We have been arguing that instead of controlling things, as the government tends to do, it should provide information to parents. As of now, no data is available. Accessing information needs resources, awareness and time.
Parents take decisions on admitting their wards into these schools entirely through “word of mouth” information. At times, they do not even know how students of a particular school are faring in board exams. They look at how other children they know — in their neighbourhood or family — are faring in a particular school, and try it out. If they feel they are not getting value for money, they might withdraw their wards. This, in some cases, acts as a regulator for the schools.
Studies tell us that an increasing number of parents are spending a large proportion of their yearly income on private school education. Have you seen this?
The kind of importance that parents are according to their children’s education is unparalleled in history. We recently came across a school in Rajasthan that charges Rs 200 a month as fees for students. A number of parents are daily wage earners, and pay fees on a weekly basis. A labourer who struggles to put meals on the table spends a substantial portion of his income on what he perceives to be a good school. That is something we may not have seen even two decades ago.
What kind of government control are you talking about?
To open a school, a minimum of 15 permissions are required. Usually, it is 20-25, from various authorities.
In most states, you need to meet a lot of requirements to start a school. For instance, the plot size: There are regulations on the size of the school building, the playground etc.
It might be possible to adhere to these regulations in places where land prices are not very high. In congested urban colonies, it is impossible for new entrants to meet the criteria.
Land cost itself is prohibitive. As a result, we also see a lot of political funds or large real estate owners coming into the sector.
In some senses, this creates a natural entry barrier and allows many schools to continue to operate as virtual monopolies. Typically, at some stage, these schools stop worrying about the quality of what they offer, as they are aware that competition is unlikely.
The CBSE and other boards have their own sets of requirements for affiliation. In certain cases, they even specify sizes of classrooms and so on.
What about finance for starting schools? Is it possible for new entrants to obtain debt or equity to start a school?
Education commands a significant proportion of household expenditure across all income segments. In 2014, it was Rs 9,675 per month, according to the 71st round of the NSS.
Yet, the sector has not seen much traction from venture capitalists and impact investors. To date, education has attracted 3 per cent of equity investments in this country.
Securing loans to start a school is very difficult. If I want to start a food-delivery app, my ability to raise external funds is much higher. It is quite absurd.
This is because of the not-for-profit tag that education carries. Banks are hesitant to lend to a trust or a society. It is almost impossible for a small operator to get a loan — except from a moneylender at exorbitant rates. In general, for this space, either you use your personal savings or fee income, so you are limited by your own capacity. Even if the intentions are right and you are committed to building a good, stable institution, you can only offer what your resources permit, which will always be limited.