Rapidly declining percentage of GDP spend on higher education is encouraging India Inc. to open up professional institutions in such abundance that number of private management college alone is anticipated to rise by 100% in next 2 years, predicts a report of The Associated Chambers of Commerce and Industry of India .

According to it, number of privately managed colleges are expected to go up at 600 from 300 at present level  by 2012 for which resources will not be a constraint since GDP spend on higher education has come down from 0.77 way back in 1991 to 0.7% as of now. The share of expenditure spent on higher education as a percent of total education expenditure has remained stagnant at approximately 19% over the past 2 years, it further highlights.

The report  `Envisaging Future of Indian Higher Education’ and to be released by Human Resource Development Minister, Mr. Kapil Sibal on Friday, however, also reveals that number of engineering and medical colleges are likely to clock an anticipated growth of 67% and 47% by 2012 respectively as demand for engineering and medical stream is also rising disproportionately.

It predicts that number of engineering colleges in private and joint venture sector are likely to be about 2000 and number of medical colleges reach a level of 200 in next 2 years, said ASSOCHAM President, Dr. Swati Piramal.

The report, however, admits that number of engineering colleges currently run close to 1200 in across India and strength in terms of number of medical colleges is confined to 150.

It states that factors responsible for growth and demand for private education will be pushed up due to twin reasons of demand pull and supply push factors which include inability of public university system to meet demand of rapidly growing population and declining trend of public expenditure on higher education.

Secondly, conventional courses currently widely taught in traditional institutions will not gear students towards creating employability for which alternatives would be available in private sector, colleges and institutions.  The demand will also rise for professional courses because of increasing purchasing power for high cost private education since their has been a 20-20% rise in income of people belonging to middle class.

The report also indicates that population growth has slowed down from 2.1% to 1.7%, indicating better accessibility to quality education and labour force from India is entering the global arena.  All these factors also indicate the growing opportunities in this sector, the demand being price inelastic.

India education space could be one of the largest market in Asia with a population of over 1.13 billion since government is also planning to spend around 5% of GDP in next 5 years on education.  The market could be anywhere worth $ 50-55 billion, it points out.

According to ASSOCHAM report, private sector has leading presence in few select discipline such as engineering, medical and management.  The market size of private engineering and medical colleges is together estimated around US$ 1360 million, each claiming a size of US$ 680 million. The size of medical colleges is estimated at US$ 350 million.

The share of private unaided higher education institutes has increased during 10th plan and is expected to grow further through 11th plan also.  The extend of private sector involvement in higher education colleges vary across major states with approximately 63% colleges in Andhra Pradesh being private unaided.