The education industry

There is common saying that goes..”The roots ofeducation increased from a third to over half of all
education are bitter but the fruit is sweet.” Theenrolment. And this trend, by all accounts, will continue
roots in our country is the system. Being theinto the future. Engineering, Medical and Management
world’s largest democracy the educated youth ofare the favorite streams for most of these private
the country has had to pay the price. The price beinginstitutions. Over sixty percent of private engineering
to forgo their entry into professional colleges, thanks toand medical colleges are located in the 4 southern
the quota system. In some states with quotas uptostates of Karnataka, Andhra Pradesh, Tamil Nadu and
70% of the seats the youth belonging to the so calledMaharashtra. These states account for 25 % of the
“upper castes” do not find a place inpopulation but house more than half of the number of
Government colleges/institutions.engineering and medical colleges. The central
 government too encourages these private institutions
 as it takes the pressure off its own self and ensures
This gave rise to the opening up private educationalavailability of skilled manpower, the main requirement
institutions across India.for a growing economy.
  
Private Educational Institutions in India could be 
classified into the following categories:Another measure adopted by the government to
(a) Aided Colleges these are colleges that areensure students are able to pay the high fees is by
privately managed but aided by the government.persuading Public Sector banks in providing education
(b)Unaided colleges these are colleges that areloans to the students. The student loan disbursement
privately managed and also raise their own funds.of Public sector banks stood at a whopping Rs. 20,000
 crores till the end of the financial year 2007-08.
Professional colleges across India have sprung up in 
such large numbers making it into an industry of sorts.The education market is leaning on the back of the
We are calling this “Industry” because of theworkforce proving itself equal to their counterparts
employment and the revenues that these institutionselsewhere in the world in productivity. The Indian
generate.workforce is the much sought after lot by global giants
 across the world. Hence it is safe to say that the
 education system and the industry behind this
 workforce is witnessing a boom time.
Private spending on education in India in $US 
 India’s youth, often referred to as its demographic
 dividend, accounts for over 50 per cent of its total
Schooling (tuition fee, tutoring, textbooks, preschool etc.)population, with 367 universities and 18,000 colleges
29413 millionwith half-a-million teachers and about 11 million students
Professional Courses (engineering, medical, MBA)on the rolls. As mentioned earlier as a country we
7054 millionmust use this demographic dividend to our advantage.
Test Preparation (engineering, UPSC, medical test prep,In the last five years there are about 1,500
GRE/GMAT etc.)management colleges, close to about 3,500
1664 millionengineering colleges and about 1,200 medical
Skill development (vocational training, child skillcolleges.Besides these private engineering and medical
enhancement for mental arithmetic etc. IT training,colleges the state has also witnessed investments
teacher training etc….)from private equity players in the education segment.
2436 millionBelow are mentioned a few of such ventures:
Estimated total market size in private sector 
40,565 millionIndia-focused PE firm Gaja Capital Partners invested
 8.25 million dollars in Career Launcher. SAIF Partners
 invested 10 million dollars in the English training academy
There are institutions often funded by rich individuals orVeta and ICA Infotech. Some of the other listed
even by organizations. The market for these privatecompanies in the education segment are Educomp
institutions has survived and indeed blooming by theSolutions, which posted a return of 374 per
day although new colleges come across high legalcent. Everonn Systems, which got listed in August
barriers to enter.2007, gave a return of 130 per cent in just five months.
 The older names like Aptech and NIIT, fetched returns
Many of these institutions cannot confer degrees onof 162 per cent and 124 per cent in 2007. This market
their students unless they meet set guidelines thatalso runs into crores of rupees.
have been set by the government body the AICTE 
and the UGC. This growth can be attributed to theIt is believed that based on the current and future
phenomenal growth of the IT industry the country hasmanpower requirements of the various sectors, there
witnessed. As a country we also have to use theis a huge demand-supply gap in the education space.
huge educated population to our advantage.The education sector has opened up to brand new
 areas and subjects. Whoever thought of taking up
 courses like graghic designing or retail management
Today, four out of five engineering students attendand going on to make a successful career out of it.
private colleges, even though those institutions chargeThis has attracted many players to invest in education
five to 10 times more in tuition than governmentand training institutions.
colleges. The private schools also demand an upfront 
entry or “capitation” fee in a range of anythingIn conclusion:
between 20 lakhs to 50 lakhs—which is in many 
cases a small fortune for middle-class families. OneAlthough the primary education scenario in the country
has to remember that the returns on theseis not very glossy one can paint a very rosy picture of
investments are also high.higher education in the country. One can only hope for
 that much concern in  primary education which still
The Planning Commission reports that in the periodremains very illusive for many.
2002-2007, the share of private institutions in higher