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PPP in Education Workshop on PPP in Urban and Social Sectors

PPP in Education Workshop on PPP in Urban and Social Sectors. Manish Aggarwal, Director – Consulting & Brijgopal Ladda, Head – PPP CRISIL Risk and Infrastructure Solutions Limited. 21 st May 2010. Key Messages. Historically, Education sector has witnessed low public spending

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PPP in Education Workshop on PPP in Urban and Social Sectors

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  1. PPP in Education Workshop on PPP in Urban and Social Sectors Manish Aggarwal, Director – Consulting & Brijgopal Ladda, Head – PPP CRISIL Risk and Infrastructure Solutions Limited 21st May 2010

  2. Key Messages Historically, Education sector has witnessed low public spending Highly regulated with multitude of agencies Recent Government Initiatives would completely transform Education sector landscape Planning Commission recognizes criticality of private investments through PPPs to plug in large deficits PPPs in Education needs to recognize unique characteristics Understanding the value chain in Education would help develop appropriate models Formulation of clear policy, regulatory framework, monitoring service delivery, and design of annuity scheme critical

  3. Historically, Education sector has witnessed low public spending • Budgetary Allocations have not increased in percentage terms • The budgetary allocation for Education is currently at ~ 3.8% of GDP (target of 6%) • The allocation for Higher Education accounts for 12% of total • Leading to large deficits across the value chain • Gross Enrolment Ratio (GER) for upper primary level is at 70% • GER for Higher Education at 12% (target 15% by 2015) • Estimates suggest need for 1500 universities against 400 at present • Availability of professional colleges in rural areas non commensurate with the total rural population • Significant regional disparities Offers immense investment opportunities….

  4. Policy and Regulatory environment highly regulated • Multitude of regulations that govern education sector at both centre and state level • Fragmented with involvement of multiple agencies • Universities Grants Commission- Higher Education & Research • AICTE, MCI, DCI- Technical, Medical & Dental • Bar Council of India- Legal • Distance Education Council • Private investment in education only as “not-for-profit” and can be structured through Trust/Societies/company under section 25

  5. Recent Government Initiatives have potential to completely transform Education sector landscape… • Elementary education received a major thrust post the launch of Sarva Shiksha Abhiyan Programme during the Xth plan • Introduction of Mid- Day Meal Programme led to increase in the GER, and retention along with improving the nutritional status • Enactment of Right to Free and Compulsory Education- a path breaking milestone • Policy proposals in pipeline: • National Council for Higher Education and Research- to address multiplicity of regulatory agencies • National Accreditation & Regulatory Authority- to maintain pan India global standards • Three other important bills tabled in Parliament to address entry & operations of foreign educational institutions; prohibition of unfair practices; and educational tribunals bill

  6. Planning Commission recognizes criticality of private investments to meet plan targets • Private investment imperative to expand infrastructure and provide greater access to all forms of education in India • PPPs a good way to attract private investments • Concept of PPP & its applicability to education not new; requirement is to accelerate the pace and develop new models of participation PPPs would improve Infrastructure Access Transparency Funding Relevance Availability of schools & allied infrastructure For rural population & marginalized citizens of the society By making cost of service more visible Through easing of budgetary constraints Impart right skills in line with changing demands ` However, Private participation needs to be regulated to ensure non-negotiable quality and affordability in line with socio-economic objectives

  7. PPPs in Education needs to recognize following key characteristics of this sector… • “Core education services” is “not-for-profit”. However, infrastructure and other support services can be. Need to understand value chain • Regulation & strict adherence to quality of service delivery absolutely critical for success of PPPs • Local involvement to generate trust important to create buy-in • Clear policy framework, institutional arrangement for creating awareness / capacity building, and common guiding principles necessary for ensuring private participation, and large pipeline of projects • Sector (key sub-segments) may require both capital and operational subsidies; Annuity structure may be critical for ushering in large scale PPPs • Need to have alternate revenue streams - Multiple use of infrastructure - night schools, vocational training, corporate training centres etc

  8. Understanding the value chain in Education would help develop appropriate models Infrastructure facilities Operational Services Allied Services • Management of Professional services- development of building/infrastructure • Operations - O & M • Provision of Faculty • Training and development • Provision of Books • Transport, Catering • Library • Labs, IT, Administration Sports Bundled Approach for development of New institutions • Basis for structuring the PPP models • Gap and Objective • Social and Legal Aspects • Infrastructure and allied services can be easily taken up by any infrastructure developer / player with a profit objective • Operational services needs to align with “not-for-profit” objective of government • Annuity payments may offer a good solution keeping in view the government objectives and affordability issues • Alternate revenue streams may reduce need for operational subsidies

  9. PPP Models in Education Sector (illustrative only) Source: PPP in Education (Dr Sam Carlson)

  10. Key suggestions for stimulating private investments in Education… • Formulate clear policy to promote PPPs in Education • Creation of institutional and regulatory mechanism including establishment of accreditation agencies • Develop appropriate models to attract private investments keeping in view the government objectives and value chain • Draft Model Contract documents or atleast key principles document, which can be used by state agencies to develop project pipeline • Launch pilot projects to test models

  11. Thank You

  12. www.crisil.com maggarwal@crisil.com bladda@crisil.com

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