Friday, November 12, 2010

Higher ed spending to rise 13% yearly over next decade

India's expenditure on higher education will grow nearly 13% annually in the next 10 years driven by the private sector, said a report released by human resource development (HRD) minister Kapil Sibal on Thursday, November 11. "Higher education spends in India are currently estimated at Rs. 46,200 crore (Rs. 462 billion) and are projected to grow over Rs. 150,000 crore (Rs. 1500 billion) in the next 10 years, reflecting an average growth rate of 12.8%," said the joint report by audit and consulting firm Ernst and Young (E&Y) and industry lobby Federation of Indian Chambers of Commerce and Industry (FICCI).

The report says a typical Indian household spends the most on education today after food and transport. Average household education expenditure in India has risen from 1.46% of annual income in 1981 to 2.55% in 2008 and 7.5% in 2010. "Nearly 55% of Indian middle-class households have started saving for higher education of their children," the report said.

Changing macroeconomic trends are creating new categories of students. They are also increasing the willingness to pay for academic quality, employability-linked education as well as foreign education. "The shift towards a services economy is creating a large demand for skilled workforce, which in turn will drive enrolment in higher education," the report said.

The private sector contributes 92% of the education spending, and within this space, professional courses account for 62%. Since government-run institutions are not geared towards professional courses, 62% of spending in this segment is on general courses. Increased spending over the next decade will boost enrolment, private participation, and better curriculum in higher education sector.

Amitabh Jhingan, partner and education sector leader at Ernst and Young, said the projected higher education expenditure signalled robust growth. Rajan Bharti Mittal, President of FICCI, said education is the "biggest game changer" for India and critical for sustained economic growth.

The report says India's higher education system is already the largest in the world in terms of number of institutes, and the third largest in terms of enrolment. India has 13.6 million students pursuing higher education in 25,951 institutions. The U.S. has 17.76 million students in 6,700 institutions and China has 25.35 million students at 4,000 higher education institutions.


The report highlights a dramatic growth in the number of colleges and universities in India over the past decade. "The number of universities and colleges has almost doubled, led by massive participation by the private sector. Since 1950-51, the number of universities has increased from 28 to 504," it said.

Sibal said India needs another 800 universities to cater to growing demand. "India has to create a critical mass of educated people for its own economy," the minister said. "While over 220 million students are in schools, just 14 million are in higher education. Here we have to expand without compromising quality. It's a daunting task and partnership of public and private sector is a necessity." Mittal of FICCI called for tax breaks and incentives to encourage the private sector to invest in vocational education, e-education, training and skill development.

Source: Mint, November 12, 2010
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