Education sector in India
Some facts about India
India has one of the largest education systems in the world. The Indian education system is divided into two major segments: core and non-core businesses. The core group consists of schools and higher education,while the non-core business focuses on segments such as pre-schools, vocational training and coaching classes.
India has one of the youngest population in the world. This gives pressure on Kindergarten education. Private Equity investment has marked this as their benchmark and has started to invest in Kindergarten till standard XII. This segment has huge prospects in coming next 5 to 10 years. Educational sector is one of those sectors which is not heavily effected in times of financial crisis like year 2008. The cash flow in education is always assured and schools are not dependent on financing their working capital. This makes the education sector as one the most promising sector of 2011 and beyond.
In Indian parliament there are bills waiting to be approved which will allow big foreign universities to open schools and colleges in India. This is greatly required to uplift the educational standards in India. There are plethora of engineering, medical etc colleges in India but few provide above average education. With big foreign universities coming in, educational standards are set to see a face lift. This will also lift the level of competition for the Indian universities giving direct benefits to Parents and Childrens.
SECTOR FACTS
FDI inflows in the education sector during the period April 2000 to September 2011 stood at US$ 448.97 million, according to the Department of Industrial Policy and Promotion (DIPP) According to the 2011 census, the total literacy rate in India is 74.04 per cent. The female literacy rate is 65.46 per cent and male literacy rate is 82.14 per cent The country has 544 university level institutions, which includes 261 state universities, 73 state private universities, 42 central universities, 130 deemed universities, 33 institutions of national importance and five institutions established under various state legislations, according to the Ministry of Human Resource Development (HRD) Annual Report 201011 The country has around 79 centrally funded institutions, which includes 15 Indian Institutes of Technology (IITs), 11 Indian Institutes of Management (IIMs) and 30 National Institutes of Technology (NITs).
Investment Opportunities Private equity investment in education has reached US$ 190 million in 2010 from US$ 22 million in 2005. Investments in the Kindergarten to class XII segment is expected to grow to US$ 33 billion by next year from the current US$ 20 billion, said Ministry. According to a report 'Education in India: Securing the demographic dividend,' published by Grant Thorton, the primary and secondary education, or Kindergarten-12th grade (K12) sector is expected to reach US$ 50 billion in 2015 from US$ 24.5 billion in 2008. Further, according to the report '40 million by 2020: Preparing for a new paradigm in Indian Higher Education' released by Ernst & Young, the higher education sector in India is expected to witness a growth of 18.0 per cent CAGR till 2020. At present, the sector witnesses spends of more than INR 46,200 crore (US$ 10.4 billion), which is estimated to grow at an average rate of more than 18.0 per cent to over INR 232,500 crore (US$ 52.5 billion) in 10 years.
Scope of education sector in India
India needs 1.2 million more teachers under the Right to Education Campaign, according to Mr. Kapil Sibal, Union Minister for Human Resource and Development. By 2020, to increase the percentage of students going for higher education from the present 12.4 per cent to 30 per cent in the country, India will need 800 more universities and another 35,000 colleges, according to Mr Sibal. The country's fast-growing education sector holds a potential to attract a US$ 100 billion investment over the next five years driven by demand for skilled professionals and need for infrastructure development, according to experts, such as KPMG. As per a report released by research firm RNCOS, the annual student enrolments for higher education are expected to grow at a CAGR of nearly 8.7 per cent during 2010-11 to 2012-13 and will require huge investments for developing the infrastructure.
Investment Policy Updates
The Medical Council of India (MCI), a state body that regulates the medical education sector and registers doctors, has allowed hospital chains such as Fortis Healthcare, Max Healthcare and Apollo Hospitals to set up medical colleges. The National Accreditation Regulatory Authority for Higher Educational Institutions Bill, 2010 postulates that every higher educational institution and every programme conducted by it should require accreditation in the manner provided in the proposed legislation The Educational Tribunals Bill, 2010 provides for the establishment of the State Educational Tribunals and the National Education Tribunal. The Prohibition of Unfair Practices in the Technical Educational Institutions, Medical Educational Institutions and Universities Bill, 2010 bars accepting admission fee and other charges other than those declared by the institution in the prospectus The Foreign Educational Institutions (Regulation of Entry and Operations) Bill, 2010 in order to allow foreign universities to operate in the country. The government allows 100 per cent FDI in the education sector. Finance Minister, Mr Pranab Mukherjee, has said that the proposed allocation for education under the Eleventh Five-Year Plan will be US$ 65.21 billion, taking the share of education in total planned expenditure from 7.7 per cent to 20 per cent.
To accomplish massive expansion and up gradation of the education infrastructure of schools, universities and institutes imparting vocational training, government plans to mark up its expenditure on education from around 10 per cent to 19 per cent. The Central Universities Act was promulgated in January 2009 for conversion of three state universities into central universities. It also brought new central universities in 12 states. The National Mission on Education through Information and Communication Technology (NMEICT) aims to leverage the potential of ICT in providing high-quality, personalized and interactive knowledge modules over the internet in any-time, any-where mode. Further, the Union Cabinet has approved the merger of two Government schemes - National Mission on Education through Information and Communication Technology (NMEICT) and National Knowledge Network (NKN).
