Education Sector in India

Latest update: October, 2017

• With 762 universities, India has the world’s largest higher education system in the world & it ranks 2nd in terms of student enrolment in higher education
• Gross Enrolment Ratio (GER) in higher education reached 24.5 per cent in 2016.
• Government has a target Gross Enrolment Ratio of 30 per cent to be achieved by 2020.
• Indian literacy rate is estimated to be at 75 per cent in 2016 as compared to 63 per cent in 2011.
• According to the Economic Survey of Delhi 2016-17, the city has observed an increase in expenditure on education. The national capital’s total expenditure (plan and non-plan) on education, including sports, art & culture, increased from US$ 713.8 million in 2011-12 to US$ 1.59 billion in 2016-17.

Source: Census 2011, Ministry of HRD, UGC, AICTE, NCTE, MHRD and INC . ,UGC Annual Report 2013-14

introduction

India holds an important place in the global education industry. The country has more than 1.5 million schools with over 260 million students enrolled and about 751 universities and 35,539 colleges. India has one of the largest higher education systems in the world. However, there is still a lot of potential for further development in the education system.

India has become the second largest market for e-learning after the US. The sector is currently pegged at US$ 2 billion and is expected to reach US$ 5.7 billion by 2020. The distance education market in India is expected to grow at a Compound Annual Growth Rate (CAGR) of around 11 per cent# during 2016-2020. Moreover, the aim of the government to raise its current gross enrolment ratio to 30 per cent by 2020 will also boost the growth of the distance education in India.

Market Size

The education sector in India is poised to witness major growth in the years to come as India will have world’s largest tertiary-age population and second largest graduate talent pipeline globally by the end of 2020. The education market in India is currently valued at US$ 100 billion and is expected to nearly double to US$ 180 billion by 2020.* Currently, the school segment is valued at US$ 52 billion and contributes 52 per cent to the education market in India, higher education contributes 15 per cent of the market size, text-book, e-learning and allied services contribute 28 per cent and vocational education in manufacturing and services contributes 5 per cent. Higher education system in India has undergone rapid expansion. Currently, India’s higher education system is the largest in the world enrolling over 70 million students while in less than two decades, India has managed to create additional capacity for over 40 million students. It witnesses spending of over Rs 46,200 crore (US$ 6.93 billion).

Investment

The total amount of Foreign Direct Investments (FDI) inflow into the education sector in India stood at US$ 1.42 billion from April 2000 to March 2017, according to data released by Department of Industrial Policy and Promotion (DIPP).

The education and training sector in India has witnessed some major investments and developments in the recent past. Some of them are:

• Unacademy, a platform for educators to create multimedia content for free viewing by users, has raised US$ 11.5 million in a funding round led by Sequoia India Capital Advisors and SAIF Partners.
• TalentSprint, a skill development company based in Hyderabad, has announced the launch of 'SmartCampus', where it plans to skill around 1 million people in the areas of IT and banking by the year 2020.
• KKR and Co Lp, the US-based private equity giant, plans to invest around Rs 700 crore (US$ 105 million) in coaching firm Resonance Eduventures Limited, which will be used to buy back shares from existing investors and expand its presence to more geographies.
• UAE-based Gamma Group, outlined plans of investing around Rs 3,000 crore (US$ 450 million) in the infrastructure, health and education sectors of Kerala, which is expected to generate around 2,000 indirect and direct jobs in the state.
• Welingkar Institute of Management Development and Research has signed two memorandum of understanding (MoUs) with Israeli universities, namely Hafia University of Israel and IDC Herzliya, which includes pledging cooperation in the fields of study of technology, agriculture, archaeology, biology, etc.
• International Finance Corporation (IFC) has invested US$ 15 million in education venture Byju’s for a minority stake, which is expected to help the test-preparation platform to expand domestically and internationally.
• Education technology companies in India raised around US$ 323 million across 26 deals in 2016, as against US$ 98 million raised through 23 deals in 2015##.
• New York Life Insurance Company, the largest mutual life insurance company in the US, has invested Rs 121 crore (US$ 18.15 million) in Max Ventures and Industries Ltd for a 22.51 per cent stake, which will be used by Max for investing in new focus areas of education and real estate.

Government Initiatives

Some of the other major initiatives taken by the Government of India are:

• NITI Aayog is launching the Mentor India Campaign which will bring leaders and students together at more than 900 Atal Tinkering Labs in India, as part of the Atal Innovation Mission.
• The Government of India's think-tank, Niti Aayog, has entered into a partnership with the State governments of Madhya Pradesh, Odisha and Jharkhand for better learning outcomes in the education sector.
• The Government of India will spend around Rs 20,000 crore (US$ 3.10 billion) to build six new Indian Institutes of Technology (IITs) by March 2024, of which Rs 7,000 crore (US$ 1.08 billion) will be spent by March 2020.
• The Union Budget 2017-18 has made the following provisions for the education sector:
  • The Budget has pegged an outlay of Rs 79,685.95 crore (US$ 11.952 billion) for the education sector for financial year 2017-18, up from Rs 72,394 crore (US$ 10.859 billion) in 2016-17—a 9.9 per cent rise.
  • The Government of India has allocated around Rs 17,000 crore (US$ 2.55 billion) towards skilling, employment generation, and providing livelihood to millions of youth, in order to boost the Skill India Mission.
• The Government of India has approved an all-time record of over 4,000 post-graduation (PG) medical seats to be added in various medical colleges and hospitals for the academic session 2017-18, said Mr J P Nadda, Union Minister of Health and Family Welfare.
• The Cabinet Committee on Economic Affairs, Government of India, has approved the proposal to open 50 new Kendriya Vidyalayas (KVs) under Civil/Defence sector in the country requiring an investment of Rs 1,160 crore (US$ 180.11 million).
• The Government of India and the World Bank have signed a US$ 201.50 million International Development Association (IDA) credit agreement for the Third Technical Education Quality Improvement Programme (TEQIP III), aimed at improving the efficiency, quality and equity of engineering education across several focus states.
• The Ministry of Skill Development and Entrepreneurship has launched the Pradhan Mantri Yuva Yojana, which will provide entrepreneurship education and training to over 700,000 students in 5 years through 3,050 institutes.
• The Cabinet Committee on Economic Affairs has approved opening of one Jawahar Navodaya Vidyalaya (JNV) in each of the 62 uncovered districts with an outlay of Rs 2,871 crore (US$ 430.6 million), which is expected to benefit over 35,000 students in rural areas and provide direct permanent employment to 2,914 individuals.
• The Catalyst initiative by the Government of India and United States Agency for International Development (USAID) is expected to create awareness about digital payments across 60 million traders and merchants in the country.
• The Ministry of Labour and Employment will set up Model Career Centres (MCC) across the country. Out of the 950 employment exchanges in India, 100 would be developed as model centres with an investment of Rs 350 crore (US$ 52.5 million). The Union Government also plans to set up 100 driver training institutes across India.
• Mr Ravi Shankar Prasad, Minister for Law and Justice and Information Technology, has stated that the Government of India will likely educate over 10 million people on e-payments in rural India, through the newly-launched Digi Dhan Abhiyan or digital financial literacy programme.
• The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved 'Pradhan Mantri Gramin Digital Saksharta Abhiyan' (PMGDISHA) to make 60 million rural households digitally literate. The outlay for this project is Rs 2,351.38 crore (US$ 353.70 million) to usher in digital literacy in rural India by March, 2019.
• Prime Minister Mr Narendra Modi launched the Skill India initiative – ‘Kaushal Bharat, Kushal Bharat’. Under this initiative, the government has set itself a target of training 400 million citizens by 2022 that would enable them to find jobs. The initiatives launched include various programmes like: Pradhan Mantri Kaushal Vikas Yojana (PMKVY), National Policy for Skill Development and Entrepreneurship 2015, Skill Loan scheme, and the National Skill Development Mission.
  • PMKVY is the flagship program under the Skill India Initiative. The Union Government plans to set up skill development centres across India with an investment of Rs 12,000 crore (US$ 1.8 billion) to create job opportunities for 10 million individuals by 2020 under PMKVY, as per Mr Bandaru Dattatreya, Minister of Labour and Employment.
  • National Policy for Skill Development and Entrepreneurship 2015 is India’s first integrated program to develop skill and promote entrepreneurship simultaneously. The Union Government plans to provide Rs 7,000 crore (US$ 1.05 billion) to states to spend on skill development, and thereby accelerate the ambitious task of skilling 500 million Indians by 2022, and encourage creation of an ecosystem of entrepreneurs.
  • The National Skill Development Mission has created an elaborate skilling eco-system and imparted training to 7.6 million youth since its launch in 2015 and the government now plans to set up 1,500 Multi Skill Training Institutes across the country.

Road Ahead

In 2030, it is estimated that India’s higher education will:

• Adopt transformative and innovative approaches in Higher education.
• Have an augmented Gross Enrolment Ratio (GER) of 50 per cent
• Reduce state-wise, gender based and social disparity in GER to 5 per cent.
• Emerge as a single largest provider of global talent, with one in four graduates in the world being a product of the Indian higher education system.
• Be among the top 5 countries in the world in terms of research output with an annual R&D spent of US$ 140 billion.
• Have more than 20 universities among the global top 200.

Various government initiatives are being adopted to boost the growth of distance education market, besides focussing on new education techniques, such as E-learning and M-learning.

Education sector has seen a host of reforms and improved financial outlays in recent years that could possibly transform the country into a knowledge haven. With human resource increasingly gaining significance in the overall development of the country, development of education infrastructure is expected to remain the key focus in the current decade. In this scenario, infrastructure investment in the education sector is likely to see a considerable increase in the current decade

Moreover, availability of English speaking tech-educated talent, democratic governance and a strong legal and intellectual property protection framework are enablers for world class product development, as per Mr Amit Phadnis, President-Engineering and Site Leader for Cisco (India).

The Government of India has taken several steps including opening of IIT’s and IIM’s in new locations as well as allocating educational grants for research scholars in most government institutions. Furthermore, with online modes of education being used by several educational organisations, the higher education sector in India is set for some major changes and developments in the years to come.

Exchange Rate Used: INR 1 = US$ 0.015 as of October 6, 2017.

References: Media Reports, Press Releases, Press Information Bureau, RNCOS Report, Department of Industrial Policy and Promotion (DIPP), Union Budget 2017-18

Note: # – As per the report ‘Distance Learning Market in India 216-2020’ by Technavio, ## - According to data from Venture Intelligence, * - According to a 2016 report by Technopak