July, 2015 Sector Outlook

OUTLOOK
EDUCATION
STABLE

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 Education

India has one of the largest education infrastructure in the world. As on March 2014, India
had around 14.25 lakhs schools, around 48,000 higher educational institutions and 712
universities. Governments expenditure (states & central) on education has seen
continuous increase in the past few years, from Rs.2.93 lakh crore in 2010-11 to Rs.4.03
lakh crore in 2012-13. GoI, in its budget for 2015-16 has allocated Rs.68,968 crore for
education sector. As a % of GDP also expenditure (state & central) on education has
increased from 4.05% to 4.29% during the same period. Majority of government
expenditure on education was towards school education (accounted for 66.5% in 2012-
13) through various government schemes which have helped in improving enrolment
ratios at elementary and secondary levels.

Gross Enrolment Ratio (GER) at elementary schools (Class I to VIII) has remained stable
around 95% in 2012-12 & 2013-14 after peaking in 2010-11 at 104.3%. However, at the
same time GER at Secondary and Senior Secondary school levels has seen continuous
increase during the period. GER at secondary & senior secondary level has increased from
52.2% in 2010-11 to 62.0% in 2013-14. Supported by continuous increase in enrolment
in school segments, higher education has also seen continuous increase in GER from
19.4% in 2010-11 to 21.1% in 2012-13. In absolute terms, enrolment in higher education
has increased from 275 lakhs to 296 lakhs during the same period. Overall the stable
growth in the formal education sector is expected to continue. However, some of the
entities which have experienced non-renewal of MBBS seats in the academic year 2014-
15 and entities having exposure to some of the state governments by way of receivables
outstanding (under different schemes) are likely to face challenges on cash flows.

Going forward, factors such as greater proportion of population in the school going age,
growing middle class population with increasing income levels, increasing private spend
on education etc. are likely to result in relatively higher growth in private schools. The
governments thrust on improving the countrys literacy rate through higher enrolments
as well as ensuring lower drop-out rates in schools has been driving the growth in
enrolment in the higher education segment too. Given relatively higher capital investment

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 Education
requirements in higher education, this segment provides significant growth opportunity
for the private players. Performance of the players in the formal education segment
(comprising of schools & colleges) is likely to remain stable.

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