ALTHOUGH the word ‘profit’ remains taboo while discussing education in India, the fact remains that quality education is emerging as one of the fastest-growing – and lucrative – ‘businesses’ in the country. Most politicians and academicians frown on the use of terms such as top-line and bottom-line growth while planning the setting up of new institutions, but a clutch of ‘education entrepreneurs’ is transforming this staid sector.

Education and teaching have always been seen as ‘noble’ professions in India and matters relating to money, investments and profits have had no role in the hallowed and rarefied circles where such issues are debated. But economic reforms and rapid economic growth in recent years have resulted in a sea-change in attitudes towards education.

Even prestigious, government-promoted institutions such as the Indian Institutes of Technology (IIT), the National Institutes of Technology (NIT) and the Indian Institutes of Management (IIMs) have finally realised that it costs a lot of money to provide top-quality education to students, who have to pay reasonable fees and not those that were fixed in the 1960s and 1970s.

Most traditional Indian universities are funded by the University Grants Commission (UGC), the regulator, which decides on the fees that affiliated colleges can charge and the salary structure of the teachers. The UGC and other regulators such as the All India Council of Technical Education (AICTE) still function with a dirigiste mentality and are loathe to give up control over the hundreds of universities and thousands of colleges.

While the education establishment, comprising regulators and greying academicians at universities and colleges continue to live in the pre-reforms era – where the concept of license ‘raj’ still prevails – millions of young Indians in the under-25 age group are restless and seek better education.

India’s median age is around 25, which means there are about 600 million Indians below the age of 25, most of who are eager to get the best of education, which they believe would pull them out of poverty and ensure a better future for them. Aspiration levels of this generation are high, and the youth are exposed to the wonders of a modern, market economy, thanks to the explosive growth of television.

But the decision-makers in the education establishment are still frozen in a time warp and raise hurdles, preventing reforms in the education sector. The appointment of ace lawyer Kapil Sibal as the human resources development (HRD) minister in the United Progressive Alliance government, replacing the ageing and ailing Arjun Singh – who symbolised the ancien regime in education – about two years ago has brought in fresh thinking and finally rejuvenated the sector.

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THE minister is in a big hurry to bring about dramatic changes in all three areas of education – primary, secondary and tertiary. Earlier this month, Sibal reiterated the need for huge investments in education, pointing out the country needed at least $150 billion in new investments over the next 10 years in the sector.

“This is a mind boggling challenge,” says Sibal. “We cannot sustain economic growth rate unless we have quality educational infrastructure and empower our youths.” The only way to ensure double-digit growth and for the country to reach its true potential is by creating a critical mass of people in the education system, he adds.

According to him, India needs a thousand more universities – there are a little over 360 at present – and 45,000 more colleges (18,000 at present) to cater to an estimated 40 million students by 2020. A majority of Indian youth, especially in the villages, drop out by the time they reach standard VIII. Enrollment in higher education institutions is a mere 12.4 per cent in India, as against 23 per cent in China (which is also the global average) and 70 per cent in the US.

Sibal’s efforts to open up higher education to foreign universities and even domestic businesses has run into rough weather, with politicians from across the spectrum opposing him vehemently. Two crucial bills that he piloted in Parliament are stuck because of lack of backing from lawmakers.

The minister, however, has the backing of other key decision-makers in the government, including Sam Pitroda, who is an adviser to the prime minister, and had headed the Knowledge Commission. “There is huge opportunity for private investment in the education sector,” says Pitroda, who about 25 years ago, as adviser to then prime minister Rajiv Gandhi, initiated reforms in the telecom sector. Those changes paid handsome dividends, bringing about revolutionary changes in the Indian telecoms business.

A report by international consultancy Ernst & Young recently pointed out that spending on higher education in India is currently pegged at below Rs500 billion (about $10.9 billion). This is expected to more than triple over the coming decade, as Indians will continue spending huge amounts to educate their children.

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THOUGH changes have been slow in coming in the traditional education structure – comprising official, state-backed universities – there are dramatic movements occurring in the modern education sector. Last week saw British publishing major Pearson – which brings out the Financial Times in London and also owns book publisher Penguin – acquired a controlling stake in Bangalore-based TutorVista for $127 million.

Pearson aims to raise its stake in this venture to 80 per cent, reflecting its “excitement about the vitality of India’s education sector,” as Marjorie Scardino, the CEO, explains.

TutorVista was started in 2005 by serial entrepreneur Krishnan Ganesh, as an online tutoring company. About 20,000 students in the US – 70 per cent of who are in school and the remaining in colleges – use its tutorials, which are marketed at an affordable price of $99.9 for a month’s unlimited usage.

The company provides interactive, online tutorials for students in different parts of the world – but most of its clients are in the US – through an internet-based voice and text chat format. It employs 2,000 tutors, based mostly in India, who conduct more than 40,000 tutoring sessions daily. TutorVista, which raised nearly $40 million in venture capital funding, has been growing at a phenomenal rate of more than 800 per cent annually.

One reason for the popularity of the service is the competitive fees that it charges; while a tutor in the US would charge nearly $100 an hour for conducting sessions at a student’s home, TutorVista’s rates are just a fraction, with the added advantage it is available round-the-clock. The company is also launching an English preparation service, which would help student around the world to master the language.

Pearson, which is the world’s largest education company, is excited about the prospects in India. According to John Makinson, chairman, Pearson India, the acquisition gives it control of the world’s largest online tutoring business and “a platform on which to build a leading presence in the Indian private schools sector.”

Pearson has also formed a 50:50 joint venture with another leading Indian private sector education major, Educomp Solutions, to provide vocational education services. While the Indian government spends about $40 billion annually on education – mainly subsidising primary and secondary schools in rural areas, which continue to be woefully lacking in terms of infrastructure and teaching skills – the private sector spending on education has outstripped it.

Hundreds of other private education providers – including companies that train students seeking admissions in IITs and IIMs – are also thriving in India’s burgeoning education landscape.

The fastest growing segment is the technology-enabled learning one, which thanks to the roll-out of 3G services and broadband internet, is set to capitalise on the huge hunger for knowledge.