Back to school

Posted by Ninad on May 10, 2010 under All Posts | Be the First to Comment

Here are some statistics from IDFC-SSKI research report on Indian Education (2009).

• Government spends $ 30 billion on education every year
• Citizens spend additionally $ 50 billion on private education
• K-12 segment is worth $ 20 billion

So, do you want to start a school in India?

A school is a capital intensive business. In a city like Delhi or Mumbai, setting up a school for 1000 children on a 2 acre plot could cost anywhere between Rs. 15-20 crores.

In India, schools can be owned only by a not-for-profit trust or society or government.

Government has over 1 million schools and effectively runs the largest number of schools in the country.

There are a total of 75,000 private schools in India. Only a handful like the Delhi Public School (DPS) has more than 100 locations.

Given these intricacies, how are education entrepreneurs setting up schools?

They simply set up two legal structures. A company owns all the assets of the school and leases it to the trust for a fee. The trust runs the school and books all the expenses.

There are a plethora of new schools which have come up especially in the B and C class cities, where the cost dynamics are more favourable.

Given the big demand for good quality school education, new schools with spiffy facilities are bound to come up with this dual legal structure. Ultimately, this will mean a better choice to parents and their kids.Â

For profit?

Posted by Ninad on May 3, 2010 under All Posts | Read the First Comment

Currently, around 14 million students attend college. However, given the robust annual growth of GDP of more than 9 per cent, it is estimated that India will need to send 22 million students to college in the year 2014.

Mr. Kapil Sibal, Union Minister for HRD has mentioned that he wants to send 30 per cent of India’s college-going-age kids to college. This would mean 30 million more students going to colleges.

India presently has around 350 universities and the National Knowledge Commission has stated that India needs around 1,500 universities.

In 2008, it is estimated that India had around 340 million people in the age group of 25-50 year olds who did not have a college degree. This is expected to rise to 380 million by the year 2014.

Setting up a good quality university is highly capital intensive and time consuming. Although foreign universities are likely to be allowed to come to India; at best, they will meet a fraction of this demand.

So, what is the future of those students who seek a good quality college degree and are unable to get it?

The yawning gap between demand and supply will ensure that aspirants for prestigious institutions like IIT and IIM will be on the rise for many years to come.

If this huge gap is to be met, shouldn’t the government look at changing its model and allowing for-profit institutions in the education sector?