Monday, September 10, 2012

Coaching capital braces for a tough test

At first sight, Kota seems like only a little less glitzy version of Gurgaon, the city near New Delhi known for its gleaming glass-and-chrome office complexes, call centres, shopping malls and residential towers. Kota’s rise has nothing to do with the automobile boom led by Maruti Suzuki India Ltd, which set up its first plant in Gurgaon in the 1980s and paved the way for its transformation into a thriving corporate enclave.

This town in south-western Rajasthan, on the Delhi-Mumbai railway corridor, has been powered almost entirely by education—rather, the business of education. Numerous institutes in the town, known as India’s coaching capital, have sent countless students to some of the country’s most prestigious engineering schools.

Kota’s raison d’etre becomes evident the minute a visitor enters the town. The hoardings and banners that greet visitors don’t feature the latest Bollywood offering; they aren’t about an enticing new consumer product; what they plug are coaching schools. Indeed, the entire ecosystem of Kota—from residential facilities for out-of-town students to the mushrooming high-end showrooms—has been developed around the education business.

All this may be poised to change. A decision by the Centre to move the nation to a single entrance test for admission to engineering colleges across the country, partly to diminish the influence of coaching institutes in preparing students for admission tests, has dealt a blow to the business model of Kota.

The proposed common entrance test will be a national test that aims to reduce the demand for capitation fees that engineering institutes typically command for granting admission just as it will ease the stress on aspiring students, who otherwise have to sit for multiple entrance examinations.

Under the plan, all Central government-funded technical institutes will give 40% weightage to students’ performance in school board examinations and 60% to the scores in the entrance test. In the case of the elite Indian Institutes of Technology (IITs), besides passing the entrance test, a student would also have to finish among the top 20 percentile in the school-leaving examination to qualify for admission.

While until now only the score in the engineering entrance test has mattered, it will become just one more metric in assessing a student for admission, still an important one, although the so-called one-nation, one-test initiative is still mired in confusion. The greater focus on marks in the school-leaving examinations for admission to institutes such as the IITs and the National Institutes of Technology (NITs) has led to a decline in the flow of students to Kota’s coaching schools.

The impact
Along with two dozen engineering degree aspirants, Shivam Sharma is seated on the neatly manicured lawns outside the multi-storey test preparation institute Career Point Ltd. Given that the institute claims a success rate of 70% in sending students to various engineering colleges, Sharma, who has passed his 12th class examination from Agra and came to Kota to join Career Point in July, is understandably nervous about making the cut for admission to engineering colleges.

“I have lost over a month (of preparation) because of the confusion over the entrance exam,” Sharma said with a grimace. “Several of my friends and juniors stayed back” in Agra instead of coming to Kota to join test preparation classes. The change in the requirements for admission has dimmed his chances of entering one of the IITs because Sharma scored just 66% in his class XII board exam. “Like me, many may not get a chance to crack IIT. Giving more emphasis on the board exam too has affected the decision of many to prepare for IITs while they are in the 11th standard,” he said.

Ravit Anand, another engineering degree aspirant,who came to Kota from Ghaziabad on the outskirts of Delhi to prepare for the same entrance examination, agreed. “They have created a mess out of nothing and taken away chances of many students,” Anand said. “Officials could have taken the decision gradually, allowing students to think and prepare for the change with time in hands.” Not surprisingly, the coaching business is already feeling the pinch.

Nearly 100,000 students come to Kota every year from all parts of the country to realize their ambition of entering engineering schools. Every student spends an extra Rs. 8,000-Rs. 14,000 per month to cover their cost of living. Including the coaching fee ranging between Rs. 50,000 and Rs. 85,000, a student ends up paying upwards of Rs. 200,000 a year. Put together, the annual revenue of the coaching business in Kota is roughly around Rs. 20 billion.

The top six institutes in Kota combined employ more than 5,000 people directly, including 1,200 faculty—a fifth of whom have graduated from the IITs. Almost all classrooms are equipped with the latest teaching technology and, in addition, each institute has set up problem-solving desks manned by teachers. “There is a 20% impact on the business. This is significant but it’s out of (our) control…what can you do?,” said Pramod Maheshwari, chief executive and managing director of Career Point Ltd, the first coaching centre to get listed on the stock market.

“The confusion has impacted the flow of students to Kota, especially in the engineering segment,” he said, adding that many 11th grade students were missing this year. Career Point shares have fallen about 40% since 21 February, when Union minister of human resource development Kapil Sibal first announced the single entrance test. The small-cap index of BSE Ltd has fallen nearly 10% in the same period.

Not cramming schools?
P.K. Bansal, chief executive of Bansal Classes, said the authorities in Delhi may believe that coaching centres were spoiling the standards of IITs by ensuring the selection of students with exceptional skills in memorizing lessons rather than in understanding the sciences. “But in reality, we train them so well that they go and excel. We are hardworking teachers, trying our best for making up the loss that the school system was supposed to provide. These are not cramming schools,” he said. He too conceded that there was a perceptible drop in new student arrivals this year, pegging it at 15% at his institute alone.

It is difficult to estimate either the size of the coaching business in Kota or pick the exact point at which it mushroomed into a semi-industry. Legend has it that Kota was at one time a thriving industrial hub that drew a lot of bright engineers; the boom eventually went bust and one retrenched engineer decided to start tutorial classes for aspiring engineering students—the idea clicked and set Kota on its way.

Even foreign institutes such as Etoos Academy Pvt. Ltd., the South Korean test-prep company, were unable to resist the lure of Kota. They too are feeling the pinch. Etoos Academy director Choi Young Joo said the institute had nearly 4,500 students last year; this year it is a little less than 3,500—a contraction of 25%. “It’s a policy decision and we are now devising alternative plans to capture the test-prep market beyond engineering. We are in India for long term,” said Choi.

The town has 129 registered institutes, according to the official website of Kota, though residents estimate the number could be a few times the official figure, given a large number of unregistered coaching schools.

The future
The big question is whether the blow to the coaching capital of India is temporary or permanent. Analysts say the boom days may be over, but coaching classes will continue to have a market unless the government succeeds in reducing the shortcomings in the formal education system. CEO Maheshwari of Career Point, for instance, says the fact that students’ parents are willing to pay for coaching classes on top of the fees they already pay to their regular schools shows “nobody is relying on the school system”.

“The coaching institutes’ existence is an outcome of inefficiency and failure of school system,” he said. “Unfortunately, the government is not accepting this…instead they are blaming the coaching industry.” Shilpa Danodia, a student from Sikar in Rajasthan, says: “You have to improve your standard and an entrance as tough as IIT-JEE (Joint Entrance Exam) or AIEEE (All India Engineering Entrance Examination) needs serious preparation and hand-holding.” Danodia is enrolled at Resonance Eduventures Pvt. Ltd. in Kota.

Which then begets the question as to whether in the interim the change in rules will actually work to the detriment of students based outside of the main metros. While they will not be able to access coaching hubs such as Kota for the usual duration, an alternative coaching infrastructure will take time to emerge locally in other small cities and towns.

Vinod Raina, a member of the Central Advisory Board on Education (CABE), a body that advises the government in policy making, says a reduction in the number of high-stakes entrance tests will reduce the demand for coaching institutes. “Parents fear that unless their kids get coached, they won’t be able to compete. ...The reasons are many but coaching is a complete nuisance and should be made illegal,” he said.

Source: Mint, September 10, 2012

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