Investments Prospects in Indian Education Sector
Education in India is provided by the public sector as well as the private sector, with control and funding coming from three levels: central, state, and local. The Nalanda University was the oldest university-system of education in the world. Western education became ingrained into Indian society with the establishment of the British Raj.
Education sector in India falls under the control of both the Union Government and the states, with some responsibilities lying with the Union and the states having autonomy for others. The various articles of the Indian Constitution provide for education as a fundamental right. Most universities in India are controlled by the Union or the State Government.
Investments opportunities in Indian education sector
The Indian education sector has been recognised as a “Sunrise Sector” for investment in the recent past. This recognition stems from the fact that the sector offers a huge untapped market in regulated and non-regulated segments due to low literacy rate, high concentration in urban areas and growing per capita income. The Government has also been proactively playing the role of facilitator in this sector.
The higher education sector, owing to its huge potential, holds very promising prospects. With an estimated 150 million people in the age group of 18-23 years, the sector offers one of the most attractive yet highly complex market for the private/foreign players.
The Indian Education sector is characterized by a unique set of attributes:
* Huge market size both in terms of number of students and annual revenues
* A potential growth rate of 16% is expected over thenext 5 years
* Significant activity in terms of new foreign entrants and participation is expected to be witnessed in the years ahead
* Accreditation is still not mandatory, however, reforms are in the pipeline to address this issue
The Indian education sector is evolving, which has led to the huge investments options for non-resident Indians (NRI) and emergence of new niche sectors like vocational training, finishing schools, child-skill enhancement and e-learning among others. Growth is driven by the increasing propensity of the middle class to spend on education and more aggressive initiatives by private entrepreneurs.
Private sector investment options in Indian education
The Government of India has set itself an aggressive target of achieving 30 per cent gross enrollment ratio (GER) in Higher Education by 2020, which translates into doubling the GER in the next 8 years.
As per recent estimates by National University of Educational Planning and Administration (NUEPA), in order to achieve this target an additional investment of Rs 9.5 lakh crore, which includes capital expenditure and operating expenditure, has to be made in the next 8 years. To give a perspective, the total allocation to the education in India under the 11thFive Year Plan (2007-12) was Rs 2.7 lakh crore out of which higher education’s share was only about 30 per cent.
The private sector’s role in the higher education sector has been growing at a rapid pace over the last decade and needs to further expand at an accelerated rate in order to achieve the GER target.
Despite the huge potential in the higher education sector, not everyone has been able to achieve success. The challenges/threats, which the private sector players face in India are significant and therefore, approaching the market with a well thought-out strategy is advisable.