CapitalMarket.com - Education: Increase budget allocation for education, and grant infrastructure Status
Pre Budget 2012-13 Wednesday, March 07, 2012 19:00 Hrs IST
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PRE BUDGET REPORTS

Education: Increase budget allocation for education, and grant infrastructure Status

Current Status

At US $ 100 bn a year at market prices, India's education sector is among the top 10 in the world in value terms. In addition, the cost of educational services in India is one of the lowest in the world, less than one-sixth of the global average. The revenue size of the addressable market for private investment in education is US $ 30 bn. This is growing at an annual rate of 17% and is likely to accelerate to 19% from now until 2015.

The Government's focus education, evident in the passing of the Right to Education Bill in 2010 and in the increasing budgetary and Plan allocations for the sector, has generated significant opportunities for companies in the business. In the Union Budget of FY 2011-12, Rs 42000 crore was allocated for the Ministry of Human Resource Development (an increase of 17% over last year), Rs 31000 crore for the Department of School Education and Literacy and Rs 11000 crore for higher education. The government schools' technology investments have been funded by the Information & Communication Technology (ICT) school initiative under the Sarva Shiksha Abhiyan (education for all) scheme of the Government of India.

Industry Expectation

  • To grant infrastructure status to education sector
  • Increase budget allocation to for Sarva Shiksha Abhiyan
  • Increase in allocation skill development programmes. Also to give Tax benefit for companies setting up skill development centres in backward region.

Analyst Expectation

  • Expects to see increase in budget allocation

Stocks to watch

Everonn Education and Educomp Solution

Outlook

The government is focused on improving the literacy rate and the quality of education in the country. The spending on education is expected to rise 12-fold per household between 1995 and 2025 due to an increase in the income levels of the Indian middle class. The focus is now shifting towards higher education and skill development. Despite the rising demand for skilled manpower as a result of India's rapid economic growth, employers find a majority of new graduates are unemployable on account of inadequacies in the educational system. If in the coming budget, Finance Minster give Infrastructure status to this sector, it would lead to ease in raising debts at cheaper rates for education companies. Along with it, if the there is rise in skill development allocation, it will be positive for Educomp Solutions and Everonn Education
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