Industry Snapshot : Education Industry

  • May 20th, 2017

“Education is our passport to the future, for tomorrow belongs to the people who prepare for it today.”

― Malcolm X

Education Industry

The education Industry in India has seen growth during the last decade and is still growing. Various initiatives by Government and the changing mindset of people for education has led to this growth.

More than 54% of the population in India comprises of the youth, which has increased the need for education both at the primary as well as secondary level. India’s human capital is becoming one of its major strength. Both the government and private players are investing in this sector.

“Beti Bachao, Beti Padhao”, “Sarv Sikhsha Abhiyan”,”Skill India”, “Start-up India”, “Pradhan Mantri Yuva Yojana (PMYY)” are some of the successful Yojanas which are helping in transforming India.

But the Indian Education Infrastructure is still inadequate to deliver knowledge at a higher level and vocational education. Practical application during studies has still not gained momentum in India.

Classification of Indian Education System

Classification of Indian Education System

Primary Education comprises of 3 stages.

  1. The Pre-Primary Stage is for kids. It generally comprises of Nursery, LKG, UKG or KG (Kindergarten), Playschools. Children of age between 3-6 years attend these schools. It is generally taken care by the private owners.
  2. The Primary Stage has students aged between 5-12 years and includes class 1-4.The Government schools provide Elementary education for free. The duration of this stage is 4-5 years. Subjects under this scheme generally consist of English, Hindi, Mathematics and environmental education etc.
  3. The 3rd stage is the Upper Primary Stage. This stage comprises of classes from class 5-8.Few of the subjects like science, social science, regional language or Sanskrit are added in this stage .It is also known as High School.

Secondary Education This has 2 stages.

  1. Secondary Stage This stage consist of students aged between 12-14 years and comprises of class 8, 9 and 10. Earlier class 5 and 8 used to have Board Examination but now we have class 10 board examination. It is conducted either by the central board (CBSE, Central Board of Secondary Education), or, Council for The Indian School Certificate Examinations (ICSE) or the state Government in each state.
  2. Higher Secondary Stage The Higher Secondary stage includes class 11 and class 12.This is administered by Central Board, State Government or, Council for The Indian School Certificate Examinations (ISC).This is also known as senior secondary schools. In this stage, there are generally 3 streams in India, namely, Science (Medical and Non-Medical), Commerce and Arts. Students choose their subject as per their interest. The students are aged between 15-18 years.

Higher Education This has 2 stages.

First is the Under graduation stage and the second one is Post graduation Stage.

  1. The Under Graduation Stage has students aged between 18-21 years depending upon the course chosen.The courses vary from 3-5 years. The degree is known as Bachelor’s Degree.
  2. The Post-Graduation Stage is of 2-3 years. Masters courses are of 2 years and Research-based courses are of 3 years.

There are a total of 760 universities, 38498 colleges, and 12276 Stand-alone Institutions. The most enrolled post-graduation Discipline are Social Science Discipline (17.35%) followed by Management Discipline (15.70%), but only 5.31 % opted for Ph.D. in Management Discipline.

Number of Institutions

The other forms of education prominent in India are

  • Adult Education

Adult Education Programmes are helping people who feel the urge of new learning ranging from basic education to any skill development. National Literacy Mission aims at educating illiterate people and has made 127.45 million people, of which, 60% were females, 23% belonged to Scheduled Castes (SCs) and 12% to Scheduled Tribes (STs) by the end of 10th 5 Year Plan.

During the 11th Plan, Government of India introduced two schemes, namely

  • Saakshar Bharat and
  • Scheme for Support to Voluntary Agencies for Adult Education and Skill Development

 The aim of these new schemes is to raise literacy rate to 80%, to reduce gender gap to 10% and minimize regional and social disparities, with a focus on Women, SCs, STs, Minorities, and other disadvantaged groups. Districts that had female literacy rate below 50% as per census 2001 including Left Wing Extremism affected districts are being covered under the programme.

  • Distance Education

This is gaining significance in current times. Many students who do not go for Higher Education (Maters or Ph.D.) are opting for Distance Learning. It is convenient and economical for all sections of the society and provides courses for skill update and which has relevance to learners even if they are located at distant places.

Few Open and Distance Learning (ODL) system consists of

 Indra Gandhi National Open University (IGNOU),

 State Open Universities (SOUs),

Institutions and Universities offering education and includes Correspondence Course Institutes (CCIs) in conventional dual mode universities.

Currently, the system works under UGC.The UGC is in the process of framing new Regulations for Distance Education.

  • Home Schooling

Home-schooling is not widespread nor accepted in India. In this, the child is not sent to school and is taught skills by his parents in the work they do. The government of India has made elementary education compulsory for children aged between 6-14 years.

  • India’s standing in the World:

India has the largest tertiary age population and so India is expected to grow in the education Sector. Moreover, favorable government decisions, large youth population, improvement in literacy rate, new ventures for education has led India to hold an important position in the global education industry. There are more than 1.4 million schools which have around 227 million enrolled students thus making India one of the largest education systems in the world.

E-learning has also gained momentum due to digitization with over 70 million students enrolled and it is only behind the US in e-learning.

Other Rankings are -

  • According to the Legatum Prosperity Index 2015, India ranks 99 among 142 countries in Education
  • 31 Indian institutes have found a place in the Times Higher Education World University Rankings 2016-17 with Indian Institute of Science (IISc) Bangalore being top among the Indian Institute.
  • The Indian Institute of Science, Bengaluru, has topped among the Indian Institutes, bagging the 147th rank and Indian Institute of Technology Delhi, ranked 179th holding position in top 200 around the world.


Total Annual Tertiary Graduates

We can see that India holds 3rd position in terms of Tertiary Graduates globally but the rate at which it is growing is much lower than China which is witnessing a fast and steady growth.


As per Census Reports, the Literacy rate among females have increased from 53.7 in 2001 to 64.6 in 2011.For males, the literacy rate has improved from 70.3 in 2001 to 80.9 in 2011.

Details are mentioned in the table below-


  • Public Expenditure

The government of India has increased expenditure on Education from 4.10% to 4.13% in 2013-14.This has improved the efficiency of school systems in India.

Public Expenditure

Various Initiatives launched by Government

Various Initiatives launched by Government

Sarv Sikhsha Abhiyan

It is a government initiative to universalise Elementary Education and making education a fundamental Right to all children between 6-14 years group, within a time period.

 Beti Bachao, Beti Padhao

Looking at the current scenario many parts of India still consider girls as a burden or kills girl child. So, Beti Bachao Beti Padhao (BBBP) was launched by the Prime Minister on 22nd January 2015 at Panipat, Haryana, to change the mindset and create a balance between both the genders.

Kaushal Vikas Yojana

Under Kaushal Vikas Yojana, the youth is provided with high technical expertise and management skills as per current technological trends. This is to facilitate expertise in the chosen stream to compete with the international Standards and get easy employment.

Pradhan Mantri Yuva Yojana

Pradhan Mantri Yuva Yojana is to build a new class of entrepreneurs consisting of youngsters.This scheme was launched by the Ministry of Skill Development and Entrepreneurship.The government will arrange classes as well as training programs for youngsters for 5 years starting from 16-17.

 Pravasi Kaushal Vikas Yojana

This Yojana was launched National Skill Development Corporation (NSDC) and focuses on skill development of the Indian youth who are seeking or looking forward to getting employed overseas in selected sectors that have high demand in the global labor market as per international standards. The aim is to boost Indian youth so that they hesitate while taking up any opportunities.to make India the Skill Capital of the World.

Pradhan Mantri Vidya Lakshmi Educational Loan Yojana Portal

Most of the right skilled people are not able to grow or take up a right career due to the insufficiency of funds or lack of financial support. To remove this constraint Prime Minister Narendra Modi has launched a single window IT based Student Financial Aid Authority known as the Pradhan Mantri Vidya Lakshmi Karyakram.It will administer as well as monitor Educational Scholarship as well as loans. This will enable the poor and middle-class student to pursue higher education of their choice.

Swayam, Massive Open Online Courses

Swayam is an online portal for education through which the students will be able to access more than 2000 courses and 80000 learning hours from anywhere and at any time. It covers courses from class 9 till Post graduation level.

It works in 4 quadrants,

 (1) Video lecture,

(2) Reading material

(3) Self-assessment tests

(4) An online discussion forum for clearing the doubts.

To manage different segments of Educational sectors National Coordinators have been appointed

They are

  • Engineering- NPTEL
  • Post-graduation education- UGC
  • Undergraduate education- CEC
  • School education- NCERT & NIOS
  • Out of the school students - IGNOU
  • IIMB for management studies

This platform will be further expanded by linking it to education-dedicated DTH channels.

Sukanya Samridhi Yojana

Sukanya Samridhi Yojana is a step to ensure a prosperous life for the girl child in India. This Scheme is launched under Beti Bachao, Beti Padhao Yojana to facilitate education and marriage expenses for a girl child.

The account can be opened till the girl is 10 years old. This requires a small deposit investment and offers one of the highest interest. No tax is deducted from the amount deposited under this scheme.

The maximum amount which can be deposited in a year is INR 1, 50,000.

Skill India

This scheme is launched to train around 40 crore people in different skills by 2022.It includes different initiatives like,

  • National Skill Development Mission,
  • National Policy for Skill Development and Entrepreneurship, 2015,
  • Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and
  • Skill Loan scheme

IndiaSkillsOnline Learning Portal has been launched by NSDC so that students who have registered to the skill program can easily get access to online skill training programs.

National SC/ST hub

India is developing, but the next leap over in growth will take place when all the sections of the society are developing. So the Government of India initiated the National SC/ST to develop a support system for SC/ST entrepreneurs. This hub is part of Stand-up India programme which will work for the development of new entrepreneurs for public processes. The young entrepreneurs will be guided by Industry Experts, CPSE’s and incubators.

An amount of Rs. 490 Crore has been allocated for the National SC/ST Hub in the Budget by MSME for 5 years starting from 2016.

Kasturba Gandhi Balika Vidyalaya

Under the Sarva Sikhsha Abhiyan, The Kasturba Gandhi Balika Vidyalaya scheme was started to enhance the education system for the girls belonging to lower caste or any minority communities.

This is to ensure that gender disparities are reduced. Under the scheme, upper primary schools are opened in the Educationally Backward Blocks (EBBs) which are feasible and also provide boarding facilities.

National Literacy Mission Programme

  • This programme extends to the whole of India. It started in the year 1988 and aims at educating 80 million adults (15-35 years) in 80 years.
  • The aim is to help people gain real education to understand the reason for deprivation and how can they move forward.
  • It involves NGOs to carry out it's working. NGOs helps run educational programmes, training programs, projects, research studies, and evaluation.

Factors Affecting the Industry

  • Population Diversity
  • Globalisation
  • Technology
  • Religious and spiritual beliefs
  • Political system
  • Educational Planning
  • Economic condition
  • Access to opportunity
  • Funding
  • Industry or International collaboration
  • Internationalization of education,
  • Global competition for talent
  • Research funding
  • The commodification of Education.
  • Quality of teaching and learning


Recent Budget Decisions

  • Rs 79686 crore (against revised estimate of Rs 73599 crore for financial year 16-17) has been allocated for the education sector, a 9.9% rise from the previous allocation. Of the total outlay, Rs 46, 356.25 is for the school sector and the rest for higher education.
  • Establishment of National Testing Agency, an autonomous and self-sustained premier testing organization, which will conduct all academic entrance examinations.
  • Reforming University Grants Commission (UGC) with greater autonomy for quality higher educational institutions.
  • Two new AIIMS in Gujarat and Jharkhand which will increase medical seats by 5000.
  • 100 India International centres for the youth to seek jobs outside India.
  • A budget of Rs 2,200 crore for skill development.
  • 3.5 Crore youth to be trained under SANKALP programme.

Recent Budget Decisions


Challenges to overcome

Challenges to overcome
  • No updated Syllabus

The present system of education is being run on an outdated syllabus. The books have the same syllabus for long period of time. The students don’t get knowledge of recent developments and technologies, which takes place around the world which makes the students bookworms rather than becoming knowledgeable.

This can be done by embracing new technologies in the education system.

Education at higher level needs to be based on industrial standards (updated from time to time) and should be learned through practical application.

Internship, workshops, practicals, case studies, Live projects, competitions, public speaking, industry interactions, the industrial visit should be embedded in our education system to make a change to the system.

  • Limited Entrepreneurship opportunities

In India, from the very beginning children are told that you will get a good job if you study hard.The students study to get well-paid salaries and not to take up new ventures. This has reduced the willingness of students to take risks. Our education system should be such that it should generate enthusiasm to become a business person.

There is a lack of access to training and mentorship in India. Data reveals that only 22 percent of aspirational entrepreneurs who plan to start their business in the next 12 months have access to formal or informal training to start a business - which is much lower than the Asia average of 44 percent.

However, the scenario is changing recently and few institutes have started entrepreneurship courses and most of them have been introduced only recently. For instance, the Indian Institute of Technology (IIT), Delhi, recently introduced courses on entrepreneurship. Similarly, IIT Kharagpur is also considering a micro-specialization in engineering from next year.

  • Reservation System

The Constitution of India says that the “State shall not discriminate any citizen on grounds only of religion, race, caste, sex, place of birth or any of them” but there lies a dark truth of reservation in the system. This acts as a hurdle for the talented students.

The administrative body of Ministry of Human Resource Development and other central bodies have approved a pro-rata based reservation for SC/STs.For educational institutes 22.5% (SC 15% and ST 7.5%) has been made. Similarly, the State Government and Union Territories have made a reservation in education on pro rata basis.SC and ST students are also entitled to relaxation in respect of the upper age limit (generally 5 years) as well as lower cut-off qualifying marks (5-10%).

  • Low Qualified Teachers

Elementary education which forms the educational base of any student has 4 out 5 unqualified teachers. They do not have the requisite qualification. Experts say that appointment of contractual teachers has led to decline in the standards. Few states like North-East (including Sikkim), West Bengal, Bihar, Jharkhand, Chhattisgarh, Madhya Pradesh and up north in J&K have less qualified teachers than the other states.

  • Infrastructure facilities

More than half of the primary education institutions do not have access to electricity, toilets. The students are forced to study in one room or under trees without the basic needs. Many of the girls do not attend school due to lack of toilets. Most of the primary schools have the pupil-teacher ratio of 50:1 which leads to no learning.

Lack of well-qualified teachers and one teacher playing many roles is forming a weak primary education base.

  • High cost of education

The cost of Education in India is rising. Tuition fee for undergraduate education in the IITs was increased from Rs 90,000 per annum to Rs 2 lakh per annum. IIM Ahmedabad increased the fee for its flagship two-year diploma programme from Rs 18.5 lakh to Rs 19.5 lakh. as the number of such institutions increases, the budgetary requirements for supporting them will prove to be a challenge.

Education-loan-driven higher education, which has clear implications for blocking the socio-economic mobility of poor people, even in an affluent country like the United States.

Medical education in India has already fallen into this trap; with a high cost of education in private and foreign institutions, the increase in volume is not resulting in enhanced access for a significant section of the population.

Between 2008 and 2014, the National Sample Survey Office (NSSO) reported (pdf) last week, the average annual private expenditure for general education (primary level to post graduation and above) has shot up by a staggering 175% to Rs6,788 per student.

During the same period, the annual cost of professional and technical education has increased by 96% to Rs62, 841 per student.

  • Accessibility to all

The National Sample Survey Organization (NSSO) data (GOI, 2006) suggests that although distance between home and schools is not a critical issue, the remoteness of habitations within rural areas affects the participation of children, particularly girls and those with disabilities

Educational access and retention remain unsatisfactory. In recent years Muslim minority children have been identified as having unusually low levels of access to education.

 Many first generation learners live in environments that do not encourage them to learn and continue their education.

Only 10% of Indians have access to higher education after schooling. The northern(over 15%) and southern region(13%) of India have better access to higher education as compared to the central northern region of India comprising of Bihar, West Bengal and Uttar Pradesh(just 10% for men and 6% for women, whereas in the northeast, only 8% men and 4% women have access to higher education.

Indian students have lower access to higher education (10%) as compared with China which has 22% enrolment and US which has 28% enrolment. Since the early 1990s, the post-secondary enrolment in India rose from 5 million to 13 million which is much lower than China which grew from 5 million to 27 million.                         

  • Lack of practical Knowledge

Indian system of education depends heavily on books and theory based knowledge. Very few Institutes have incorporated Practical knowledge based subject in their curriculum, As a result, students learn only for exams and does not gain the practical applicability of it. Elementary and Primary education is based on theoretical knowledge.

Practical knowledge and skill based education is still not part of schools, colleges, and universities. The structure of the curriculum, lack of infrastructure leads to the inadequacy of making Practical knowledge possible in India.

  • Dubious Institutions

There are a large number of colleges in India which are fake and are ruining the lives of many. The University Grants Commission (UGC) and the All India Council for Technical Education (AICTE) have issued a public notice in June 2016 with a list of 23 fake universities and also listed 279 technical institutions which do not have the approval to grant degrees.

Delhi has the maximum number of fake universities (6 out of 23) and 66 out of 279 of unapproved are in Delhi. Many of these institutions have been in the ‘red’ list for quite some time, according to a UGC official. Other leading states having fake institutes are Telangana, Uttar Pradesh, West Bengal and Maharashtra.

  • Black Economy of Education Sector

A lot of money is generated as black money in the education systems. This black money is creating distortion in Indian Society as well as economy. This black money has the most widening effect on future generations as the amount which is the part of their parents' savings lies in the control of few hands who either park it in real estates or abroad. This, in turn, hikes up the prices of real estate which leads to another loop of inflation. The students too consider degree as an entitlement and not something to be earned once the fees is paid. This lack of vision about how to develop our education system will cause long term harm to our society.

Opportunities to explore

The Indian education market is expanding due to the rapid expansion of the digital learning market. India education system is plagued by poor infrastructure and a shortage of trained teachers.

K-12 segment is valued at $52 billion with a market share of 52% is the most attractive segment. Favorable demographics brings enormous economic opportunities. Government support for the sector with reforms and increased financial outlays is helping strengthen and expand the sector.

The number of professional colleges in India is increasing. The vocational training market is growing as the need for skilled professionals with new teaching techniques. Foreign Universities entering into Indian market has also improved the level of learning among students and also increased competition for the domestic institution which is leading both Government and private players to improve the infrastructure

Private Institutes in education are preferred over Government Institutes. Out of 677 universities across the country, 185 are owned privately and the enrolment rate at private institutions stands at 59%.

E-learning and online education platform are the new areas which have tremendous scope in the edu-tech.

Relevant Questions

  • Why is education sector not a favorite among MBA Students?
  • Whom do you think are good payers in education industry?
  • Key challenges India is facing to catch up with the developed countries in education
  • Would you be interested in the academic job? Why?
  • Is it right move to open so many new IIMs when they are not able to meet the expectation of IIM brand?
  • Statistics around education industry in India vs. top countries in the world.
  • Name three start-ups which are doing well in the education sector.

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