11 Dec 12 TiEing up Indian Higher Education

The Indian higher education sector is in the midst of tremendous growth and change. The population demographic has created an unprecedented number of young people in this country. The scale of the problem that India faces in terms of educating and providing employment to her vast youth population, is unique. The sheer size of the problem has made education a subject of national debate, with the attendant glare of the media and public opinion. In the past year, giving further impetus to the debate is the political push by the Human Resource Development (HRD) minister, Mr. Kapil Sibal and his views on the need for reform in the Indian education system.

There exist great opportunities for the private sector to play a dominant role in the near future. With an eye on the future,  a few weeks ago TiE (the entrepreneur network) set about hosting a seminar on private participation in Indian higher education. I was invited to represent ValueNotes, and moderate a most stimulating panel discussion, joined by the likes of Mr.Siva Ram Mallela (Founder of Knowledge Partners, Former Dean of New Initiatives at ICFAI University) and Mr.Chenraj Jain (Founder, Jain University). I’d like to share some of my thoughts on the subject,  enriched from the event!

Indian higher education presents multi-fold opportunities…
We know that the demand for higher education institutes will increase, as the number of students is expected to increase at the rate of 5% annually. A typical Indian household spends the most on education today after food and transport. Higher education spends in India are currently estimated at Rs.46,200 crore and are projected to grow over Rs.150,000 crore in the next 10 years, reflecting an average growth rate of 13%. While public expenditure on education has increased to meet this need, the percentage share of Gross Domestic Product (GDP) spent on higher education has reduced from 0.77% in 1991 to 0.7% in 2008, as per an E&Y-FICCI report.

It is heartening to know that the private sector has recognized the opportunity and stepped up. In 2009, the education sector received $118 million from venture capital and private equity investments across nine deals, and this trend is expected to continue in 2010. The education market is estimated to be worth $80-billion, and the number of private equity deals has increased four-fold in the last four years.

The Government needs to act fast in exploring the options of maximizing public private partnership in higher education and implementing changes in policy. While there is still opposition to make it a profit generating endeavour, if regulations and strict monitoring are adhered to, the entry of private players will provide this sector with the much needed impetus.

While reform is the mantra of the day, we must acknowledge the overwhelming challenges that Indian higher education faces. Consider first the access issue. In 2000, the gross enrolment ratio in higher education, which measures the number of individuals going to college as percentage of college-age population, was 8% in China and 10% in India. By 2008, the ratio had shot up to 23% in China but crept up to only 13% in India. College and university education remain off-limits to many talented Indian students. The National Knowledge Commission has recommended 1,500 universities in the long run, to reach the 25% GER target…the demand-supply gap is glaring!

On the quality front, consider the QS World University Rankings, which are designed to assess the all-round quality of universities across all disciplines and levels. Two Chinese universities found listing among the top 100 universities in the 2010 rankings, but sadly, not a single Indian university made it to the list. No doubt, we have institutions of excellence in teaching in the IITs and IIMs. But they are not full-fledged universities. Leading Indian institutes are good at teaching but they are not research-oriented. We need more quality institutions of world-class level than what India has right now. That’s where foreign universities and the innovation universities come into play, bringing about true global competition.

The UGC needs to encourage universities to increase the rate of adoption of ICT. The incorporation of ICT is imperative for the sector to become globally competitive. To retain the quality of education, private players need to commit themselves to bringing world-class university experience to Indian students – technology across university functions then becomes a key enabler in achieving this.

To sum up my argument, we, and by we, I mean the private sector, need to invest in our education infrastructure – now. We need to take a hard look at the scenario today – grossly inadequate infrastructure, under-compensated faculty, lack of research focus, mired regulatory framework, inefficient, outdated systems and processes in several institutions, and the overall lack of focus on quality. The ultimate fallout – vastly unemployable youth, disconnected from industry requirements. Little thought is being given to harnessing the younger population: unless we find creative ways to massively increase investment in higher education, the potential dividend may fail to translate into real dividend.

ValueNotes Research
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