If you’re hunting for a sector that promises big growth in future, you could do with a little (or a lot more) education.
According to an Anand Rathi report, India’s education sector ranks among the top 10 in value terms. Households account for about 35 percent of that spending, which is higher compared with other countries.
The cost of educational services in India is one of the lowest in the world — less than one-sixth of the global average, notes Anand Rathi. The cost of education in India is half of that in China, one-fourth of that in Mexico, one-tenth of that in Canada and one-fifteenth of that in the US. However, if measured in global average prices, yearly education spending in India, at $600 billion, is even higher than in the US, the brokerage said.
Public spending in education accounts for more than 60 percent of overall education spending in India. Yet, current educational facilities are inadequate in terms of both quantity and quality. As Anand Rathi notes, seats available for tertiary education are sufficient for just 12 percent of the population in the age group that needs such education. In addition, perceived quality gaps are driving even lower-income students to shift from public education to private education.
Given the serious budget constraints faced by the government, large private participation is required to create adequate access and improve the quality of education.
With greater number of students pursuing private education, private investments into the sector are increasing. Anand Rathi estimates the value of the private education sector at around $30 billion currently, and forecasts that it will expand to $45 billion by 2015. Why? Because the public sector is simply not equipped to meet demand for education either in quality or quantity.
Moreover, some key education bills are at different stages of deliberation in parliament. “The central government’s pro-active stance and supportive statements have created the impression that private investment in education is reaching inflexion point for explosive growth,” the brokerage says in its report.