Education sector to grow 20 per cent in FY2017 to Rs 7.8 lakh crore

The education sector has tremendous potential to grow due to the huge demand-supply gap, a note by India Ratings and Research, a Fitch Group company,

India’s education sector is set to reach Rs 7,80,000 crore in size in FY2016-17 from Rs 6,42,300 in FY16, a growth of over 20 per cent, a note by India Ratings and Research, a Fitch Group company, said on Tuesday.

The education sector has tremendous potential to grow due to the huge demand-supply gap, the note said. At present, there is an additional requirement of 200,000 schools, 35,000 colleges, 700 universities, and 40 million seats in vocational training centres in India, the report, citing India Brand Equity Foundation as source, said.

Besides the expansion in the conventional public and private sector education systems in the form of schools and higher education institutes, the sector shall grow reasonably backed by the non-formal private education sector in the form of pre-schools, coaching institutes, vocational training centres etc. “More international collaborations with education institutions along with joint ventures and merger and acquisitions with both foreign and domestic corporate players would further help the sector to grow,” said Sunil Kumar Sinha, Principal Economist, India Ratings.

The share of state private universities out of the total universities in India spiked to 29 per cent in FY2015 from around 3 per cent in FY2009, according to data from the Ministry of Human Resource Development. Some private universities have even created a niche for themselves within a span of four to five years or even less on the back of efficient faculty, tie-ups with reputed international universities, less administrative intervention from the government, updated syllabi of courses, and state-of-the-art infrastructure. The agency believes that there is a significant incentive for opening up state private universities in the absence of any regulatory cap on the approved intake for students, which has a positive bearing on the functioning of such universities, the report added.

The rapid expansion of education sector in India, however, is accompanied by a high student-teacher ratio in both the school and higher education segments. “This indicates that the supply of teachers is not keeping pace with the rise in student strength. Besides the quantity, there is a problem of qualified and skilled faculty,” Sinha said. Thus, the quality of learning and academic standards has become an issue as reflected by the international rankings of Indian educational institutions. However, rising the government policy support in the form of a rise in budgetary allocations, setting up of boards to evaluate the standards of schools and colleges, teacher training initiatives among other things is a positive step towards augmenting the quality of education in both school and higher education.

Ind-Ra believes the implementation of Seventh Pay Commission would exert additional cost pressure on private institutions (including those in Ind-Ra’s portfolio) but it shall kick in with a lag. The liquidity condition will continue to be affected by the delays in fee reimbursement by the government on account of the several government-run welfare schemes in selected regions. Ind-Ra, therefore, expects the working capital utilisation of educational institutions to remain high in FY2017.

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