The Indian higher education system has emerged as one of the largest in the world, with 14.6 million students enrolled in more than 31,000 institutions. Over the past decade, the number of universities in the country has increased at a CAGR of 7.5 percent (from 272 to 556) while the number of colleges has grown at a CAGR of 11 percent (from 11,146 to 31,324). The role of the private sector in Indian higher education has increased significantly over the last decade, with majority of the students currently enrolled in private institutions. This role will only increase considering the substantial investments required in the sector.
Federal and Constitutional set-up of Indian places ‘Education’ as a concurrent responsibility of both the Centre and the State. The Government has been actively encouraging private participation in vocational education – both through private enterprises and public private partnerships. The government has also announced incentives including financial assistance for public private participation in higher education sector. There is a vast opportunity for provision of innovative services. Given regulatory constraints, lack of infrastructure and severe competition for quality education, there is a large and rapidly growing market for private sector services in higher education, imparting education through new and innovative means.
The emergence of India as a knowledge-based, service driven economy has made its human capital its major strength and put the spotlight on severe inadequacies in India’s infrastructure for delivery of education, particularly higher and vocational education. The need for the quality education has become the need of an hour that has created opportunity for private and foreign participation in the higher education segment.
The lack of quality education and educational equipments has attracted quality private participation. Private support can thus help governments overcome financial, administrative and technical constraints. The government has allowed investors a reasonable and legitimate return on their investment. In case of the absence of a legal mechanism to earn a reasonable rate of return on investments made, investors are induced to resort to illegitimate practices to secure and siphon off their profits. Therefore, the government will put in place a regulatory regime that would oversee the functioning of both public and private institutions in a transparent manner.
Several factors have encouraged this trend the growing demand from beneficiaries for quality in education; rising incomes; lower cost of student financing; new skill demands from the marketplace; declining public sector expenditures, and others.
