Why are 1000 Schools being sold in India?

India Sep 27, 2020

Why are over 1000 schools in India on sale?

  • Over 1000 KG- class 12 schools are up for sale, hoping to pool in an investment of close to Rs 7,500 crores in the next two-three years. As the COVID spread hits the education sector hard, this step has been taken to alleviate the deteriorating condition of this sector.
  • Many state governments have also put caps on fee collection even as schools are expected to pay salaries to the teachers apart from bearing overhead costs.
  • One large school chain had to slash non-teaching staff salaries by up to 70%. Even funding has become difficult to come through with financial institutions hesitant on lending, owing to a lack of clarity over how the situation will pan out.

What is the impact of the virus on the schools and students?

  • With no job security and the government’s decision to not ask a fee, the education sector is skating on thin ice. Not only small schools are finding it hard to cope up, but various difficulties were faced by large-running schools. It is expected that schools are not going to open until next year but with the current loss and depreciation, these schools are required to be buoyed by external sources to stay afloat.
  • In most cases, these schools have taken a hit because of the effect of shutting down of the promoters with an adverse effect on other businesses, hampering the growth.
  • These acquisitions might bring more stability to India’s education. Since these financial institutions and schools have deeper pockets, it will help reduce the technological disparities between the premier and budget private schools.
  • The only subject that fears the parents is a hike in the school fee when the schools reopen. Though the reopening of a school may require additional costs, fee structures cannot surpass a certain limit being sensitive to the hard-hit families as well.

Can the falling education sector be saved?

  • While the education sector had to experience a downfall, this sale provides a ray of light in these doomed times. With an estimated investment of 1 billion in the next 2-3 years, the education sector seeks to balance out the losses and stable the growth.
  • This agonizing time has not been easy especially on the education sector as both the students and schools have to compromise on their schedule and education. Scouting for quality assets, the established educational institutions seek to move ahead with a strong strategic interest to overcome this hardship.

This article has been written by Jahnavi Rathore for The Paradigm

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