India opting for PPP model to overcome shortage of schools
Tuesday, 17 May 2011
Article by Sandeep Aneja, MD of Kaizen Management Advisors Private Limited
The Indian schooling systems is one the largest education systems in the world comprising of over a million schools. However, over a hundred million children still do not have access to schools due to inadequate infrastructure. For many years investment in education had been neglected by successive governments and there was no plan to cater to the massive educational needs of a country whose population was not only growing but getting younger. Today half the population of a 1.2 billion nation is under the age of 25 and the age old education system is feeling the pressure of this demand.
Recognising the growing aspiration of people and the need to develop into a knowledge economy, education has come back into the focus of our policy makers. The planned spend on education jumped 6 times in the eleventh five year plan, education budget was hiked by 24% for the current financial year and a number of educational reforms were undertaken by the government starting with the Right to Education Bill that has made primary education a fundamental right for the citizens of India.
These measures did not address the question of capacity creation to meet the large demand supply gap. With 90% of the education spend going towards salaries, very little is left to create additional capacity. Hence, the government has now looked towards the private sector to help meet this challenge through Public Private Partnership (PPP). The PPP model generally involves private sector undertaking most of the capital investment while the government helps with concessions on land through long term subsidised lease. The schools are generally under private management which delivers better quality with part of the students, generally from weaker sections, getting fee waivers or highly subsidised fee.
Although cash strapped state governments like Punjab had recognised this as way to cater to the growing demands of their people, the central government started pushing for this in 2009. The central government announced the creation 6000 model schools of which 2500 are to be developed under PPP. The model is to address the growing demand of secondary and tertiary education. Under this route the land would either have to be procured by the private promoter or would be leased out by the government. The entire capital expenditure on these schools will be borne by private promoters and the government will pick up the tab for part of the recurring cost for a period of 10 years. The government will have the right to sponsor 40%-50% of students in these schools. The private promoter shall be allowed to charge a fee to the rest of the students to make profit.
PPP has clearly been identified a win- win model to meet the demand supply challenge and create capacity. Even the Planning Commission has pitched for expanding PPP in health and education sectors in its presentation to Prime Minister Manmohan Singh to formalise the draft approach paper to the 12th Plan. Hoping the private sector will pick up the ball, the government is slowly opening up one of the last bastions of the license raj in India.