Emerging Investment Opportunities in the Indian Education Sector

freeonlineindia November 5, 2016 Indian Leave a comment

Emerging Investment Opportunities in the Indian Education Sector

The education sector of any country marks the development of the country’s economy. For India as well education is a key factor that would help in the further development of the country. it has been noted that in the fast four or five decades the education sector of India that gone through major transformation and the way people are looking at the importance of education is changing.

There is no doubt in the fact that people are now thinking of education sector as a good area for investment and more and more people are trying to grab the opportunities that the education system is or will be providing as a whole. Let’s look at a brief about the education sector in India before we go on to the investment opportunities that it offers currently.

S.No	Unknown Information about Indian Education Sector	Detailed Information
1	Number child joins higher studies after completing lower/secondary educations in India	11%
2	Number Granted Deemed Universities in India	44 in past 50 years and 49 in last 5 years
3	The Age limit of Children for gaining compulsory education in India	6 – 14 Years
4	Number of Schools in India	1.4 Million Schools
5	Number of Higher Education Institutes in India	36,000

The growth of Education sector of India

In the year 1968 education was made compulsory to the children up to the age of 14. This came with the passing of the first National Policy Education or NPE. Along with making education compulsory for the children up to 14, the government of India also allocated some 6% of the national income towards the expenses of building a strong education system in the country. Along with this a system of radical structuring in the country was also established with included a pattern of 10+2+3. This included ten years of secondary schooling then high school for two years and then three years of an undergraduate education. This system is followed even today in India.

Then with the second edition of NPE 1986 the whole concept of equal education to all was started. This involved providing education opportunity for all the citizen of the country, establishing more and more educational institutes, also setting up of a non-formal education network in India. After seven years some modifications very made to the rules and then the concept of conducting common entrance exam for getting admission in specific technical and professional courses were started.

Then again in the year 2009-10 the Right to Education Act was passed and it was announced that all the children of the country aged between 6 to 14 years have a right to compulsory and free education. This came as a milestone reform for the Indian education system. Latest record say that today India has more than some 1.4 million schools with more than 227 million students enrolled for schools and more than 36000 higher education institutes. This makes India one of the world’s largest and widespread education systems.

Moreover industry leader are of the view that the education sector in India is expected to growth in the coming years and is estimated to reach around USD 120 billion. This is supposed to mean that the education sector of India would grow around 10 to 15% in the years to come. Now this may seem that India is growing towards some mark able progress but sadly it is not so.

Why India lacks on literacy rate

A report by Legatum Prosperity Index 2015 India ranks number 92 in education among 142 countries in the report. In this reports 142 countries have been compared in 8 categories which include governance, economy, education, entrepreneurship & opportunity, social capital, safety, personal freedom and health. In all this eight categories India has a rank of 99 which is not that good for sure. Apart from this the Census report of 2011 shows that India has a literacy rate of just 74% which makes India rank low in a list of 10 Asian countries that have a literacy rate below 80%.

Now one may wonder that what is the reason behind this low literacy rate of India and why the initiatives that have been taken by the government have now been able meet its objectives completely. Well there are more than one reasons to justify these questions. One of the major reasons is the poor quality of education in most part of India. Apart from this here are some reason which justify the answer-

One of the biggest problems is that India is used to rote learning. Most of the schools and teachers believe in learning based on repetition. Now this makes a student just memorize what one repeats but then the meaning of the learning is lost somewhere. One this is an example of poor quality education.
Poor teaching system is also a result of poor under paid teachers and also unmotivated teachers who just put any personal effort to make learning more effective for the students.
The framework of the system is also not very impressive and so leads to poor education quality.
Another major problem in the country is the presence of inadequate infrastructure to set up any education institute. Also there is lack of technology in classrooms learning’s. More over there is the problem of high student-teacher ratio which makes it impossible for schools to maintain the students’ capacity.
Implementation of a universal education system becomes difficult and almost impossible due to the diverse demography of the country.

Details about the Draft NPE 2016

But then this does not take away the fact that the Indian government is making a lot of efforts in improving the quality of education in the country, and trying to make it international level. Now keeping this in mind the Draft NPE 2016 ha come up with certain major goals to put the Indian education sector in the global sector.

NPE 2016	National Education Policy 2016
Motive behind NPE 2016	To provide Equal Education to all children
Number of years taken to formulate NPE 2016	About 3 years
Focus of NPE 2016	Improving the quality of education and restoring its credibility

With the new policy the target of the government is to meet the demands of the growing population educational needs in the country. With this policy all the necessary reforms will be made in the country so as to improve the education system in the country and bring about training of teachers, bring technology enabled education possible, skill education, quality audits, etc. Here are the important and notable features of Draft NPE 2016-

There will be measures taken to build up a better evaluation process that could be in par with the international standards and ensure better quality assessment.
Equal opportunities will be available for the children of the country and they will be trained in a way that they are well prepared to face the competitive world.
Quality standards will be set which the schools will have to meet. Also Information and Communication Technology (ICT) integral to education will be made integral to the education system.
A Teachers Education University will be set up on a national level in order to maintain teacher development and management.
The curriculum of schools will be changed from time to time with the latest developments and this will also avoid rote learning.
The education system would be kept away from all kinds of social discrimination. Only equality will be maintained.
Adequate help and support will be given to institutes that offer distance learning and Massive Open Online Courses.

Union Budget 2016

In the Union Budget of the financial year 2016 there were some announcements made regarding to the initiative being taken in order to improve the education system in India. This included the allocation of USD 6.70 billion for school education and USD 4.44 billion for higher education. This marked almost a 5% increase in the allocation as compared to the previous year’s allotment. Also it was announced that 10 public and 10 private educational institutions will be made par to the international educational level. In order to improve the educational infrastructure, the Higher Education Funding Agency will be launched.

But then the fact is that there is still a lot more to be done in order to uplift the education system in India. There are still a lot of barriers due to which the education sector is not being able to grow up to its complete potential. Even though there are a lot of scheme and initiatives being taken for the improvement, there is the implementation factor that is acting as the biggest challenge.

Now the best option here for the government is to involve the private investors in the game, so that the education sector of the country can be improvised. This would mean that the government can include both foreign and domestic private investors. As of now, Indian government has been pressing on the point that the education sector should not be made a place to earn profits, but wants to keep it focused on just providing learning. But eliminating this concept would mean that more and more private investors would invest in this sector and meet the educational demand of the growing population of the country. This would also bring about a better educational infrastructure where there is a good teaching faculty and enough of technological use. Likewise many other obstacles would eliminate. As of now there is also 3% of share value of private investor in this industry. But when seen overall the Indian education system required a minimum investment of USD 123 billion by the year 2030 so as to reach the international level. So this brings up some great opportunities for the private investors.

What are the opportunities for investment in the education sector in India?

Upcoming institutions– With the growing awareness surely more and more children are being admitted to school. This means that more and more institutes will be required. This is where the private investors will have an opportunity. Now reports say that already 25% of the market share of the K-12 education sector is owned by the private players and around 31% of enrollments are in private schools. It has also been noted that in the recent report of 2016 by the PRS Legislative Research that the number of students in the government schools have decreased from 71% to 62% between the year 2009 and 2015, which show the gradual shift from government schools to private schools. The same shift has been noted in case of universities as well. There are around 185 privately owned institutions in the country which show an enrollment rate of 59%. This surely shows that people are starting to prefer more of private colleges and schools.

Now as calculated through a research, India would be further requiring 40000 schools, 35000 colleges and 700 universities in order to educate 130 million schools aged children. And the target of the government is to reach 30% of Gross Enrolment Ratio by the year 2020. Now this means that the private investors have a great opportunity to invest. Private investors would have an option of obtaining direct license or to go about the franchise model like the Delhi Public School.

Teacher Training– In India one of major concern or barrier that comes in the development of the education sector is the poor quality of teachers. Now there are many reasons behind this, it would include poor pay, absence of accountability and lack of making decision power. All these factors lead to the teachers not performing well. For a person to perform there has to be certain amount of motivation. But then India there is a lack of motivation in the teachers. The NPE 2016 has said that India is facing a shortage of 5 lakhs teachers in elementary schools. It has also been noted that about 14% of the government schools do not even have a minimum of 6 teachers per schools. And the teachers who are available they either do not have the required knowledge or the skill to teach the students. Another problem is that with the growing number of schools the management gets confused on whether to choose an under qualified student or a qualified teacher. Paying salary to the teachers also comes as barriers. Due to which the schools tend to hire under qualified teachers who have to be paid less.

Now to meet all these problems there would be a need of establishing many institutes that would focus just on teacher training and maintain a level of teacher quality. Institutes, which can train teachers by conducting effective classroom teaching. This would also come as an investment opportunity for the private investors who can set up training institutes for teachers.

Rural Education- there is many students in the rural areas of the country who do not have access to any form of formal education even now. This mainly includes the cities that fall under the Tier 2 and Tier 3 cities category. But slowly awareness is been created in these areas and children in these areas also want to study. Keeping this in mind the government of Indian has allotted USD 4.7 billion for the development of education in these areas. But then there is sure a need of more investment to meet the demands. This can be met with the participation of the private players. There are one or two private institutes that have been making a mark in the rural areas as well, this includes Unitus Seed Fund backed Hippocampus Learning Centers. This means that there is a great scope for private investors in these areas well.

Inclusive Education- Now there are many disabled children in the country, who do not have access to education. But then there is hardly any development that is seen in the sector of inclusive education. Even though, the government has come up with the Scheme of Inclusive Education for Disabled at Secondary Stage which provides educational opportunities to the disabled children. But then this is not enough. Private investors can invest in this sector of education as well, which is currently untouched by the private players.

E–learning– With digitization make its way in the world learning has moved much beyond just textbooks. People and especially students are getting attracted to mobile, multimedia, audiovisual and such new methods of learning. It is more interesting and more on the practical side. Now this comes as a great opportunity for the private players as use of such modern and advanced technology means better infrastructure and more investment. This would surely means that more and more private schools and institutes will be preferred. The edu-tech space will provide a huge scope for the private investors as this industry has a great potential for growth in the coming two to three years. Educomp and NIIT are huge players in this sector and they have a huge base of students and teachers associated with them. They provide variety of courses that involves multi-disciplinary skill and talent development courses for individuals, corporate and institutions.

Few other notable institutes that are making a mark in this the E-learning space are Vedantu which offers personalized training to students via the online platform. Then there is INurture, Youth4Work, Byju’s and XSEED Education that are growing rapidly in the education sector of the country using the online platform. Likewise more and more private institutions can come up in this growing market.

The education sector of India has great potential and can grow immensely with the right kind of push and investment in the right areas. For the actual growth of the country’s education system it is necessary that the government initiatives are supported by the private investors. With combined efforts it is possible to overcome a lot of obstacles that are in the way of the growing education sector of India.

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