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Wednesday 4 April 2012

Govt invites private companies to start secondary schools

New Delhi: Following a road map laid out in the budget, the Union government has invited proposals from companies to open secondary schools, amid increasing concern over the quality of education being imparted in India’s class rooms.
The human resource development (HRD) ministry, which oversees education, has sought expressions of interest from companies in joining the public-private partnership (PPP) project to open 2,500 schools over the next five years.
Private entities will procure the land, and design, develop, operate and manage the schools, the HRD ministry said in a document outlining the proposal. The government will offer a 25% infrastructure grant and the recurring cost of education for students sponsored by it.
Under the Right to Education Act, at least 25% of a school’s students can belong to underprivileged families and are entitled to free education.The government will pay for their schooling.
Finance minister Pranab Mukherjee, in his 16 March budget speech, outlined a proposal to open 6,000 model schools, including 2,500 on the PPP model, in the 12th Five-Year Plan period that began on 1 April.
The budget pegs an outlay of Rs. 972 crore in 2012-13 for the model schools.
The 2,500 secondary schools, to be modelled after the Central schools run by the HRD ministry, will be planned as joint ventures between the Union government and private firms.
This is the first such move by the government, which has repeatedly said that the public sector on its own will not be able to boost the country’s education sector.
According to details in the ministry’s documents, even companies without any experience in education can bid to open schools. “A corporate entity would be eligible for one school for every Rs. 25 crore net worth subject to interest bearing deposit of Rs. 50 lakh each for up to three schools and Rs. 25 lakh per school thereafter,” it said.
An education firm already running at least one Central Board of Secondary Education (CBSE) school—from which at least two consecutive batches have graduated from class X—can qualify for three schools under the PPP project.
Firms with schools that have not scaled up to the class X level will be eligible for one school, the ministry said in the document explaining the eligibility framework.
A company can qualify for three schools if it has run educational institutes for five years and can deposit Rs. 25 lakh for each school. While the interest from the deposits will accrue to the government, the capital will be released to the company in three annual instalments after the school starts operation.
“I think this is the best way of leveraging both the government and private sector to solve the education challenge. Let’s hope they (government) make some real progress in the next one year,” said Satya Narayanan, chief executive of CL Educate Ltd, which runs a chain of schools and test preparatory centres across India.
He added that the documents seem to suggest that interested players need to have “reputation and a track record or net worth. In a way, even if you are a liquor company, you can still bid for it (a school). However, the interest-bearing deposit clause seems like a guard against non-serious players.” He said his company “would definitely participate in the process to open PPP schools”. There are an estimated 290 million students enrolled in kindergarten to class XII (K-12) schools in India, of whom 7.4 million attend private schools in the cities, according to Parthenon Group, an international consulting and advisory firm.
Of the private school population, about 7.1 million students pay less than Rs.40,000 in annual fees, the firm said in a recent report.
India’s education market was worth $40 billion in 2008, of which the K-12 segment was worth $20 billion, according to securities firm CLSA.
Though updated data wasn’t available, CLSA had predicted in its report that by the end of 2012, the K-12 segment alone would be worth $29 billion. It also said the school and private college segment had huge growth potential.
At a meeting of the BRICS (Brazil, Russia, India, China and South Africa) nations on Thursday, Prime Minister Manmohan Singh reiterated India’s focus on education and job creation.
“In India, for example, we need to create 8-10 million jobs every year over the next decade to absorb the expected growth in the labour force. We are working on ambitious programmes of skill upgradation and education and creation of an environment conducive to an expansion of productive job opportunities,” he said. “We would like to learn from the experiences of other Brics countries on how they are dealing with these problems.”
India has a labour pool of about 429 million that is likely to grow by around 12 million every year, according to the Economic Survey 2011-12. Here, the education and training of this workforce will be a key challenge for the country, which spends less than 4% of its gross domestic product on education, the survey report said.

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