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December 21, 2009

Education Sector

History

Education is a trillion Dollar industry worldwide. The history and structure of education system in India has not been stable. With India having a history of invasion during the feudal period, the system of imparting education also kept changing. Indian educational system has moulded itself on the pattern of British education system. Post Independence, all government’s greatly emphasised the importance of spreading education to all corners of the country. Education in India was not open for private participation. However, off late, the government has given permission to private bodies to run schools and colleges for profit. Increased demand for education has led to major changes in supply. Higher education has now entered the market fray. Universities that had a virtual monopoly for decades and even centuries are now encountering a range of competitors - virtual consortia, global branches of universities, for-profit institutions - that are vying for revenues and profits. Briefly the history of Education can be summarized as-

Ø Up to 17th century

· Nalanda, Takshila, Ujjain, & Vikramshila Universities

Ø Prior to British rule

· School for every temple, mosque or village

Ø In British rule

· Education was introduced & funded by the British

· Macaulay’s recommendations

Ø Post Independence till 1976

· State responsibility

· In 1951 First Indian Institute of Technology (IIT) established at Kharagpur followed by: Mumbai, Kanpur, Chennai, Delhi, Guwahati, Roorkee.

· First two Indian Institutes of Management (IIMs)- Ahmedabad and Kolkata followed by IIM(Bangalore), Lucknow, Kozhikode, Indore.

Ø From 1976 till 2005

· Joint responsibility of the State and the Centre.

· In 1985 - Indira Gandhi National Open University (IGNOU)

· In 2001 - Sarva Shiksha Abhiyan (SSA)

Ø 2005 onwards

· Introduction of grade based system

The Industry

India is one of the largest markets for education in the world in terms of number of students. Currently, there are over 1 MM schools in India providing education to over 200 MM students. The number of teachers in India currently stands at 5.8 MM. The Indian Education System can be broadly divided into three segments; namely Schools, which include pre schools and the K12 segment, Professional colleges imparting education in the field of medicine, engineering and management, and lastly, Vocational training institutes, which includes IT training and teacher training institutes. Pre-Schools are places where formal education is not imparted, but children are taught basic activities which help them get independent Faster. The largest pre-school player is KidZee. In the K12 segment, formal education is imparted to children. It starts with lower kindergarten (LKG) till XII standard, following which, students go for professional education. Private tutoring has become a flourishing business in India with an estimated market size of almost US$2 Bn. While the sector is very fragmented, with classes being run even in residential premises, larger players like Chate Coaching Classes, Mahesh Tutorials etc., who have a wide network, are benefiting from this growing market. Coming to higher education, Currently in India, there are over 700 private colleges and 10 private universities imparting education in the field of engineering, medical and management studies. To ease the pressure of central legislation over private universities, the government has started granting deemed university status to private institutions. The transition from private college to private deemed university is a new and growing trend. Vocational training is an occupational training in which a person is specifically trained. Currently, in India there are many privately owned institutes that are providing vocational training. NIIT's and Aptech's core IT training business falls under vocation. Frankfinn Institute of Airhostess Training, which provides training to airhostesses, also comes within the ambit of vocational training institutes.

Technology in Education

E-learning and online tutoring- Online education is the need of the hour, but at the same time, this is heavily dependent on reliable and high-speed Internet coverage. Its biggest advantage is that a student can opt for employment while still pursuing his studies. Current players include Educomp, Extramarks and Tutor Vista.

ICT in public schools- India recognized the importance of Information & Communication Technology (ICT) in education as early as 1984-85 when the

Computer Literacy and Studies in Schools (CLASS) Project was initially introduced. A total of 12,000 computers were distributed to secondary and senior secondary schools through State Governments.

Present Situation: Why the sector is lagging?

· Obtaining approval for setting up of a higher education institution is a lengthy and cumbersome process and the regulation and fees fixation are also highly ambiguous.

· The sector is controlled by the government, it is marred by the poor governance and high absenteeism of teachers in rural as well as urban areas.

· Delay in allowing FDI in education.

· There is an effort on the part of the government to block the entry of foreign universities into India. The case of CFA Institute (Formerly AIMR) is a classic example of bureaucracy in education in India.

· In terms of spending on higher education, the situation is grimmer. India currently spends about 0.4% of GDP on higher education and this is the prime cause of outflow of students from the country. Developed countries like US spend 1.5% of GDP on higher education, whereas UK spends about 1% on higher education.

Impact of Liberalization

Pre Liberalization

The education sector during the pre-liberalized era can be marked by the prevalence of Licence Permit Quota Raj. Sincere entrepreneurs could not borrow commercially since their schools were supposed to be non-profitable. One could borrow for almost any purpose, except to open a school. During this period only public institutions were prevalent in the country and FDI was not allowed. The schools were mostly run by trusts. The state-level governments funded the colleges of engineering etc. There was barrier even in the acquiring of land for setting up educational institutions.

Post Liberalization

The post liberalization era is marked by abolishment of Licence Permit Quota Raj which lowered the entry barrier for the educational institutions. Approval of FDI, infrastructure generation, removal of barrier to the use of land was also started during this period. The 93rd Amendment done in this time makes education free and compulsory for all children in the age group of 6-14.Government also introduced Sarva Shiksha Abhiyan (SSA), in an effort to universalize elementary education. The Sarva Shiksha Abhiyan is to provide useful and relevant elementary education for all children in the 6 to 14 age group by 2010. Mid day meal scheme was also started by government to attract poor children into government schools. There is also another goal to bridge social, regional and gender gaps, with the active participation of the community in the management of schools. The Government expenditure on Education has greatly increased since the First five year plan. The Government of India has highly subsidized higher education. A number of foreign institutes have emerged in this period.

Impact of Globalization

Globalization has resulted in exchange of different educational programmes and even immigration and emigration of students between countries in the world. Many overseas business schools have come to India seeking a big revenue boost, and a chance to understand the concerns of a developing economy. The Foreign Educational Institutions (Regulation of Entry and Operations, Maintenance of Quality and Prevention of Commercialisation) Bill is expected to be approved, and it is being watched closely by some foreign institutions like Canada York University, Ohio University and the Tuck School of Business which want to make a foray into India. A number of Indian B-schools have established offshore campuses and the Middle Eastern nations and Singapore are clearly emerging as favourite destinations.

  • Xavier Labour Relations Institute (XLRI) in Jamshedpur offers an executive education programme in Dubai and now has a campus in Singapore.
  • IIM Bangalore offers an advanced master's programme, in collaboration with the City University of Hong Kong, SDA Bocconi-School of Management in Italy and Anderson School of Business Los Angeles, USA.
  • Harvard Business School will start an executive education programme in India next year, targeting companies with global ambitions to address what it believes is the typical challenge in the booming economy & managing hyper growth.

The internet has emerged as an important source of providing education to students through various correspondence courses, online study materials, tests etc. There has been a temporary movement of teachers to provide education services abroad.

Key Players

Ø Indian companies

§ Educomp

§ NIIT

§ Everonn

§ Amity

§ Symbiosis

Ø US

§ Apollo group

§ Devry inc.

Ø OTHERS

§ Mega study (South Korea)

§ ABC learning centres (Australia)

§ Benesse corporation (Japan)

Regulations

The main features of the policies are

v Provision of free and compulsory education to all children upto the age of fourteen years

v Education, in general, is the concurrent responsibility of the Union and the States. However, (a) coordination and determination of standards in higher and technical education, and (b) institutions declared by Parliament by law to be institutions of national importance are the responsibility of the Union.

v Local authorities (Panchayats and Municipalities) are to be assigned a suitable role in education (especially School, Adult and Non-Formal Education) through individual State legislations.

v State Governments and Local Authorities are expected to provide facilities for instruction in the mother tongue at the primary stage of education

Important Legislations

Next to the Constitution, State Policy is articulated through legislations. Some of the important Central legislations having a bearing on the subjects allotted to the Department of Higher Education are:

The University Grants Commission Act, 1956

The All India Council for Technical Education Act, 1987

The National Council for Minority Educational Institutions Act, 2004

The Copyright Act, 1957

The Apprentices Act, 1961

National Policies on Education

There have so far been mainly two comprehensive statements of the National Policy on Education, viz. those of 1968 and 1986. The former contained decisions of the Central Government on the recommendations of the National Commission on Education, 1964-66. The latter was a result of the renewed priority assigned to Education by the government of the Late Shri Rajiv Gandhi, who was Prime Minister during 1984-89. The 1986 policy was reviewed by a Committee constituted in 1990 under the chairmanship of Acharya Ramamurti. On the basis of the recommendations of this Committee, certain provisions of the 1986 policy were modified in 1992. Thus, in all, the following three comprehensive national policy statements exist on Education:

National Policy on Education, 1968

National Policy on Education, 1986

National Policy on Education, 1986, as modified in 1992

Policy Decisions on individual issues taken from time to time.

Besides the above comprehensive policy statements, policy decisions on individual issues are taken from time to time, as needed - in the form of Resolutions, Schemes, Guidelines, Orders, etc.

SWOT Analysis

STRENGTHS

· Good premier Institutes. Due to the traditional importance placed at higher education we have a strong system for higher education and the premier institutes like the IIT, IIM , NIT and other institutes are producing best talents

· Large talent pool of educated students

· Importance given to spoken and written English makes us a better fit in the globalized world.

· EDUSAT – a satellite dedicated for education sector. It has strengthened the distance education system in India.

· Growth in supporting sectors like the stationeries, educational aids etc

WEAKNESS

· Quality of the students passing higher education need to be improved to make them employable

· Lack of concentration on the primary education

· Lack of infrastructure to educate the economically backward class

· Less acceptance of distance education in the industry

· Lack of teaching faculty

· More Importance given to Rotting than inquisitive learning

· Inadequate number of universities. While Japan has 4,000 universities for its 127 million people and the US has 3,650 universities for its 301 million, India has only 348 universities for its 1.2 billion people.

OPPURTUNITIES

· Demographic benefit. India is becoming a younger country year after year. Therefore the market size is bound to expand.

· Globalization Impact. Willingness of the foreign universities to set up in India and Indian universities planning to set up colleges outside India.

· Tutoring jobs are being outsourced from the western countries to India.

· Use of latest technological aids for education.

THREATS

· Excess concentration on English might cause loosing out some of our local languages in the long run.

· Rising costs of the education

· Brain drain due to the lack of importance for research and development

· Reluctance of educated people to take up the traditional jobs like the ones in small scale industries.

Future Growth

The schooling market is projected to more than double in value in the next 10 years, from ~US$ 30 billion to ~US$ 71 billion. This will also support the growth in the complementing sectors.

Main Segment

2008

CAGR

2013

CAGR

2018


US$ Million


US$ Million


US$ Million

Pre School

1200

20%-25%

3500

10% - 15%

5800

K-12

21,000

5% - 10%

30,800

5% - 10%

43,200

Tutorial

5000

8% - 13%

8000

5% - 10%

11800

Books

1700

5% - 10%

2400

3% - 8%

3000

Stationery

1380

5% - 10%

2000

3% - 8%

2600

Educational CDROMs

120

25% - 30%

390

20% - 25%

1100

Multimedia in Schools

25

60% - 70%

320

50% - 60%

3300

Total

30425


47410


70800

Sources: Technopak Reports

Market for Higher Education is projected to grow almost three times in the next 10 years; market size for Skill Development is projected to grow almost ten times, albeit over a smaller base

Main Segment

2008

CAGR

2013

CAGR

2018


US$ Million


US$ Million


US$ Million

Higher Education

6700

8% - 13%

11200

7% - 12%

18100

Preparatory

1600

13% - 18%

3200

10% - 15%

5900

Total

8300


14400


24000

Sources: Technopak Reports

Private Education Growth

With market growth estimated at 11% over the next 10 years, private education is likely to grow from US$ 41 billion currently to:

§ a US$ 69 billion market by 2013

§ a US$ 115 billion market by 2018

Pre-schools, K-12 Schooling and Higher Education will together represent ~2/3rd of the market, with a small percentage drop in 10 years, as other segments grow faster.

Multimedia in schools, child skill development, IT training and E-learning, preparatory and vocational studies, though relatively small segments in 2008 are forecasted to grow in the range of 25% to 60% and will together represent 1/4th of the market.

Pre-school, Educational CD-Roms and Child Skill Enhancement segments are likely to continue to remain an urban phenomenon.

Teacher training is likely to continue to grow at 40% to 50%, as the requirement for quality teachers will be very high.

Recommendations

· Need for creation of skill development. More emphasis should also be given to developing skill sets which can make students employable.

· Special reorientation for school drop-outs. School dropout should not be discriminated. Their other talents need to be discovered and circumstances to enhance the talent should be provided.

· E-learning and Online Tutoring. More E-Learning and Online tutoring centres are to be created to spread the education.

· Hike in salaries of teachers and professors, especially in public sector schools the competency level of the teachers are to be improved and the pay packages are to be aligned with that.

· Hiring of teaching faculty should be more stringent.

· Rules and regulations surrounding “not for profit” need to be reviewed.

Creation of an all encompassing Commission for Higher Education, a central statutory body to replace the existing regulatory bodies including the UGC, AICTE, NCTE etc.

3 comments:

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