Universities of India 2008
  
Preface| Foreword| Executive Summary|Methodology| Sector Update| Insights|Talent Study |Interview Section| University Listing| Editorial Team

 
 

Introduction

The Central Advisory Board of Education (CABE) committee on financing of higher education has concluded that the Gross Enrolment Ratio (GER) of at least 20% is consistent with turnaround in economic development. According to estimates of the National Knowledge Commission (NKC), India needs to establish around 1,500 universities to attain a GER of 15% by 2015. In the last 3 years, China authorised creation of 1,250 new universities. Furthermore, NKC has suggested that an Independent Regulatory Authority for Higher Education (IRAHE) be established who could accord degree granting power to suitable universities, set up evaluation standards, and mediate disputes. Such a regulatory body will also set up several licensed accreditation agencies for rating purposes. The government has an outlay of 6% of GDP for the education sector by the end of the Eleventh 5-year plan period.

The government has adopted an action plan to carry out reforms in higher education through the Eleventh 5-year plan (2007-2012), popularly known as the knowledge investment plan, to make the next highest investment in higher education. The Eleventh plan’s scope has the following priorities for higher education: to increase access to education (institutional infrastructure), to ensure equity through effective participation of disadvantaged groups and correction in regional imbalances, and finally, to improve the quality of information communication technology and to ensure its maximum usage to achieve the aforementioned objectives.

The government has taken the following initiatives to ramp up the higher education sector:

Eleventh 5-year plan – a major boost for higher education

The Tenth 5-year plan projected the enrolment rate in higher education to increase from 6.0% to 10.0%, which translated to an actual growth of 4.0% during the plan period. The Eleventh 5-year plan proposes to increase this rate of growth to 5.0%, which means that around 8.4 million students will need to enrol in this 5-year plan period. Enrolments in private unaided education institutes were projected to increase to 16% of the total enrolments by 2006-07 and to 20% by 2011-12 and the share of private education institutes in technical education institutes was expected to be 40% by 2006-07 and 60% by the end of the Eleventh plan.

At 2006-07 prices, the per student expenditure was about Rs 17,000 in 1993-94, which declined to Rs 13,000 by 2003-04. Assuming a mark up increase of 25% over 1993-94 levels (base year), the recurring revenue expenditure per student is targeted to be Rs 21,200 at the end of the Eleventh 5-year plan. Using mark-up based recurring expenditure estimates, the total additional outlay over the Eleventh 5-year plan will be Rs 542.2 billion.

e-learning, an emerging ICT tool for higher education

Gradually over the years, ICT has been emerging as a valuable tool in higher education in the form of digital learning. Administrative procedures, online research, e-notifications, online tutorials et al are some areas under the scope of e-learning. According to an education sector report by CLSA Asia-Pacific Markets, the global market size of e-learning has grown tenfold since 2000 to over $20 billion currently, and is expected to surpass $52.6 billion by 2010. Online courses have gained popularity because the use of innovative technology facilitates interaction between students from different parts of the globe. Likewise, courses that were imparted only through conventional methods of teaching once upon a time are now available via ICT. Another plus that favours e-learning is that it does not require physical infrastructure, which ensures greater accessibility to education media.

e-learning technologies have enabled universities to spread their reach beyond geographical and political boundaries and have facilitated collaborations with global institutions. The most prominent example is the Universitas 21 Global, an online MBA business school, which is a JV between sixteen of the world’s better ranking universities such as McGill, British Colombia, Virginia, Edinburgh, Sweden and Melbourne of Australia. This $50 million JV has been established in collaboration with Thomson Learning, an educational and training service division of Thomson Corporation (now Thomson Reuters), and is aimed at tapping potential students primarily from the UAE, Singapore, Malaysia, India, Korea and China.

The Indian e-learning market is still at a nascent stage and is far behind those in developed nations. Although e-learning is gaining gradual visibility, more efforts are needed to boost the three significant factors that contribute to its success-internet penetration, collaborations and interest displayed by private players. CLSA statistics reveal that internet penetration in India is 4% and the e-learning market is estimated at $27 million and is expected to touch $280 million by 2012. Indian institutions are still experimenting with the concept of offering full-time degrees online because in a country that still follows the traditional classroom system of education such institutes face the risk of dilution in quality of education thus imparted. Hence, premium institutes like IITs and IIMs have started offering partial courses, or a part of the programme, through online modules, whereas others are still testing the waters by collaborating with other institutions or franchisees for teaching their courses under their brand name.

At the global level, private companies such as Kaplan, BPP and Apollo Group have already carved a reputation in the education sector. The US-based University of Phoenix, which is the first University to offer a full-time online degree, is owned by the Apollo Group. India Inc. needs to generate such interest in the field of e-learning. Virtual classrooms are now supplemented with online career and counselling-oriented activities in the form of finishing schools and e-learning portals. Internet-based e-tutoring is another area in which India is slowly gaining its prowess. In this process, online tutors teach students in the Western countries through interactive sessions. Considering the rise in competition levels and the frequent mid-life career changes, the need for specialised degrees through e-education courses at tertiary level will be the trend going forward for executives looking for better prospects.

PE players slowly eying various areas of higher education

Educational services have long been an unexplored territory for private equity (PE) investors and rightly so, as the segment is prone to high risk due to its associated regulatory and social factors. In recent times, however, private players have been approaching PE investors and have been offering them lucrative investment opportunities. Some instances of such initiatives are: PE firm Gaja Capital partners’ $8.25-million investment in Career launcher; Helix Investments $12-million funding for the preparatory education company Mahesh Tutorials; a funding of $10 million by SAIF Partners to English training academy Veta and ICA Infotech. PE firm Milestone Group launched a Rs 8 billion education-oriented fund in August 2008 that focuses on education service providers involved in K 12, finishing schools, test preparation activities. Although PE investors are adopting a ‘wait and watch’ attitude, they are expected to play a major role in this sector in the years to come.

India has emerged as one of the world’s largest consumers of education services; however, a not-for-profit ownership pattern that prevails for the educational sector poses a major hurdle for direct private participation. Nevertheless, private players are entering the market in the form of academic partners offering ICT infrastructure, content development packages, e-learning resources, and other allied services. The alternative business model of this arrangement seems to be working fine for private players as well as for the government, as it restricts capital inflow to supportive areas only not directly affecting educational services. Mindlogicx Infotech Ltd, Educomp Solutions and Everron Systems are some of the prominent players who are operating in this category.

A younger India has tremendous potential to export manpower through skill migration

Developed countries are facing the issue of declining birth rates and increasing life expectancy, a phenomenon that is altering their demographics to different age groups and is leaving their families smaller and life expectancy longer. Mature economies are facing a growing talent gap since majority of the population is aged. Moreover, these countries are also facing a severe shortage of academicians in the teaching profession. This shortage is present in other professions as well as inexperience spans across skilled labour. Professionals from these countries face more pressure when they enter the labour market because there are lesser people of the schoolleaving age and working age in these countries. This scenario is expected to worsen in the near future and developed countries will rely on other countries with a younger workforce to fulfil their demand-supply gap.

The above chart illustrates the fact that the 30 developed economies of OECD countries have been consistently witnessing deterioration in population in the age group of below 15 years (young age) over the last four decades. Furthermore, during 2005, population of all OECD countries was just a little over 1.1 bn, which is equal to or more than the population of India. Owing to these factors, India has the potential to act as the leader in skill migration. India is among the youngest country in the world as almost 54% of its population is below 25 years of age. Moreover, India is well known for its technical manpower and a fair proportion of this manpower is employed in developed countries, especially in the West. India has the potential to become a global manpower destination for many multinational companies due to its large and growing graduate pool. This fact is evident from the way leading multinationals and foreign companies are increasingly competing in India to find the best talent from the most reputed schools of excellence. India has an advantage to deploy its manpower abroad because it enjoys the advantage of skilled labour, in terms of technical as well as basic communication skills and project management techniques. For these developed economies shortage of skilled labour exists in occupations right from teachers, to doctors, engineers, etc; and migrant workers outside the home country help them fill the gap, thus leaving tremendous scope for Indian professionals to migrate and work abroad.

Stepping up efforts for mutually beneficial collaborations at the global level

The General Agreement on Trade in Services (GATS) is a treaty of the World Trade Organisation that is designed to extend international trade in services, which includes higher education. Trade in higher education includes distance learning, recruitment of international students, creation of university campuses abroad and migration of professionals. According to a consultation paper on ‘Higher education in India and GATS: An opportunity’ by the Department of Commerce, global trade in higher education is estimated at US$ 30 billion per annum.

Emerging demographics show that the demand for higher education is greater in ‘younger’ countries (countries with significant young population) than in ‘greying’ countries (countries with significant elder population), but the supply of education services is greater in greying countries as there are fewer students for enrolment. The US, the UK, Australia and New Zealand are the largest exporters of education services whereas India, China, the Philippines and Indonesia are the largest importers of education services. According to the International Institute of Education, India alone accounted for around 25% of 325,000 Asian students in the US in 2004-05.

India has been historically operating as a closed economy, which explains its cautious approach towards the entry of foreign institutions in education — a sensitive sector. The pros and cons of this argument are debated equally by academicians, policy makers and students. While on the one hand, the entry of foreign institutions exposes different models in education and points out to the drawbacks in India’s system, on the other hand, it exposes the current system to the risk of adulteration due to the lack of proper regulation for fees and quality of education. Considering that the education industry is a billion-dollar industry involving foreign education providers, distance learning and franchisees, GATS could put together a mechanism whereby private and foreign investments in higher education are encouraged subject to high quality standards and efficient regulations.

 

India and China are among the leading sources of foreign students to overseas countries, but China and Japan are also popular destinations for international students among Asian countries and India is not so popular. In 2005, China managed to attract around 140,000 international students for higher education whereas India managed to attract only 13,267 foreign students.

FDI up to 100% is allowed in higher education in India through the automatic route. Also, foreign participation through collaborations, franchising and subsidiaries is also permitted; however, during April 2000 – May 2008, India’s FDI inflows were worth around US$ 70 billion, of which education services accounted for a meagre 0.15%. Countries like Singapore, Dubai and China are wooing international universities for setting up operations so that their students have access to degrees from well-recognised global universities. India is emerging as an attractive destination for many foreign universities, but firstly it needs to minimise the restrictions and regulations (for setting up private universities, for entry of foreign universities and for foreign investment in education) and then make decision making faster.

Turn challenges into opportunities

India faces the dual challenge of attaining aggressive business-building goals and having an insufficient pool of talent to achieve these goals. The Indian universities may turn this challenge into an opportunity by taking initiatives like developing a new talent pool for India. The keys to success include matching the right people to the right initiatives, ensuring that the initiatives are truly important, and providing the right support — to build both leadership and functional skills — so that leaders emerge in a “just in time” fashion.

As India grows into a knowledge superpower, it will need a host of facilities to ensure a steady supply of skilled level of employees with the required qualifications. Higher education must serve the interest of sustainable development and help build a better society. There is a need for partnership between the state and private sector to further boost higher education in the country. There is an increasing need for synergies between the corporate sector and university level institutions to create partnerships between public and private sectors in the field of higher education

India can generate a greater volume of qualified jobseekers through PPPs that strengthen industrial-training institutes and create more vocational programmes that are tailored to the needs of various industries. Ideally, there should be increased integration between institutions involved in supply of labour, including training and educational institutions, labour legislation, and the business sector that constitutes the demand side of labour.