Education Report Final

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 1

•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 ) in pre-school segment is as low as 18% @ •Gross Enrolment Rate (GER • •

Current Trends

•Rising awareness • development and

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

Market Size and Players •Organised

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

Better Performing States

Slow Performing States

Gross enrolment ratio (GER)

Rajasthan, Delhi , Maharashtra, Uttarakhand

Bihar, Punjab, Haryana, Nagaland

Drop out rates

Kerala , Goa, Haryana, Himachal,

Assam, Bihar, Mizoram, Meghalaya

Teacher appointments

Andhra Pradesh, J&K, Orissa, UP

W.Bengal, MP

Teacher training

Chhattisgarh, Gujarat, Assam, Tamil Bihar, Maharashtra, Arunachal Nadu Pradesh

Construction of school buildings Tamil Nadu, Rajasthan

W. Bengal, Bihar, Jharkhand

Construction of additional classrooms

Chattisgarh, UP, Manipur

Gujarat, Karnataka, Assam, AP

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

J&K, Sikkim, Arunachal Pradesh

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

8

Financing : While India has pursued

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

Equity :

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)

Source: Fortress Team Research

70 60

Actual and Projected Demand for Secondary Education

Market Size and Players

50 40 30

Total Demand Lower Secondary Senior Secondary

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

•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)

Millions of Students

Current Trends

Source: Presentation by Sam Carlson Education consultant (World Bank)

•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

Source: Fortress Team Research

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 students; •348 universities, 17625 colleges, >500,000 teachers; 10.5 million •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

What needs to be done…

 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

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

Gov Intervention

Government controlled /run

Lesser/No Gov intervention

Profit Motive

Not for profit

For profit

Penetration

Deep but highly under utilized

Urban Areas, optimum utilization

Streams Offered

Welding, turning (total 110)

IT, Finance, Retail, Media, Animation

Up gradation of courses

Less/ no up gradation

Frequent up gradation

Quality Infrastructure

Basic and inadequate

Advanced and adequate

Linkage with industry

Lesser tuning with the industry

Designed as per industry requirement

Job Orientation

Yes, low key jobs

Yes, medium-top end jobs

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

UGC

Service

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

SMU

MUL

STUDENT

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

Source: SSKI report, Fortress Team Research

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

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

School Learning Solutions

Individual Solutions

Corporate solutions

Target Customer

School children

Young adults

Working professionals

Value Preposition

Academics

Employability

Productivity

Customer

School

Individual

Corporate

Coverage

Multimedia Learning Teacher Training

IT/BFSI/Spoken English, Management education

Learning products Training delivery & Admin

India + emerging economies`

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

ToToCreate CreateNew NewInfrastructure Infrastructure

Package 22 plots plots Package Reinstate Infra. Education Infra purpos Buildand school use different training d use separate floor area for Private public&training purposes floors for Public and1: private Education Infra Impart training on different rates for Private Students and Recommended students 21:: Commercial Infra 2: Commercial Infra

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

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

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

Trends of High Enrollment in

Leased

to

Out

PrivatePrivate SchoolsSchools

Source: Fortress Team Research

Rent

High Student Fees

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

Promotion

From Government as alternative schools

•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 •

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

Source: Fortress Team Research

Open Schooling

Sakhar Shala, Bhatti Shal

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 •2500 schools available to betoset allupininthe EBBs ageunder groupgovernment of 14-18 (state + center) and l at every 5 km and•State a higher government secondary to contribute school at every land at 7-10free km of cost to secondary education •Emphasis (USE) on by English 2017 (GER language of 100%) on to secondary education •Classesby VI-2020 XII or (0 IX dropouts -XII ) 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

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

EdCIL Sales 07/08

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

Pre + play school

6000-7000 No

School Education

2000025000

High

Higher education

1500020000

Very High

Vocational Education

5000-6000 No

Test Prep

600-800

Coaching Classes

7500-7800 No

No

Key features

Urban driven •Unorganized •Franchise based •

Largest market •Low Quality •Structuring issue •

Variety of courses •Regional disparity •Well organized •

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

No regulations •Highly unorganized •Urban driven •

Growth Drivers

Peer pressure •Free pricing •Low penetration •

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

Growing Economy •Government Policy •High Population •

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

Quality Education Free pricing •Peer pressure • •

Source: Fortress Team Research

Business Potential

Capital intensive Scalability is an issue •Lucrative investment • •

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

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

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

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. ENROLMENT ( GER )Primary OF ALL(VICATEGORIES OF(I-VIII)  GROSS Primary (I-V) RATIOSUpper -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 2000 - 104.9 85.9 95.7 66.7 49.9 58.6 90.3 72.4 81.6 9. 01 10. 2005 - 112.8 105.8 109.4 75.2 66.4 71 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 DOR-02 (%): onwards 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

Institutions

Year

Primary

Upper Primary

Sec/ Sr. Secondary

1995-96

593410

174145

99274

2000-01

638738

206269

126047

2005-06

772568

288493

159667

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

2005-06 11219

2006-07 15952

2007-08 16934

2008-09 19777

2009-10 19682

Secondary Education Adult Education Language Development University & higher Education Technical Education General Education Distance Learning Information & Technology Total Expenditure

1591 263 152 2108 1600 3908 0 0 20841

1837 408 194 2774 1718 2286 0 0 25169

3793 363 152 3892 3870 4665 0 0 33669

5140 408 180 5235 3963 6084 160 452 41442

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

Source: MHRD

Univ . 0.2 0.6 2.0 2.8 4.4 8.6 14.3

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