India’s Private Education Boom

According to a recent report by Asian brokerage and investment group CLSA, India’s education and training market is valued at $40 billion and is growing rapidly. It is expected to be a $70 billion industry by 2012. Primary education (K-12) makes up about half of the market. In addition to traditional schools, there is strong demand in India for supplemental teaching. As Bhavtosh Vajpayee notes in the CSLA report, “We estimate at least 20 million children take some form of tuition outside the classroom.” Today, India’s 75,000 private schools have an enrollment of 90 million students, compared to public school enrollment of 129 million and an additional 142 million students who are not yet in the system. Many believe that public education in India has failed to provide high-quality instruction. This, combined with a significant gap between the relatively small portion of students who graduate with a strong education and the vast majority who struggle to obtain basic schooling, has led parents and government officials to turn to the private sector to improve the education system. India’s industrial liberalization beginning during the early 1990s led to a boom in information technology and infrastructure. This, in turn, led to a greater demand for well-educated employees. As a result, public-private partnerships (PPPs) began forming in the mid-1990s to provide information and communications technology services, including teacher training and IT education, in schools. Such PPPs between the central government and private providers follow the build-own-operate-transfer (BOOT) model. While privately-funded schools in India must be run by nonprofit trusts, for-profit businesses may contract with the trusts for services such as administration, IT, food services, transportation, and security. In addition, related sectors such as preschools, private tutoring, teacher training, the development of learning aids such as educational software and multimedia, and e-learning have become attractive opportunities for many for-profit businesses. Moreover, the central government welcomes foreign direct investmentââ?¬â??seen especially in higher educationââ?¬â??as a means of potentially reducing government expenditures. India’s education market is growing exponentially. Despite regulatory hurdles and an aversion to for-profit “commercialization” of the schools themselves, the nation is increasingly embracing private-sector involvement in education in order to improve instruction and meet the rising demand for well-educated, highly-skilled workers. For more information on the growth of the market for private education in India, see: Shamni Pande, “India Inc. goes to school,” Business Today, July 23, 2008 Seema Jhingan and Dimpy Mohanty, “India’s Education Sector ââ?¬â?? Back to School,”, November 6, 2008.