Nitin Rao

Indian Education: Missing Markets, New Opportunities

The role of the private sector in promoting education is a topic of considerable interest and discussion.

Atanu Dey’s series of blog posts on The Indian Education System make for good reading.

An extract:

“Imagine for a bit what it would be like if education were provided by private sector firms. Can it be done? Would a socially optimal amount, variety, and quality of education be provided? Would there be market failures? If so, how can those market failures be corrected? Can one devise mechanisms to correct those failures?

The answer to whether the private sector can provide education is clearly ?yes? because around the world for a very long time private firms have provided education very successfully. Both private sector for-profit and not-for-profit business models exist. Education, at some level of description, is a service like any of a very large variety of goods and services provided very efficiently by the market. The generalization that markets work holds quite meaningfully in the specific case of education broadly.”

The education sector – once seen as the exclusive obligation of the government and NGOs – now presents opportunities for research and
private investment.

For instance, The Spark Group (Full disclosure: I have been supporting Spark), founded by entrepreneurs from MIT, is creating a branded chain of $2 schools across India (Spark School-in-a-Box). The schools will be owned and operated by private entrepreneurs. Spark hopes to maximize outcomes of the initiative by harnessing the power of grassroots entrepreneurship. The model will be to provide a plug-and-play package that comes with everything required to start and run a low-end school – from curriculum to fee schedule to infrastructure design. The plan is to take the entrepreneur from “ink on the contract” to “chalk on the board” in 100 days flat. This chain of schools will be adapted for local needs – and yet be integrated under one brand that will be instantly recognized by every poor family in India. Backed by rigorous academic research from Harvard and MIT, Spark plans to make sustainable investments in schools by providing much-needed resources and value-added services.

The Center for Civil Society has recently launched the Education Choice campaign through which they are providing vouchers to poor students. The idea behind Education Vouchers is to empower the poor students so that they can attend a school of their choice. Their choice in turn creates competition among schools to attract and retain students. The choice and competition working together provide universal access and higher quality of education to all. Other noteworthy efforts in education include Microsoft’s Partners in Learning program, Hole-in-the-Wall Education (a joint venture between NIIT and the IFC) and Wipro’s education initiatives with government schools. These initiatives will go a long way in developing the right synergies between able partners, public and private, profit and non-profit.

As Vipin Veetil and Chetan Choudhury write in their paper, “Role of the Private Sector in Promoting Education: How to Capitalize on the Demographic Dividend”:

“India is at a critical stage. If we fail to embark on a process of systemic reforms, the demographic dividend may forever be lost. The poor are leading a silent revolution despite regulatory hurdles and challenges; let us support their efforts by forging vibrant partnerships between government and private enterprises.”