Private sector participation in India’s higher education (Part I)

Private sector participation in India’s higher education:

In this two-part series, I share my views on the contribution of private sector to India’s higher education. While this first part gives the background, the next one will explore in detail the challenges faced by higher education in India.

A few years ago, since the schools under PGI and the PU and Presidency College had achieved a fair degree of maturity and stability, I decided to enter the realm of higher education by setting up the Presidency University.

blog_Pvt_h_eduWhen I started to give shape to my dreams, I realized that there was a great scope for private sector players like us to make a positive impact and contribute to the growth of higher education in India.

For the first 50 years since India became a republic, its education sector has been traditionally built on the core principle that it is the State’s responsibility to educate its citizens. Hence, over the last two decades, the focus has been on capacity creation. The Government has continued to invest in creating new capacities as well as enhancing them in existing institutions. It’s heartening to see the progress made during this time — India has certainly come a long way from 28 universities and 578 colleges in 1950–51 to over 500 universities and more than 25,000 colleges at present.

Today, the country has the largest number of higher education institutions in the world and close to 20 million students enrolled.

When I was trying to get more data, I noted with interest that over the past 10 years, the central government expenditure on higher education, has been fairly constant around 1-1.5% of its total expenditure. While various committees have observed the importance of private sector investment in higher education to raise this expenditure, there is no data available on private sector spending in this sector.

Currently, India spends 1% of its GDP on higher education.  In contrast, USA spends about 3% of its GDP on higher education, Canada 2.5%, Chile 2%, Russia 1% and Brazil 0.5%.  USA, Chile and Korea also show high proportions of private expenditure on higher education (between 1.7% to 2.1% of GDP).

Data indicates that currently the private sector is playing a significant role in addressing access to higher education.  As on 2014, there were a total of 36,812 colleges.  Of these, 20,390 colleges were private and 6,768 were public colleges.


Indian higher education unquestionably faces huge challenges. While on one hand there is a need to bring as many young people as possible into the higher education fold, on the other it is required to significantly focus on building quality and global competitiveness. Quality of education has a wide-ranging impact on employability and labour productivity.

According to official data, India’s labour force, is expected to be around 653 million in 2031. India’s growth story is primarily driven by its services sector which in turn derives strength from skilled labour force. Unless the country has a nimble-footed dynamic higher education system, it faces the danger of losing its competitive advantage not just to China and Brazil but also smaller nations such as Philippines and Malaysia.

In the next part, I will dwell more on the specific challenges faced by Indian Higher Education, and how private sector faces challenges in the critical areas of Access, Equality & Quality.


Nissar Ahmed, Chancellor, Presidency University