After training, private enterprise sees money in education

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With India needing 45,000 more colleges in the next 10 years to serve some 400 million students, education is not only attracting private enterprise but also emerging as a preferred investment destination.

“Education is now being considered one of most preferred sectors for investments,” says Narayanan Ramaswamy, executive director with consultancy KPMG. “Sectors like technology, hospitality and financial services are particularly attractive,” Ramaswamy said.

“The only concern is how long it will take to get returns on investment.”

For long, running schools and colleges had been the domain of state-run and state-funded institutions, philanthropists, welfare trusts, missionaries and the like. But experts say this is expected to undergo a change now on the lines of what happened in training.

If institutions such as NIIT, Aptech, Franklin and Rau’s Study Circle led the boom in training, the education sector is witnessing the expansion of franchises such as Aloha, Edify School, Abacus and Sri Sri Ravi Shankar Bal Mandir.

The potential for business is also huge. As a leading industrialist, whose family runs both non-profit and private education institutions put it recently: “At just $1,000 per year per person for higher education, India is a $200-billion market by 2020.”

“In other countries, the private sector plays a meaningful role in helping governments. It is nice to see a similar trend emerging in India as well,” Barry O’Callaghan, chairman, Education Media and Publishing Group International said.

“Research shows the market can benefit from the education sector becoming an enterprise,” adds O’Callaghan, whose group builds and runs education content and services firms in India and China in partnerships with local institutions and entrepreneurs.

According to Gaurav Marya, president of Franchise India – an industry lobby for those in the franchise business -, the education and training sector was no longer limited to some philanthropists and was actually attracting private investment.

“We are witnessing a phenomenal change. Education now is being looked as a good business opportunity. Education as an enterprise is no more a bad word. There is a huge amount of interest from the private players,” adds Marya.

It is this industry lobby that says in its report entitled “Indian Education Franchising Report 2011” that the next 10 years will see India need at least 1,000 more universities and 45,000 more colleges to cater to an estimated 400 million students.

But for that to happen there are some fundamental issues that need to be addressed, says O’Callaghan. “You need huge sums of money to correct it,” he says, adding it also needs to spread to rural areas that have weak infrastructure, sanitation and faculty.

“There is a wide gap in the services provided by the education sector. In urban areas, there is mushrooming of schools. But we do not find good institutions in rural areas,” says Ashok Ganguly, former chairman of the Central Board of Secondary Education.

“The government needs to ensure that the gap is filled,” he says, adding only then will the Right to Education Act achieve the desired objective and spread literacy across the country.

In fact, the human resource development ministry had estimated that to implement this law and arrest drop-out rates, an investment of Rs.2.3 trillion (Over $50 billion) was required over five years beginning April 1 last year.

That is a huge amount, leaving no alternative but to rope in the private sector. “The only concern is regulatory measures must be clear and transparent.” By Priyanka Sahay