CLASS APART: (Clockwise from above) A digital board built by Educomp; founders of Pathways School; a Zee High experience

Can’t decide which school to send your child to? Well, in the coming years that decision will become harder still. The country is about to witness a phenomenal boom in the school sector, with hundreds of new schools offering state-of-the-art educational facilities being set up all over India.

Take a look at the numbers. Educomp Solutions, the New Delhi-based education services provider, will be helping set up more than 100 Millennium Schools in cities, small towns and semi-rural areas. The Bangalore-based online tutoring company TutorVista, owned by the Manipal Education & Medical Group, plans to open 100 schools in India and Nepal. Yash Birla group’s Birla Shloka Edutech is investing Rs 500 crore by 2012 to set up 100 schools and 20 teacher training institutes.

Career Launcher, another education services provider that is already running 17 Indus World Schools, has plans to launch 25 more in Bangalore, Chennai, Calcutta and Visakhapatnam. Others such as Delhi Public School, the Dubai-based Gems Schools or the Delhi-based Pathways International School have plans to extend their network of schools across the country.

That’s not all. Companies in the pre-school segment such as KidZee, Shemrock and Kangaroo Kids are also looking to set up new schools. “We have over 45 Zee schools across the country and plan to open 300 more by 2011,” says Sumeet Mehta, CEO, Zee Learning Systems.

Most of these schools will boast of such technologies as the “smart class”, an interactive multimedia tool which Educomp has already introduced in its schools. Another is “digitally” — a PowerPoint-enabled teaching tool that is a Manipal innovation.

Yash Birla and (below) Shantanu Prakash

Says Shantanu Prakash, head of Educomp, “Our schools will blend the latest innovations in education technology. They will move away from rote learning modules to deliver skills which can help children build meaningful careers.” Adds N. Srikrishna, CEO, Birla Shloka Edutech, “Our journey began with building multimedia tools in schools. We plan to expand the business to schools across the country.”

So what has fuelled this sudden boom in the Indian school sector? In a word, it’s the prospect of big money. The sheer size of the kindergarten to Class 12 (K-12) space — and its potential for rapid growth — is hugely attractive to companies. “The private K-12 sector in India is worth $20 billion and is expected to double in 10 years, with 30-35 million children joining school,” says Raghav Gupta, president, consulting division of Technopak Advisors, a business consulting firm.

According to brokerage firm IDFC-SSKI, at 361 million, India has the largest school-age population in the world. “There is a consistent shift towards costlier private schools — catalysed by... awareness among Indian parents about the importance of quality education as also their ability and willingness to pay for it,” says the IDFC-SSKI report.

Apart from the huge school market that’s waiting to be tapped, private players may also benefit from a policy nudge. Current regulations allow only registered, not-for-profit trusts or societies to own and run K-12 schools and they get tax benefits to boot. The profit cannot be declared and any ‘surplus’ fund has to be invested in the school itself. But all that may change soon.

The Yash Pal committee on higher education earlier this year noted that the not-for-profit model was coming in the way of private investment in the education sector. Yash Pal proposed modifications in the legal framework which would allow companies to own and operate educational institutions and pay taxes. This would make the system transparent and big companies and foreign investors would also find it easier to come into the arena instead of having to resort to the circuitous route of setting up education trusts and the like.

In fact, human resource development minister Kapil Sibal is planning to table a bill in the Budget session of Parliament that will formalise the new rules and encourage big business to step into the school sector.

All this is good news for the plethora of businessmen waiting to invest in the K-12 space. “One out of every five schools in India is privately run and a whopping 48 per cent of all school children attend private schools,” says Technopak’s Gupta, adding that if companies are allowed to report profit in the K-12 segment there will be a bigger windfall of investments.

Indeed, India’s education market appears to be such a goldmine that many local players have set up joint ventures with international partners. For instance, Educomp has floated joint ventures with leading international players such as Raffles Corp, the largest education company in the Asia Pacific region, and the UK-based Pearson Plc, publishers of The Financial Times.

Khozem Merchant, deputy chairperson of Pearson India, says that the company has also formed a joint venture with Calcutta-based manufacturing conglomerate Usha Martin. Says Merchant, “Usha Martin is the first company we tied up with in India to set up K-12 schools across India.” Usha Martin though did not comment on the project.

“There’s a growing need for good schools — the deficit is over 2 lakh — to keep pace with the changing times and demands of the new generation of Indians,” says Prakash.

Adds Merchant, “We are looking for tie-ups with companies to help them set up schools and offer customised learning for specific school boards in India.”

But there is some concern that rampant privatisation of education could be harmful in the long run. “Privatisation will make education much more expensive and exclusive, just like the healthcare system,” forecasts Kumar Rana, a research associate at economist Amartya Sen’s Pratichi Trust, which conducts research in primary education in India.

However, others point to the manifold advantages of inducting companies to tone up India’s school system. “More private investment will mean that the state will have to spend money on a smaller segment to achieve universal education in the country,” says Kaushik Basu, chief economic advisor at the finance ministry.

Yash Pal goes a step further. “Anybody who wants to make money will find ways of making it. So why block private or foreign investments in schools? However, before allowing private investors there should be a proper assessment of who the people involved in opening schools are and where the money is going.”

Tracking the money will actually get easier once companies are allowed to operate with the profit motive. Says Sandeep Mitra, a Bangalore-based chartered accountant working for a multinational company, “Nowadays most corporations in the school business camouflage their profits under the social responsibility head. Profit is much higher now because parents are willing to pay hefty capitation fees and donations (often paid secretly in cash). So if the policy is changed, and companies are allowed to report the profit, at least they will have to pay taxes and the business of running schools will become transparent.”

Naturally, the government has promised to institute checks and balances even while wooing private capital into the education sector. At the World Economic Forum in Delhi last month, Sibal announced that though the government would allow private investors in, they would have to face strict government regulation.

Whether that comes to pass remains to be seen. For the immediate future, though, get ready to be spoilt for choice when it comes to selecting the perfect school for your child.