The Indian education system is divided into the core and non-core segments. The core group consists of primary, secondary and higher education, while the non-core segment focuses on segments such as pre-schools, vocational training and coaching institutes.
Studies and reports on the Indian education sector concur that there is immense scope for growth. According to an August 2010 PricewaterhouseCoopers (PwC) report, titled Emerging Opportunities for Private and Foreign Participants in Higher Education, the education sector in India is estimated to be around USD 25 billion. Another report, by Grant Thornton titled Education in India: Securing the Demographic Dividend, states that the vocational segment has emerged as a big market that is expected to grow rapidly to USD 3.6 billion by 2012, growing at a CAGR of 25%. According to estimates by HDFC Bank, private equity investment in education was USD 190 million in 2010. Further, these estimates suggest that investments in the kindergarten to class XII segment grew to USD 20 billion in 2011 and are further expected to grow to USD 33 billion in 2012.
The Indian education sector can broadly be classified as such:
- K-12 and HEI: The term K-12 stands for kindergarten plus 12 years of schooling. Children enter kindergarten at age 3 and after spending two years in kindergarten, continue on to 12 years of schooling before he/she is ready for higher education. The higher education institutes (HEIs) then take over providing undergraduate, graduate and vocational level university education.
- Public education and private education: The Government of India allocates a percentage of its annual budget to the education sector and operates educational institutes. More than 90% of the government’s spend on public education flows into K-12 level education. In addition to government-run public schools, private investment in the education sector is seen traditionally in the form of not-for-profit trusts that operate private educational institutes.
- Formal and non-formal education: The formal education system in India broadly comprises the K-12 and HEI level education, which falls under the purview of the Ministry of Human Resource Development (HRD). The non-formal education segment includes pre-schools (1.5-3 years), coaching classes, multimedia/IT to schools and colleges, vocational training and the books market.
According to the 2011 census, the total literacy rate in India is 74.04%. The female literacy rate is 65.46% and male literacy rate is 82.14%. India has 544 university-level institutions, which includes 261 state universities, 73 state private universities, 42 central universities, 130 deemed universities, 33 institutions of national importance and five institutions established under various state legislations, according to the HRD Annual Report 2010-11. India has 79 Centrally-funded institutions, which includes 15 Indian Institutes of Technology (IITs), 11 Indian Institutes of Management (IIMs) and 30 National Institutes of Technology (NITs), as per the report.
India needs 1.2 million more teachers under the Right to Education Campaign, according the m. Moreover, with 546 million people under 25 years of age, there is huge potential in India in the education sector that needs to be tapped. By 2020, to increase the percentage of students going for higher education from the present 12.4% to 30% in the country, India will need 800 more universities and another 35,000 colleges, according to the ministry. According to HRD estimates, India's education sector needs investment worth USD 150 billion in the next 10 years.
FDI inflows into the education sector during the period April 2000 to April 2011 stood at USD 410.40 million, according to the Department of Industrial Policy and Promotion (DIPP), which is a part of the Ministry of Commerce and Industry. DIPP is responsible for framing the country’s FDI policy.Sector Outlook
According to the Grant Thornton report, Education in India: Securing the demographic dividend, primary and secondary education, or the K-12 sector, is expected to reach USD 50 billion in 2015. Consulting firm Technopak is also very bullish about the growth of the education sector and estimates that private education sector itself would grow to USD 70 billion by 2013 and USD 115 billion by 2018. Technopak sees enrollments in the K-12 level growing to 351 million, requiring an additional 34 million seats by 2018. Further, according to the report 40 Million by 2020: Preparing for a New Paradigm in Indian Higher Education by Ernst & Young, the higher education sector in India is expected to witness a growth of 18% per annum until 2020.
The National Development Council has approved the setting up of 14 world-class universities for innovation across the 11th and 12th Plan periods on the public-private partnership model. The innovation universities are part of the HRD’s ‘brain gain’ policy to attract global talent. Further, the government has agreed to spend USD 675.90 million during the 11th Plan period for setting up 13 new Central universities and converting three existing state universities into Central universities.
As per a report by research firm RNCOS, the annual student enrolments for higher education are expected to grow at a rate of nearly 8.7% per annum during 2010-11 to 2012-13 and will require huge investments for developing the infrastructure. The report states that steady economic growth will require larger numbers of engineers and management graduates, which mandates the educational infrastructural development to address demand.