EDINVEST

COUNTRY SNAPSHOT

INDIA
November 2008
Copyright © World Bank Group, 2008. All Rights Reserved.

http://www.ifc.org/edinvest

A Key Resource on Global Developments in Private Education

This Month’s Topic: EdInvest Country Snapshot on India

-Socio-Economic Indicators, 2007 Education Indicators

Population (millions): 1,23.3 Adult literacy rate (aged 15 yrs+): 61 (2007)

GNI per capita (USD billions): 1,171.0
Primary gross enrolment rate: 112.7 (2007)
Secondary gross enrolment rate: 54 (2005)
Tertiary gross enrolment rate: 11.8 (2005)
Public education spending as % of GDP: 3.2 (2005)
Private enrolment share (%) primary: 17 (2003)
Private enrolment share (%) secondary: 42 (2003)

Source: EdStats, World Bank

Introduction
In 2008, there were
approximately 75,000 private
India has made great schools, equal to 7 percent of given that its population
strides in increasing the total number of schools. grew from about 840
literacy and school With a total enrolment of 90 million to nearly one
enrollment over the past million children, private billion between 1991
decade, resulting in schools are educating 40 and 2001, with the
significant poverty number of children
percent of the total student
reduction. With a GDP aged 6 to 14 rising by
body of 219 million 35 million.
(PPP) of $2,818, 867 in
2007, India now has the
world’s fourth largest In 2006, the net
enrolment rate in primary education was
economy (IMF, 2007). However, if
89 percent for boys and girls combined
India is going to compete as a
(EdStats, 2006). However, transition
knowledge economy, reforms are
from primary to secondary education
required for the education sector, remains low. For every 100 children
including revising regulatory entering grade one, less than fifty will
frameworks, increasing transparency, continue to secondary level education.
facilitating foreign investment and This can be attributed to high direct and
improving quality and access to opportunity costs, a lack of information
education at all levels. on the benefits of secondary education
and little value associated with girls’
This report provides a brief contextual education. In addition, there is often
snapshot of education in India including poor accessibility (over one third of
sections on quality assurance and villages have schools beyond 5 kms) and
regulation. It then goes on to provide low private sector presence due to lack
specific information on private sector of incentives (World Bank, 2005). Only
developments in the Indian education 17 percent of Indians over age 25 have
sector. received some secondary education,
compared with 36 percent in China, 17
Context percent in Sub-Saharan Africa and 28
percent in the world at large.
According to the constitution, children
aged six to fourteen have the right to free Literacy rates, especially in the younger
and compulsory education. In reality, age groups are rising, however figures
access remains determined by location, vary widely by state. In 2001, Kerala,
gender and social standing. These Maharashtra and Himachal Pradesh had
limitations mean India is unlikely to achieved a greater than seventy-five
meet its United Nations Millenium percent literacy rate for their population
Development Goals (MDGs) of over seven years of age, while less than
achieving universal primary education half of Bihar's population of the same
and fifty percent adult literacy by 2015. age group was literate (Asia Human
However, what India has accomplished Rights Commission, 2004). Nationally,
should not be downplayed, especially youth literacy rates (aged 15-21 years)
stood at 84.2 percent for males and 67.7
percent for females. This falls well
below the rates for China at 99.2 percent
for males and 98.5 percent for females
(Unesco, 2006). Geographic variations
also persist, with literacy rates varying
greatly between rural and urban areas.
Only 46 per cent of females in rural
areas were literate as opposed to nearly
73 per cent in urban areas in 2001. For
males, the gap was lower with 71.1 per
cent of males in the rural areas and 86.4
per cent in the urban areas being literate
in 2001.
A shift in government policy is largely
responsible for the increase in
enrollment. In 1986, the federal
government launched the National
Policy of Education and India pursued
external partnerships, the most extensive
being the District Primary Education
Program (DPEP). Funded by the World
Bank, the United Kingdom, the
European Commission, the Netherlands
and UNICEF, the program is active in 18
states, where it has created partnerships
between government and civil society
organizations and strengthened
coordination in planning, training and
research (Finance and Development,
June 2005). By 2005, DPEP had opened
more than 1,600,000 new schools.
Many infrastructure projects have also
been undertaken. Work either complete
or in progress include 52758 school
buildings, 58,604 additional classrooms,
16,619 resource centers, 29,307 repair
works, 64,592 toilets, and 24,909
drinking water facilities (Government of
India, 2005).
In 2001, the federal government
launched the Sarva Shiksha Abhiyan
(Education for All) program with the
goal to universalize primary education
(grades one to five) by 2007 and
elementary education (grades one to
eight) by 2010. The program aims to
open new schools, strengthen existing
school infrastructure, improve teacher
training and provide additional learning
materials. Sarva Shiksha Abhiyan places
a special focus on girl's education and
disabled children.
Another effective initiative to encourage
school attendance is the provision of
lunchtime meals in schools. At present,
most schools in India participate in this
program. With additional federal
funding pledged by the government, it
was expected that by 2005 about 130
million children will have benefited
from midday meals at school.
Government also has programs in place
to address the low participation rate of
children in lower castes, who are more
likely to drop out of school where they
often face discrimination. The
proportion of out-of-school population
aged ten to nineteen years of age from
scheduled tribes is 53 percent in rural
areas and 32 percent in urban areas
(Sinha and Bhandari, 2005).
At the tertiary level, India has the third-
largest number of higher education
enrolments after China and America;
however this translates into just 11
percent total enrolment for the age group
17-23 years, equivalent to 10.5 million
students. This places India behind other
south east Asian countries such as the
Philippines at 31 percent, Thailand at 19
percent, Malaysia at 27 percent and
China at 13 percent. In addition, there
has been a significant decline in higher
education enrolment growth. While
student enrolments grew by about 20
percent between 2000-2005, this pales
compared to nearly 100 percent growth
between 1990-2000 and 57 percent
growth between 1980-1990. This
enrolment decline continues despite an
increase of 57 percent in the number of
new higher education institutes between
2000-2005 (Economic Times of India,
September 12, 2006). In 2008, India has
348 universities and 17,625 colleges,
including a small elite sector of Indian
Institutes of Technology, Management
and Science and 20 central universities
(University World News, August 2008).
Quality
While school attendance is increasing,
the Indian education system remains
plagued by a shortage of teachers, poor
infrastructure and low attainment
(UNICEF, 2005). Another serious
problem is teacher truancy.
Unannounced visits to government
primary schools found 25 percent of
teachers absent and only about half of
those present were engaged in teaching.
Absence rates varied from 15 percent to
42 percent nationally, with higher rates
concentrated in the poorer states. Higher
salaries are not associated with lower
absence rates; however, it has been
shown that teachers are less likely to be
absent at schools that have been
inspected recently, have better
infrastructure, and are closer to a paved
road. Unfortunately, with 97 percent of
the central government education budget
going toward teachers salaries, there is
little funding left for infrastructure
improvements. Private school teachers
are only slightly less likely to be absent
than public school teachers in general,
but are eight percentage points less
likely to be absent than public school
teachers in the same village (N.
Chaudhury et al, 2004).
Teacher absenteeism is also a concern at
the tertiary level. While government has
promised additional funding for tertiary
institutions, economist Bibek Debroy
points out that "An increase in
allocations will obviously translate into
an increase in the public spending per
student. But this may not benefit
students. An increase in spending could
mean the government is hiring more
teachers and faculty, but if these teachers
do not turn up in colleges, then the entire
effort goes wasted," (International
Business Times, February 8, 2007).
A recent government survey carried out
by the National Council for Education
Research and Training (NCERT)
provided mixed results in achievement
in the subjects of mathematics,
environmental sciences and languages.
The survey was administered to 84,322
students and 14,810 teachers across 266
districts in 33 states and union
territories. Students in Uttar Pradesh
showed the greatest improvement of
13.63 percentage points, from 41.45% in
the baseline year (2001-02) to 56.19% in
a mid-term appraisal (2007-08). Other
states that recorded an improvement
were Himachal Pradesh, with a 13.5%
increase in learning levels, followed by
Karnataka and Kerala. The state of
Manipur recorded a 21-point fall in
mean percentage, followed by Tamil
Nadu (8.61), Andaman and Nicobar
Islands (5.45) and Haryana (4.54).
Officials in Uttar Pradesh credit the
impressive 14.58 percentage point
increase in mathematics to the hiring of
more math and science teachers under
the Sarva Shiksha Abhiyan program
(NCERT, July 2008). At the secondary
level, there is no regular system of
benchmarking students comparatively
with other countries or even across
states. Tests of a sample of students in Secondary Education (ICSE) offered by
grades nine and eleven using TIMSS the Council for the Indian School
(Trends in International Mathematics Certificate Examinations. Private school
and Science Study) found low students are permitted to write this
achievement in Rajasthan and Orissa exam. The ICSE also provides the
(World Bank, 2005). Indian School Certificate Examination
(ISC), which students write after a two
Very few Indian tertiary institutions are
year course beyond the ICSE. The
considered high quality and those which
Council also provides a Certificate of
are remain in the areas of management
Vocational Education (CVE-12) which
and technology, with a combined
can be taken after a two year course
enrolment of less than one percent of the
beyond the ICSE for students who
total student population (P. Altbach, The
choose to follow a vocational career
Hindu Review, April 2005). The
path.
combination of low quality and little
access continues to prompt Indian
Education policy advice for central and
students to seek education abroad. With
state governments is provided by the
110,000 students studying abroad
Central Advisory Board of Education
(75,000 in the United States), only China
(CABE). Board membership consists of
surpasses India in the number of students
nominated members representing
studying overseas. Most students are
various interests in addition to
enrolled in undergraduate and MBA
representatives of federal government,
programs, spending a total of $700
state governments and members of the
million on higher education abroad.
upper and lower houses of Parliament.
The National Institute of Educational
Planning and Administration (NIEPA) is
an autonomous body under the
Regulatory Framework
Department of Secondary and Higher
Education, which undertakes, promotes
The Central Board of Secondary
and coordinates research in educational
Education (CBSE) is responsible for
planning and administration to provide
preparing the curriculum from lower
training and consultancy services in the
kindergarten to grade 12 and conducts
field of education.
two board examinations: the All India
Secondary School Examination for grade
The All India Council for Technical
ten and the All India Senior School
Education (AICTE) regulates technical
Certificate Examination (CBSE) for
educational institutions in India.
grade 12, which is a school-leaving
Universities are regulated by both the
examination and widely recognized
federal and state governments and with
internationally for direct admission to
frequent intervention by the Supreme
university undergraduate courses.
Court. Most recently, the Supreme
Separate exams are taken for entry into
Court upheld and expanded an
engineering, architecture and medical
affirmative action program reserving
programs. Many private schools affiliate
almost half of the seats at state funded
themselves with the CBSE. A second
higher education institutions for
body which conducts grade ten
members of the lower castes. The ruling
examinations is the Indian Certificate of
increased the quota from 22.5 percent to
49.5 percent of seats in state funded
institutions. The increased quota took
effect in June, 2008. (BBC online, April
29, 2008).
The University Grants Commission
(UGC) has the mandate to both provide
funds and regulate higher education.
Regarding financial support, the UGC
provides Development Grants and
Maintenance Grants to universities and
colleges. It also defines minimum
standards in higher education in the
areas of teaching, examinations and
research. It serves as a link between
government (state and central) and
higher education institutions and also
offers advice to government on
maintaining quality.
Financing
Despite strong growth, India lags far
behind other BRIC countries (Brazil,
Russia, India and China) in social sector
investments, spending the least on both
education and health, according to a
study by the Associated Chambers of
Commerce and Industry of India
(ASSOCHAM). The AEP Eco Pulse
study showed that India's public
expenditure on health and education
stood at five percent and 9.2 percent of
gross domestic product (GDP)
respectively in the 2005-06 fiscal year.
By comparison, Russia, Brazil and
China spend 12.9 percent, 12.8 percent
and 10.2 percent respectively on
education. (Times of India, June 22,
2008). Broken down by sector, public
expenditure at the primary and
secondary level is somewhat lower than
in other emerging economies, but when
private outlays are included the result is
a level of overall spending similar to that
in developed OECD countries (OECD
Policy Brief, October 2007).
Financing of tertiary education is low
even after accounting for private
spending. India’s public expenditure per
student is $406 (about 0.8 percent of
GDP) compared to China at $2,728,
Brazil at $3,986, Indonesia at $666 and
Malaysia at $625 (Economic Times of
India, September 12, 2006).
Private Education
In 2008, there were approximately
75,000 private schools, equal to 7
percent of the total number of schools.
With a total enrolment of 90 million
children, private schools are educating
40 percent of the total student body of
219 million (CLSA, March 2008).
Private schools can be divided into two
categories – those that are ‘recognized’
by the government as having met certain
standards, and ‘unrecognized’ schools.
Roughly 15,000 charge fees of over Rs
1,250 per month per student. The
greatest increase in private enrolment
has taken place in urban areas, with an
increase in primary enrolment from
1993-2002 of nearly 96 percent
(Kingdon, 2007).
At the tertiary level, public provision
remains strong in arts and science, while
more than ninety percent of colleges in
IT, engineering and management sector
are private. There are more than 1,200
private engineering colleges, 300
business schools and more than 140
private medical colleges, together
representing a market of US$7bn.
College tuition fees vary from Rs
150,000 per annum (aprox. $3,000 USD)
for engineering courses to Rs300,000 per
annum (aprox. $6,000 USD) for an
MBA. In addition, colleges charge an
admission fee which can range from Rs
50,000 (aprox. $1,000 USD) to Rs
100,000 (aprox. $2,000 USD) (CLSA,
March 2008).
Regulation of Private Education
Regulation of private education remains
a stumbling block for investors. The
legal code currently restricts profiteering
or capitation from the student body in
private schools, allowing a “reasonable
surplus” of profits only. Schools must
be organized and operated as non-profit
trusts (CfBT Education Services, 2008).
In 1995, central government sought to
regulate private universities in some
states by introducing the Private
Universities (Establishment and
Regulation) Bill. This bill, which
included demands for the donation of
large endowments and free tuition to
about thirty percent of students, was
rejected by the private sector. The
government then adopted a policy of
awarding the status of “deemed
universities” to private institutions that
met the national goals and criteria
established by the University Grants
Commission (UGC). According to the
UGC Act (2000), deemed universities
must be viable and have management
capable of contributing to university
ideals and traditions. In 2003, UGC
drew up a new set of regulations
specifying that each private university
require a State Act. New restrictions in
expansion were also passed. Private
universities would be allowed to open
off-campus centers, off-shore centers
and study centers only after the
development of a main campus and
being established for five years. Even
then, approval would be coming in
“exceptional circumstances”. The
admission, fee structure and programs of
study of a private university would have
to conform to the norms and regulations
of the UGC.
In response to a growing number of
private medical and engineering
colleges, some states have passed their
own regulations on private higher
education and these regulations vary
widely between states. In Chattisgarh,
the Private Sector Universities Act of
2002 permitted private universities to be
established simply by publishing a
notification in the official Gazette.
Consequently, a great number low
quality, poorly equipped universities
opened overnight. The Supreme Court
acted in 2005, voiding all 107
universities established under this Act,
as they were deemed illegal and
circumvented the UGC. The Supreme
Court upheld the right of the state
government to establish a private
university, however, “the private
university should have all the
infrastructure and qualities which may
justify its claim for being conferred the
status of a University”.
Regulation of Foreign Providers
The AICTE regulates the entry of
foreign universities and can also monitor
the operations of foreign technical
education institutions. Foreign
institutions are required to submit
information on their facilities, faculty,
fees, courses and financial status which
are verified through site visits (The
Observatory on Borderless Higher
Education, March 2006). However, there
is currently no legislation to mandate or
oversee the implementation of AICTE
regulations by the UGC. This could
change. On July 22, 2008, Prime
Minister Manmohan Singh’s
government won a vote of confidence in
parliament and is no longer bound to
coalition parties which opposed the
legislation. However, the Bill’s passage
could face additional delays as the
governments’ new coalition partner has
voted against the Bill in the past
(International Focus, July 30, 2008).
Even if the Bill were to pass, foreign
investors may hesitate to enter the Indian
market for several reasons. The Bill
would be subject foreign providers to the
same constraints as local institutions,
including the June, 2008 Supreme Court
ruling increasing the number of seats
reserved for affirmation action to 49.5
percent. In addition, the AICTE is
warning unapproved foreign
collaborations that they will take legal
action against them if they continue to
proceed with advertising and admissions
for the 2008 academic year. For their
part, many of these institutions claim
that they have applied for accreditation
and are awaiting AICTE action. To date
the AICTE has approved only three
foreign collaborations. It claims that
more than 100 remain unaccredited
(International Focus, July 30, 2008).
In addition, the future of the AICTE
itself is uncertain. The National
Knowledge Commission is
recommending that the current
regulatory system (the AICTE and the
UGC) be consolidated and revised
(International Focus, July 30, 2008).
Conclusion
India has made significant progress in
increasing enrolment at all levels with
the support of various targeted programs
at the primary level. It now faces the
challenge of a rapidly growing
population putting pressure on
government resources. This makes
improving quality and increasing access
very difficult. While the private
education has stepped in to fill the gap,
the difficult and complex regulatory
environment has discouraged some
investors.
India News Items
India’s first school voucher project was
launched in March, 2007 in Delhi by
The Centre for Civil Society (CCS) , an
independent, non-profit, research and
educational organization based in Delhi
is looking to promote school choice.
Over 400 students in 68 wards were
awarded vouchers worth up to Rs 3,600
per year per student. The initiative was
oversubscribed with over 100,000
qualified aspirants and a lottery system
was used to make the awards. Those
who did not win submitted petitions to
their respective ward councilors
demanding school vouchers. Read more
online:
http://www.ccsindia.org/ccsindia/Newsle
tter/feb-mar07.htm
The main associations of universities in
the Netherlands and India have signed an
agreement to strengthen scientific
cooperation in education and research.
With low tertiary enrolment in India and
the Netherlands emerging as continental
Europe's principal power in higher
education, both countries stand to benefit
from the agreement. See the August 3,
2008 story online:
http://www.universityworldnews.com/art
icle.php?story=20080731154637665
The Indian government has asked the All
India Council for Technical Education
(AICTE) to take action against
universities making false claims,
especially regarding their foreign
alliances and deemed university status.
Since June 2008, the AICTE has served
notices to over 104 institutes for
partnering foreign universities without
its’ approval and has also served notices
to 169 other institutes, including some of
the big names in the private education
sector, for conducting unauthorized
technical courses. The state governments
were also asked to take action against
institutes that have unauthorized
alliances and operate without proper
approval. See the entire story online at:
http://economictimes.indiatimes.com/Ne
ws/News_By_Industry/Services/Educati
onal_institutes_under_fire_for_unauthori
sed_foreign_tie-
ups/articleshow/3255563.cms
The state government Karnatak, India
will soon announce legislation to enable
the establishment of private universities.
Chief Minister B S Yedyurappa said
Indian IT company Wipro has already
expressed interest and that a meeting for
international investors will be organized
in January, 2009. See the story online in
MSN News India:
http://news.in.msn.com/national/article.a
spx?cp-documentid=1630686
Suzanne Roddis (send comments to
edinvest@ifc.org )

FURTHER READING:

Government of India:

ASER (Annual Status of Education Report – Rural, provisional version, 2007)

http://www.pratham.org/aser07/aser2007.php

District Primary Education Program (DPEP)

http://india.gov.in/sectors/education/district_primary.php

University Grants Commission

http://www.ugc.ac.in/

News Articles

BBC Online: Critics Slam India’s Education Quotas

http://news.bbc.co.uk/2/hi/business/7371752.stm

CLSA Indian Education Sector Outlook, March 14, 2008

http://www.scribd.com/doc/5324806/CLSA-Indian-Education-Industry-Survey

International Focus: The Nuclear Option for Indian Higher Education

http://www.international.ac.uk/our_research_and_publications/newsletter/international_
focus_newsletter.cfm

International Sources

Asia Human Rights - India: Primary education: Low coverage, poor quality
[Editorial], June 30, 2004

http://acr.hrschool.org/mainfile.php/0184/327/

EdStats, World Bank

www.worldbank.org/education/edstats

International Monetary Fund – Finance & Development, June 2005

The Quiet Revolution

http://www.imf.org/external/pubs/ft/fandd/2005/06/

OECD Economic Survey of India, October, 2007

http://www.oecd.org/document/5/0,3343,en_2649_33733_39428741_1_1_1_1,00.html
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