NMC Allows All Companies to Set Up Medical Colleges; Fees Unregulated
UPSC / SSC current affairs note · Polity
Why in news
The National Medical Commission (NMC) has amended regulations to allow all companies incorporated under the Companies Act, 2013 to establish medical colleges, moving away from the earlier restriction to only Section 8 (non-profit) companies. This change aims to increase transparency and revenue but raises concerns about fee regulation, as non-profit medical colleges already charge among the highest fees without regulatory oversight.
Background
Historically, medical education in India was considered a charitable activity, with the Supreme Court in 1993 and 2002 ruling that education cannot be for profit, only allowing 'reasonable surplus'. The Medical Council of India (MCI) initially permitted only trusts, societies, and Section 8 companies to set up medical colleges. In 2017, MCI allowed all companies under the Companies Act, 1956 to establish colleges, but this was reversed when NMC replaced MCI in 2019, restricting to Section 8 companies again. The latest amendment reverts to the 2017 position.
Key facts
NMC's 2023 regulation allowed only Section 8 companies (non-profit) to set up medical colleges; the new amendment permits all companies under the Companies Act, 2013.
Section 8 companies must reinvest surpluses in charitable objectives; other companies can distribute profits.
In 2017, MCI amended regulations to allow all companies registered under Companies Act, 1956 to establish medical colleges, but NMC reversed this in 2019.
Vedantaa Institute of Medical Sciences (Palghar), established in 2017 by Vedanta as a private limited company, initially argued its fees were not subject to state fee regulation because it was a for-profit entity; it was later forced to submit to regulation but still charges high fees (Rs 15.7 lakh for management seats in 2025).
Deemed university medical colleges, run by trusts/societies (non-profit), charge among the highest fees and are not regulated by any fee regulatory body.
Supreme Court in 1993 and 2002 held education as charity, disallowing profiteering but allowing 'reasonable surplus' for expansion.
Till 2009, official policy was that education could not be for-profit; most private colleges were run by charitable trusts on paper.
The amendment aims to increase transparency and revenue in medical education.
Prelims pointers
- National Medical Commission (NMC) - established in 2019, replaced MCI
- Section 8 of Companies Act, 2013 - non-profit company
- Companies Act, 2013 vs Companies Act, 1956
- Medical Council of India (MCI) - disbanded in 2019
- Establishment of Medical College Regulations, 1999
- Vedantaa Institute of Medical Sciences, Palghar
- Supreme Court judgments: 1993 (Unni Krishnan case) and 2002 (TMA Pai case) on education as charity
- Fee regulatory authority - state-level bodies
Mains angles
- GS2: Government policies and interventions in health and education; regulatory bodies and their effectiveness
- GS2: Role of judiciary in defining 'charity' and 'profit' in education; impact on access and equity
- GS3: Issues of commercialization of education; private sector participation in healthcare
- GS4: Ethics of profiteering in essential services like medical education