For having better access to debt funding for K12 institutions, Pricewaterhouse Coopers(PwC) has suggested that the education sector should be accorded priority sector status.
In a report released on Catalysing Growth Education sector in the Northern region, drafted by PwC along with Confederation of Indian Industry (CII), it highlights the issue of capacity building in the education sector.
As per the report, over 15 per cent households in India earn more than Rs 3 lakh per annum and the population is growing at 15 per cent. Hence the demand for private paid education is increasing at a steady rate. The challenge in this segment is to attract sufficient capital to set up schools to meet the demand.
The debt funding could be better serviced if education sector is accorded a priority sector status. Creation of facilities enabling banks to refinance loans given to this sector at low interest rates will enable educational trust and societies to raise cheaper debt funding required for the growth. Another option suggested by PwC report for funding is help them outsource their asset creation. The major requirement for funding in the privately funded K12 segment is to finance asset and infrastructure creation- buying land, building construction, and other facilities.
The report favours outsourcing of infrastructure and other facilities available to schools to private players. This implies institutions lease infrastructure such as land , buildings, furniture , laboratories for profit entities. For K12 institutions, it enables conversion of upfront capital investment into manageable annual cost.
The HRD Minister Kapil Sibal has said that all CBSE schools have been directed to allow private players to run vocational courses after school hours. Similarly the HRD ministry favours allotment of land to educational institutions at institutionalised rates instead of market rates.
Already government schools in Delhi are being offered land at institutionalised rates and the HRD minister expects the respective state governments to work in this direction as well.
