A Report on

Education in India

Status and Opportunities

Prepared By : Fortress Education Team

Contents:

Status of Education in INDIA

Play School and Pre School Education
Present Status
•Lack of any regulatory mechanism for Play School – Pre School Segment •Population under the age group of 2-6 years is 10-11 Cr ( 9 -10 %) 2 •Gross Enrolment Rate (GER) in pre-school segment is as low as 18% @ • •
1

Current Trends

•Rising awareness • development and

Market Size and Players
•Organised

about the significance of early education for child maintaining high enrolment and retention rates in primary education •Majority of the Play School and Pre School market is concentrated in Urban Areas

pre school market is dominated by private players a few of them are Kidzee, Eurokids, Treehouse •The current urban market size is estimated to be Rs 6000 Cr

Source : Fortress Team

@ at government pre schools`

Elementary Education (Std I-VIII)
Present Status The Positives ……
•Participation : Rapid improvement in 2 enrollment rates, at least in primary schools •Equity: Social disparity which was very high till 90’s has been reduced 3 significantly. Sarva Shiksha Abhiyan ( SSA ) gets most of the credit for the improvements in Elementary Education

The Problem Areas ……..

4 •Drop out rates : 48 % in elementary Education (std I- VIII) mainly because of socio-economic reasons •Regional disparity : States like Bihar, UP are way behind in terms of GER, Drop outs.. ( Cont..)

The Problem Areas …….
( Cont..) •Infrastructure : 5 oLow PTR 5 and teacher absenteeism o24% Schools in India do not have proper school 6building o8 % schools Lack drinking water facilities

•Quality of Education : oPratham’s ASER survey: 60% of children aged 7 to 12 cannot read a simple Para
(Prathamis a reputed NGO working towards education in India)

o

Source: DISE, MHRD

Overall Performance
Aspects Gross enrolment ratio (GER) Drop out rates Teacher appointments Teacher training Better Performing States Rajasthan, Delhi , Maharashtra, Uttarakhand Kerala , Goa, Haryana, Himachal, Andhra Pradesh, J&K, Orissa, UP Slow Performing States Bihar, Punjab, Haryana, Nagaland Assam, Bihar, Mizoram, Meghalaya W.Bengal, MP

Chhattisgarh, Gujarat, Assam, Tamil Bihar, Maharashtra, Arunachal Nadu Pradesh W. Bengal, Bihar, Jharkhand Chattisgarh, UP, Manipur J&K, Sikkim, Arunachal Pradesh

Construction of school buildings Tamil Nadu, Rajasthan Construction of additional classrooms Gujarat, Karnataka, Assam, AP

% of Expenditure on Education Assam, Maharashtra, Bihar Delhi & Training of total Budget

Source : Fortress Team Research, DISE, MHRD and Presentation by Mr. Amit Kaushik UNDP Workshop on MDGs And Human Development

Secondary Education (Std IX-XII)
Success of SSA has resulted in a pull effect on Secondary Education System Secondary Education is an important foundation for vocational / higher education Hence expansion of Secondary Education is important for the development of any Nation The problem areas ….. Participation : At the lower secondary level (grades 9 and 10), the gross enrollment rate (GER) is 52 %, while at the senior secondary level (grade 11 and 12) it is just 28 % (200506). Access : Number of secondary Schools are almost half the number of Upper primary 7 schools available in the country

Financing : While India has pursued

8

the drive towards universal elementary education, since 2000 the share of investment financing for secondary education has declined significantly.

Most secondary students are boys, and disproportionately from urban areas and wealthier segments of the population. Quality : Assessments of student achievement in mathematics by at the secondary and senior secondary level suggest that the quality of instruction and learning is very low. (Source ASER report)

Equity :

Source: Fortress Team Research

70

Current Trends

Actual and Projected Demand for Secondary Education
Millions of Students 50 40 30 20 10 0
19 99 -0 0 20 01 -0 2 20 03 -0 4 20 05 -0 6 20 07 -0 8 20 09 -1 0 20 11 -1 2 20 13 -1 4 20 15 -1
Source: Presentation by Sam Carlson Education consultant (World Bank) Source: Fortress Team Research

60

•Enrolment in Government schools has decreased in last decades. There is a trend in Urban as well as rural areas to opt for private education •Sharp increase is expected in the demand for secondary education in coming decade. (Actual And Projected Demand is shown in Graph)

Total Demand Lower Secondary Senior Secondary

Market Size and Players

•Share of Private Institutions in Indian School Education is, Primary 7%, Upper Primary 21%, Secondary 32% •Annual private market size for the segment I to XII is estimated at Rs 22-26k Cr •With growth being expected in private unaided institutions the market should witness encouraging growth

What needs to be done…
Policy Level Initiatives
•Public classroom and school construction , especially in rural areas where private suppliers are unlikely to venture; •Training and hiring of more teachers , and rationalizing their deployment, so that supply better matches demand; •Investments in curriculum revision , progressive pedagogy , technology and examination reforms, to make schooling more relevant •Provide financial and in - kind assistance for poor and disadvantaged students , to offset direct and indirect costs of schooling, and overcome household reluctance to send their children (especially girls) to school; •Public information campaigns to change attitudes about the benefits of schooling and delayed marriages

Government Initiatives
•Programs to improve the internal efficiency and quality of Secondary education , so as to increase the number and quality of graduates; example programs like SSA •Promoting ICTs , so that students can take greater control of their learning and skills acquisition from sources other than the teacher and textbook.

Source: Fortress Team Research

Higher Education (beyond XII)
Present Status The positives ……
9 •348 universities, 17625 colleges, >500,000 teachers; 10.5 million students; •Third largest number of graduates after US & China. •Professional education in English medium •Growing rapidly; Covers all major disciplines;

Weakness …..
•Low enrolment (13% -2006 ) 10 •Regulatory system is over centralized; •Lack of institutional autonomy and accountability still it fails to maintain standards. •Unplanned expansion •Variable quality; market mismatch; •Little knowledge creation– little interaction with economy, society and other academic/ research institutions •Limited access and regional disparity (80% of technical educational institutions are concentrated in 4 states of MH, AP, TN, KR) •Diminishing and skewed public funding (0.6 % of GDP in 2006) •

Source : Fortress Team Research

 Increasing Access and Reducing Regional Imbalances Empowerment and Accountability of Institutions ØAcademic, Administrative, Financial, Managerial Improving Quality and Effectiveness ØQuality and effectiveness of teaching learning processes ØFaculty development ØCurriculum reforms Networking to Enhance Capacity , Improve Quality and

What needs to be done…

Produce Excellence ØNetworking of institutions with each other, with R&D labs, industry and service sector ØResource sharing of expertise, facilities Mobilization of Additional Financial Resources ØEncourage private funding

higher education services ($30 billion last year), but to corner a larger share o

Source: Research Paper

by

Shashi Shrivastava,

Education

Vocational Education
Conventional Vocational Education

•Vocational education is very important for building skilled workforce to meet growing demand of a developing country. •Percentage of students applying for vocational education in India is less than 20% compared to developed countries where it is more than 50 % . •Gov ITIs and private ICTs offer 1 1 0 courses under conventional vocational education including engineering and non engineering courses

Source: Fortress Team Research

New Trends in Vocational Education

& Market Size

ØAfter economic liberalization the contribution of service sector as a percentage of GDP has increased from 34 % in early 90’s to 56% in 2008. ØThis has triggered the need for trained manpower leading to flourishing of various private vocational institutes. ØIn the recent times it has expanded into fields like Finance, Retail, Animation, Hospitality, Media, Aviation etc. ØThe current market size of private vocational training is estimated as Rs 5k-6k Cr

Comparing

Govt. run conventional training and private vocational training
Conventional Training Private Training Lesser/No Gov intervention For profit Urban Areas, optimum utilization IT, Finance, Retail, Media, Animation Frequent up gradation Advanced and adequate Designed as per industry requirement Yes, medium-top end jobs Government controlled /run Not for profit Deep but highly under utilized Welding, turning (total 110) Less/ no up gradation Basic and inadequate Lesser tuning with the industry Yes, low key jobs

Gov Intervention Profit Motive Penetration Streams Offered Up gradation of courses Quality Infrastructure Linkage with industry Job Orientation

Source: Fortress Team Research

Opportunities and Role for Private Players

Opportunities for Service Providers

ers in all forms of education. Which means the demand for teachers training and re

anism in place play schools is one of the most lucrative business . to raise the GER in Higher education to 15 % by 2020 India will need 1500 Unive ation want to pursue further education. The trend is growing in India

(Cont…)

Case Study: Manipal Universal Learning

Revenues FY 09

ckground t is the corporate entity of the Manipal Education Group. anipal University is a Deemed university in Karnataka, India since 1993 ikkim Manipal University, an open university under the Sikkim Govt.

as of medicine, engineering, information sciences, allied health sciences, biotechnology, dental, etc

a collaborations by establishing ICICI-Manipal Academy rses through 550 Learning Centers

30m from IDFC Private Equity and $40m from Capital International. 70% of the domestic revenues from ser f $4.2m) onal Centre for Applied Sciences (ICAS)

Source: SSKI report, Fortress Team Research

Sikkim Manipal  Manipal Universal: Fund Flow

Payments Service

UGC

•Defines Eligibility •Defines Curriculum •Approves programmes with appropriate Certification •Admits Students •Conducts Exams •Award Degrees

SMU

STUDENT

MUL

•Creates Awareness •Appoints LCs •Develops Content •Supports admission process •Mails course material •Supports in hiring faculty •Supports student placement

LC
•Provides infrastructure at local level •Local faculty support for counseling & tutoring •Supports placements

Source: SSKI report, Fortress Team Research

Opportunities for Service Providers

Infrastructure , internet users and broadband penetration in last decade means IC

Products

Case Study : Educomp Ltd ØLargest provider of technology education products and services for K-12 students. Reaches out to over 21,000 schools ØIt leverages its strong understanding of the technology and education needs of schools(Public & Private) to deliver high quality, cost effective products. Business Model •Smart Class : ØBuilds IT infrastructure for private schools and licenses the digital curriculum content ØIncurs the initial expenditure in return of which it receives revenues for the next 5 years •ICT Segment ØBuilds IT infrastructure for government schools on BOOT model ØIncurs the upfront expenditure and receives quarterly payment for services rendered
Source: Annual Reports

Pre-schools Private Schools Smart Class ICT Solutions

Opportunities for Service Providers

nstitutes a huge scope for private Vocational Training Institutes in areas like IT, Media,
Case Study: NIIT Ltd

ng provider, expanded to Finance, school (ICT), corporate training etc del n the current year

Courses Target Customer Value Preposition Customer Coverage

School Learning Solutions School children Academics School Multimedia Learning Teacher Training

Individual Solutions Young adults Employability Individual IT/BFSI/Spoken English, Management education India + emerging economies`

Corporate solutions Working professionals Productivity Corporate Learning products Training delivery & Admin India + USA + Europe

Geographical Coverage India

Source: www.niit.com

Opportunities for Service Providers

d Competitive Test Preparation r curriculum and for competitive exam centre is a booming business expected to be

Franchise Model and Role of Franchise Investor
Franchise owner

Right to operate business

Franchisee

Franchisee Fee

Profit/Loss in the business

Franchisee investor

Source: Fortress Team Research

Public Private Partnership (PPP) Opportunities in Education
( Innovative public-private partnership models take advantage of existing underutilized capacity in the public sector and induce a supply response to expand that capacity. Representative models could be… )

For Existing Infrastructure

To Create New Infrastructure To Create New Infrastructure

Package 2 plots plots Reinstate& use different floors for Public and :Package 2training purpos Infra. purposes 1 Education Infra Education Build school d use separate floor area for Private and public training 1 private Impart training on different rates for Private Students and Recommended students 2:: Commercial Infra Infra 2: Commercial Infra

Prerequisites of a bidder : Prerequisites of a bidder : •Experience of Training Institute in various levels •Experience of Training Institute in various levels •Experience of Training Institute in various levels • Experience of Building activities •Experience of handling students in large volumesExperience of Building activities • Prerequisites of a bidder:

Bidder can be an Education Institute Bidder can be a JV between Institute & Real estate Deve Bidder can be a JV between Institute & Real estate Deve Government to offer:

Government to offer : Government to offer : resent Infrastructure •Plot of land to develop School Infrastructure •Plot of land to develop School Infrastructure ight to use part of the infrastructure for Training on commercial rates Land / FSI for Commercial FSI •Plot of •Plot of Land / FSI for Commercial FSI
Source: Fortress Team Research

Public Private Partnership (PPP) Opportunities in Education
CASE STUDY : Contracting out (failing) state schools
Case Study : Schools run by BMC in Mumbai ØBMC runs 1171 Primary and 49 Secondary Schools in Mumbai Region ØOver the years enrolment is BMC schools is declining (for primary schools 4,85,000 in 2005-06 to 4,25,000 in 08-09and for secondary schools 55000 in 200506 to 43000 in 08-09) ØDecrease in enrolment of BMC schools has resulted in Shutting down of around 17 primary schools in last three years. ØThe Major reason being lack of facilities and quality in BMC run Schools ØPPP model can be developed whereby the underutilized School Infrastructure can be used in a better way
BMC Low Enrollment Schools on the verge of closure Good Infrastructure Facilities Pays There are 1171 Primary and 49 Secondary Schools run by BMC in Mumbai BMC High Spending on Salaries & Infrastructure Leased Out Rent to

Trends of High Enrollment in

Private Schools Private Schools

High Student Fees

Source: Fortress Team Research

Public Private Partnership (PPP) Opportunities in Education
Open Schooling
Why Open Schooling?

ent at Up primary and Secondary level -V), 49%

ng with families, for their children attending schools is difficult

Actual Drop outs in India (12 Cr Appox)

Present Status

•NIOS , the central body formed in ‘79 •Lower Enrolments (3.4 lac 06-07) •Lower passing rates Funding •No specific funding towards OS •No major focus at state level as well •

Promotion

From Government as alternative schools Open Schooling

Bridge Schools: Role of Private Players, NGOs Concept Development and Project Management

Sakhar Shala, Bhatti Shal

Source: Fortress Team Research

Scope for support services in Education Sector

ning of Private / Gov educational projects like education cities and theme schools Education City

Rajiv Gandhi Education City (Sonipat , Haryana ) Implementing Authority : HUDA HUDA has allocated 700 acres at Sonipat for the proposed Education City 1 institute of international repute (60-180 acres) + 10 other institutions (3-25 acre) Lease hold/ Free hold land based on area, Payment terms to be decided accordingly

Gujarat VittalInnovation City (Valsad, Gujarat) Implementing Authority: GIDC + EMPI Centre INNOPOLIS Consortia University to be located in the GVIC SEZ IT companies also invited to set up their campus in GVIC Executives of the company can also participate as faculty As located in SEZ, university will be free to modify curriculum to meet industry needs

Source: Fortress Team Research

Scope for support services in Education Sector
•Project development and management consultants for PPP •Capacity building •Investment Banking •Project Management of supporting implementing various government schemes (some government schemes are as under)
Rashtriya Madhyamik Shiksha Abhiyan (RMSA) Model Schools Scheme

Targets of RMSA Genesis of the Schemes and affordable education availablebe set up in EBBs under government (state + center) and •2500 schools to to all in the age group of 14-18 l at every 5 km andState government to contributeevery at10 km of cost • a higher secondary school at land 7- free to secondary education (USE) on English language %) •Emphasis by 2017 (GER of 100 on to secondary education by -XII or IX-XII ) •Classes VI2020 (0 dropouts towards economically and socially backward sections •

Source : Fortress Team Research

Case Studies: Support Service Providers in Education Sector
EdCIL India Limited ØA government of India enterprise offering consultancy services in all areas of education and human resource development in India and overseas ØUndertakes education projects on turnkey basis from concept to commissioning EdCIL Sales 07/08

rvices for Institutional development easibility Studies reparation of Master Plan onceptualization of Schemes ngineering Designs id Preparation echno Commercial Evaluation ward of Work mplementation and Monitoring uality Assurance and Inspection onstruction Management

Technical Support to Govt schemes •Institutional Planning •Training Needs & Assessment •DPR & Feasibility report •Sector Studies •Capacity Development •Educational Planning and Administration •Curriculum Development •Impact Assessment Studies •Manpower Planning •Evaluation of Projects •Developing Computer Infra •
Source: www.edcil.co.in

Case Studies: Scope for support services in Education Sector
IL & FS IDC (Infrastructure Development Corporation) It is the infrastructure development arm of IL&FS Roles played by IL&FS IDC •Creation of commercial prototypes, suggest and evolve requisite policy/legislative framework •As a Project Developer & Sponsor, creation of structures and achieve techno commercial closure •As an Advisor, it assists govt, local bodies and sponsors to undertake projects Services to Govt / Govt Agencies •Project conceptualisation •Project Structuring & Development Services to Sponsors •Contractual Documentation •Project Costing •Bid Process management •Bid Structuring •Project Implementation and facilitation •Assistance in financial closure •Quality Assurance and oversight •Merchant banking and fund mobilisation Current Projects qNursing Training Institutes in NE states qSports Academy in Jharkhand qITI in Jharkhand
Source: www. iidcindia.co.in

Indian Education Market : A Snapshot
Segment Market Size (Rs Cr) Regulation Key features Growth Drivers Business Potential

Pre + play school School Education Higher education

6000-7000 No

Urban driven •Unorganized •Franchise based

Peer pressure •Free pricing •Low penetration

Capital intensive Scalability is an issue •Lucrative investment
• •

2000025000 1500020000

High

Largest market •Low Quality •Structuring issue

Pref to Pvt. Schools •Aspiration of parents •High stickiness

Newer business models Large scope for PPP •Structure: A dampener
• •

Very High

Variety of courses •Regional disparity •Well organized

Growing Economy •Government Policy •High Population

Large scope for pvt. technical institutes •Scope in semi urban areas •Scope for Distance edu.

Vocational Education Test Prep

5000-6000 No

600-800

No

Unregulated pvt mkt. •Number of streams •Franchise Based •No regulations •High fees •Trends/Cycles

Job/placement •Newer sectors •Affordable fees •Growing enrolments •Use of technology •Free pricing

Coaching Classes

7500-7800 No

No regulations •Highly unorganized •Urban driven

Quality Education Free pricing •Peer pressure
• •

Scope for PPP Capital intensive •Lucrative Investment •Niche focused market •Low stickiness •Scope for new areas like elearning •Scalability Issue •Capital Intensive
• •

Source: Fortress Team Research

Footnotes

1.In 2002 86th constitutional amendment made right to education elevated to a fundamental right for age 6-14 only . So constitutionally there is no compulsion for the pre school education and no regulatory mechanism has been devised by the government. 2.The gross enrolment ratio (GER) is a statistical measure used in the education sector. The GER gives a rough indication of the level of education from kindergarten to postgraduate education. In the UN, the GER is calculated by expressing the number of students enrolled in primary, secondary and tertiary levels of education, regardless of age, as a percentage of the population of official school age for the three levels 3. 4. GROSS Primary (I-V) RATIOSUpper ) OF ALL VI-VIII) ENROLMENT ( GER Primary ( CATEGORIES OFI-VIII)   Elementary ( 5. STUDENTS 6. Year Boys Girls Total Boys Girls Total Boys Girls Total 7. 1995 - 97.1 79.4 88.6 67.8 49.8 59.3 86.9 69.4 78.5 8. 96 - 104.9 85.9 95.7 66.7 49.9 58.6 90.3 72.4 81.6 2000 9. 01 - 112.8 105.8 109.4 75.2 66.4 71 10. 2005 98.5 91 94.9 1. 2.
06

Source: DISE, MHRD

3. Sarva Shiksha Abhiyan ( SSA ) is a comprehensive and integrated flagship programme of Government of India to attain Universal Elementary Education (UEE), covering the entire country in a mission mode. SSA has been launched in 2001-2002 in partnership with the State Governments and Local Self Governments. The programme aims to provide useful and relevant, elementary education to all children in the 6 to 14 age group by 2010. It is an initiative to universalize and improve quality of education through decentralized and context specific planning and a process based, time bound implementation strategy.

(%): Significant improvement from 2001-02 onwards DOR (%): Significant reduction from 2001-02 on

Source: DISE, MHRD

4 . Dropout rate is defined as the proportion of children that cease to remain enrolled in the schooling system. There are a number of methods for estimating dropout rate. One of them, followed in the Selected Education Statistics (SES) of the Ministry of Human Resource Development, is as follows: ·Gross dropout rates for classes (I-V) = {1-(Enrolment in Class V during the reference year divided by the enrolment in Class I four years ago)}*100. ·Gross dropout rates for classes (I-VIII) = {1-(Enrolment in Class VIII during the reference year divided by the enrolment in Class I seven years ago)}*100.

5 . Pupil Teacher ratio refers to the number of teachers in a school or university with respect to the number of students who attend the institution. For example, a student teacher ratio of 10:1 indicates that there are 10 students for every one teacher. A low student-teacher ratio is often used as a selling point to those choosing schools for tertiary education. On the other hand, high student-teacher ratio is often cited for criticizing proportionately underfunded schools or school systems, or as evidence of the need for legislative change or more funding for education.

Source: DISE, MHRD

6. SCHOOLS WITH NO BUILDING
A & N Islands 17 Andhra 16808 Arunachal 564 Pradesh Assam 3227 Pradesh Bihar 3444 Chandigarh 3 Chhattisgarh 11305 D & N Haveli 43 Daman & Diu 3 Delhi Goa 19 Gujarat 730 Haryana 795 Himachal 154 Jammu & 2248 Pradesh Jharkhand 13640 Kashmir Karnataka 883 Kerala 161 Lakshadweep 2 Madhya Pradesh 16181 Maharashtra 1410 Manipur 98 Meghalaya 816 Mizoram 70 Nagaland 52 Orissa 501 Puducherry 20 Punjab 334 Rajasthan 5911 Sikkim 17 Tamil Nadu 341 Tripura 14 Uttar Pradesh 1619 Uttarakhand 351 West Bengal 8152

Source: DISE, MHRD

7.Growth of Educational
Year 1995-96 2000-01 2005-06 Primary 593410 638738 772568

Institutions
Sec/ Sr. Secondary 99274 126047 159667

Upper Primary 174145 206269 288493

Number of primary institutions have considerably increased since (90-91) to (05-06) as compared to upper primary and secondary schools. There is an urgent need to boost the number of secondary institutions so as to support the increasing number of enrollments in elementary section

8. Public Expenditure on Education
Elementary Education Secondary Education Adult Education Language Development University & higher Education Technical Education General Education Distance Learning Information & Technology Total Expenditure 2005-06 11219 1591 263 152 2108 1600 3908 0 0 20841 2006-07 15952 1837 408 194 2774 1718 2286 0 0 25169 2007-08 16934 3793 363 152 3892 3870 4665 0 0 33669 2008-09 19777 5140 408 180 5235 3963 6084 160 452 41442 2009-10 19682 6170 410 200 6637 4749 7594 187 497 46126

Government of India promised to allocate at least 6% of national income to education , a goal set for realization by the end of ninth five year plan i.e. by 2002
SOURCE: indiabudget.nic.in UNESCO WORLD STATS

9.Growth of Higher Education in India
Enrolment ( million ) •1950-51 578 •1960-61 1819 •1970-71 3277 •1980-81 4577 •1990-91 6627 •2000-01 10152 •2005-06 20769 Colleges 28 45 93 123 184 254 37 Univ . 0.2 0.6 2.0 2.8 4.4 8.6 14.3

Source: MHRD

10. Existing Regulatory System : Structure & Process utory central professional councils (as examples AICTE, MCI) govern the entire system

nder direct control of the government university system including curriculums, degrees, fees, faculty qualifications and approval

of Parliament and State universities established by Acts of State Legislative Assemblies; or state legislation; y the UGC and, thus, given university status under the UGC Act 1956 mportance, such as the Indian Institutes of Technology (IIT), established by Acts of Parliam

olleges respective governing council a central or state university (private and deemed universities are unitary and not allowed

working towards loosening of statutory control over higher education, India is moving in r

Source: Fortress Team Research

Thank You !

Mr . Sanket Deshpande Fortress Financial Services Ltd Daryanagar House , 2nd Floor 69 , Maharshi Karve Road Marine Lines , Mumbai – 400 002 . Tel . : 022 – 2200 7973 to 76 Mob : + 91 9920151932 Email : sanketdeshpande@fortress . co . in Web : www . fortress . co . in

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