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Private sector key to growth of Indian higher education - EY - India

Report on private sector participation in Indian Higher Education

Private sector key to growth of
Indian higher education

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This report highlights the key role private sector has played in Indian higher education and also recommends steps that the government can take to further encourage the participation of good quality private players in strengthening Indian higher education.

The role of the private sector in Indian higher education has increased significantly over the last decade, with majority students currently enrolled in private institutions. This role will only increase considering the substantial investments required in the sector.

The Indian higher education system has emerged as one of the largest in the world, with 14.6 million students enrolled in more than 31,000 institutions. Over the past decade, the number of universities in the country has increased at a CAGR of 7.5% (from 272 to 556) while the number of colleges has grown at a CAGR of 11% (from 11,146 to 31,324).

However, Indian higher education continues to suffer from three fundamental challenges: access, equity and quality. We explore them briefly:

Access: While India’s higher education system is the world’s third largest in terms of enrollment, next only to China and the USA, its GER-currently at 13.8%-significantly lags the world average at 26%.

Equity: There is wide disparity in GERs across states, urban and rural areas, gender, and communities:

  • Inter-state disparity: 31.9% in Delhi vs. 8.3% in Assam
  • Urban-rural divide: 23.8% in urban areas vs. 7.5% in rural areas
  • Gender disparity: 10.6% for female vs.14.4% for male
  • Differences across communities: 6.6% for SCs, 6.5% for STs, 8.7% for OBCs, and 17.2% for others


  • Faculty shortage: 45% of the positions for professors, 51% positions for readers, and 53% positions for lecturers were vacant in Indian universities in 2007-08.
  • Deficient physical infrastructure: 48% of universities and 69% of colleges have infrastructure deficiencies.
  • Poor academic standards: The system is plagued with outdated curricula and ill-equipped libraries (average 9 books per student vs. 53 in IIT Bombay).
  • Unaccredited institutions: As of March 2011, only 161 universities and 4,371 colleges had been accredited by the NAAC.

The government has also shown its commitment to improve quality and transparency in the Indian higher education system by introducing various bills:

  • National Council for Higher Education and Research Bill, 2010
  • The National Accreditation Regulatory Authority for Higher Educational Institutions Bill, 2010
  • Prohibition of Unfair Practices in Technical, Medical Educational Institutions and Universities Bill, 2010
  • Foreign Educational Institutions Bill, 2010
  • The Educational Tribunal Bill, 2010

We suggest:

To encourage private players to set up high-quality institutions, the government could consider the following measures:

  • Simplifying regulations by reducing input-based constraints that stifle operational autonomy
  • Introducing student-side financing to ensure a level-playing field between high quality public and private institutions
  • Creating enabling legislations at the state level to encourage private players to set up universities in those states
  • Expediting passage of the Innovation Universities Bill to encourage private players to invest significant amounts in setting up innovation universities which are independent of geographical constraints
  • Allowing players to set up of for-profit institutions, while putting in place a regulatory framework to ensure quality and transparency

Download this report for a detailed analysis of how greater participation of the private sector could spur growth in Indian higher education segment.

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Nikhil Rajpal
+91 124 6714000

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