India has the third largest education system globally, after China and the US, with one million schools and 20,000 institutes for higher education. The common man's dream of making a better life for himself has made him focus more and more on education. Due to rising income level in India, middle class is focusing more on providing quality education to their children.
The education sector is divided into two main segments; the core segment comprises of schools and higher education, while the non-core comprises of coaching classes, pre-schools and vocational trainings.
There is a huge demand-supply gap in the Indian education sector. This has attracted many private players to invest in education and training institutions with the aim of making the candidate employable by training them in the right courses.
Importance of Private Investment in Education Sector
Education sector in India is finding it increasingly difficult to cope with the rising market demands and competition from global educational institutions due to low investments. It has become very imperative to have increased private investment to improve the infrastructure. The sector offers opportunities to increase capital because education still lacks good-quality infrastructure in the country and investors have the opportunity to build it. So, it is very beneficial to invest in Indian education sector for the private players.
Private Equity Investors have already started investing in educational projects due to increasing demand trend. India’s private banking giant HDFC (Housing Development Finance Corporation Limited) has confirmed that Private Equity investment have seen a tremendous growth since year 2005. HDFC has announced strategic plans to enter the education sector in India and approved an investment of 100 crores.
Government Initiatives
Initiatives taken by the government for the infrastructural development of education sector are:
- Rise in budget allocation for education sector by 17% i.e. Rs 150 crore for establishing new IITs and IIMs in India.
- A proposal was proposed for setting up 6000 schools at block level as model schools in the 12th Five Year Plan.
- Fund of Rs 1000 crore has also been allocated to National Skill development Fund as an initiative.
- Provide incentives to private sector for creation of infrastructure for higher education
- The government initiated measures to establish four regional centers of Indian Institute of Mass Communication (IIMC) to promote excellence in journalism.
- The Budget provisions earmarked for education of girl children should be enhanced from Rs 1,265 to Rs 3,000 in 2012-13.
- The allocation of Rs.636215 crore to UGC (University Grants Commission) which involves the finances for deemed and central universities across India.
- Survey by apex industry body, ASSOCHAM, predicts an investment of Rs. 4,500 crore over next three years
- To increase the IT spending from an estimated $356 million in 2008 to $704 million by 2012, reflecting in a Compounded Annual Growth Rate (CAGR) of 19 percent during 2007-2012
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