISSN (Online)2231-2528 http://www.researchersworld.com/ijms/ Vol.–V, Issue –3(6), July 2018 [44] DOI : 10.18843/ijms/v5i3(6)/06 DOIURL :http://dx.doi.org/10.18843/ijms/v5i3(6)/06 A Study on FDI in Education Sector and Its Impact on Gross Enrolment Ratio in Higher Education in India: An Econometric Approach Mr. Debjyoti Dey, Assistant Professor, Department of Commerce, J.D. Birla Institute, India. Ms. (ACS) Sapana Mishra, Assistant Professor, Department of Commerce, J.D. Birla Institute, India. ABSTRACT Higher education in India has been lagging behind due to various reasons. According to statistics of 2015-16, published by Ministry of Human Resource Development (MHRD), about 24.5% of the population is enrolled in the institutes of higher education in the country. Education ministry came up with the proposal of 100% Foreign Direct Investment (FDI) in higher education in the country. In the present research we found the relationship between FDI in Education and Gross Enrolment Ratio (GER) in Higher Education in India. We used econometric techniques to find out the impact of FDI in Education on GER In higher education and also to find out the causal relationship. Both Variables are stationery at first difference i.e. I (I) as per ADF Test. The co-integration test result showed the existence of long-run relationship between Foreign Direct Investments in Education and Gross Enrolment Ratio in Higher Education. The result shows the long-run GER in Higher Education. Granger Causality test indicates a bi-directional relationship between FDI in education and Gross Enrolment Ratio in Higher Education because the probability value is less than 0.10 in both the null hypothesis tested. Keywords: Co-integration, Foreign Direct Investment, Gross Enrolment Ratio, Granger Causality Test. INTRODUCTION: Higher education in India has been lagging behind due to various reasons. According to statistics of 2015-16, published by MHRD 1 , about 24.5% of the population is enrolled in the institutes of higher education in the country. Moreover, public expenditure on higher education is just 1.42% of the total actual expenditure of the Government of India (GOI) among various departments for financial year 2015-16. Higher education structure of the country has been suffering from both quantitative and qualitative problems. Given the huge population the country has, the number of institutes for higher studies is very inadequate. It is causing a large number of Indian students to enrol themselves abroad for their higher studies. In fact, India is one of the largest importers of education at present. In the question & answer session of Loksabha in 2017, Ministry of State in the Ministry of External Affairs informed that as per information received from Missions/Posts abroad, an estimated number of Indian students currently studying abroad as on 28 December 2017 is 586183. This indicates a huge outflow of money and also indicates a drain of human capital. Given this backdrop, the education ministry came up with the proposal of 100% Foreign Direct Investment (FDI) in higher education in the country. It would allow foreign universities and institutes to set up their campuses in India. Since then the matter has become a debateable topic among academicians. There are arguments in favour and in against of the proposal. There is a shortage of funds in higher education sector as budgeted allocation for this sector is very less. And there are not many ways in which this investment in this sector can be increased domestically. Since every year a large number of students go abroad for their higher education, it is sensible to allow foreign universities to set up their campuses here, in India. This would help in arresting the outflow of monetary and human capital.