Private sector to account for over three-fourths

of total investments
Published Date: Feb 07, 2014

CRISIL Research expects investments worth around Rs 5.1 trillion to flow into the educational services
industry from 2013-14 to 2017-18. Of this, the private sector is expected to contribute the major share of
almost 79 per cent. The need for quality education and better infrastructure, which government-owned
institutions lack, has driven private players to increasingly invest in the education sector.

Disclaimer

CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this Report based on
the information obtained by CRISIL from sources which it considers reliable (Data). However, CRISIL does not guarantee the
accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results
obtained from the use of Data / Report. This Report is not a recommendation to invest / disinvest in any company covered in
the Report. CRISIL especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/
distributors of this Report. CRISIL Research operates independently of, and does not have access to information obtained by
CRISILs Ratings Division / CRISIL Risk and Infrastructure Solutions Limited (CRIS), which may, in their regular operations,
obtain information of a confidential nature. The views expressed in this Report are that of CRISIL Research and not of
CRISILs Ratings Division / CRIS. No part of this Report may be published / reproduced in any form without CRISILs prior
written approval.

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Rs 5.1 trillion to flow into education sector over next 5 years

CRISIL Research expects investments worth Rs 5.1 trillion to flow into the educational services industry over 2013-14 to
2017-18. Almost half of this investment would be channelled towards the higher education (HE) segment. The K-12 segment would
receive the balance investments.

Proportion of expenditure on infrastructure over next 5 years

Source: CRISIL Research

We have forecast investments based on the number of institutions likely to be set up in the next 5 years and the average capital
required for the same. The capital cost has been arrived at after considering land cost, development cost, area required per student,
average student enrollment in schools.

Key assumptions for our investment forecast

Source: CRISIL Research

Private sector to contribute over three-fourths of total investments

Private investors are expected to pump in 79 per cent of the total investments into the education sector by 2017-18. Even in the K-12
segment (where the government has a greater role), more than 78 per cent of the estimated investments will come from the private
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sector.
The need for quality education and better infrastructure, which government-owned institutions lack, has driven private players to
increasingly invest in the education sector. Moreover, the low gross enrollment ratio (GER) within the formal education segment,
especially in higher education institutes, indicates the need for more state-of-the-art educational institutions.

Private sector contribution in the Educational services space

Source: CRISIL Research

Government spends largely restricted to elementary education

Government expenditure in the education sector has been growing at a CAGR of 15 per cent over the past 5 years. However, a major
portion of these investments continues to be directed towards elementary education.
Some of the key programmes initiated by the government to boost elementary education include the Sarva Shiksha Abhiyan (SSA), the
mid-day meal scheme, etc. During 2011-12, the Central government has spent Rs 599 billion towards education. Although elementary
education continues to be the government's focus area, its share in the overall spend has declined to 52 per cent (revised) in 2012-13
from 58 per cent in 2008-09. On the other hand, the government's share in spends on secondary schools, which is primarily in the form
of revenue expenditure, increased to 14 per cent from 12 per cent over the same period, on account of rising staff and teacher salaries.

Share of K-12 in government expenditure shrinking gradually

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Source: Ministry of Finance

Public schools dominate elementary education space

With the government's sustained focus on elementary education, more public institutions are now operating in this segment. At
present, 78 per cent of elementary schools are government-aided, while only 40 per cent of the secondary and higher secondary
schools are public.

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