2021 is expected to be more stable, but more active than the previous black swan year. These are the main challenges facing the sector this year.
The National Education Policy (NEP) with a 20-year time frame was to be implemented in a phased manner according to the prioritization of resources and the ease of a rollout. However, an implementation plan should be unveiled in some form. A key component thereof is the National Curriculum Framework (NCF). The NEP not only addresses the critical role of the NCF, but also outlines the plans for it in school education as well as in the education of teachers. The efficacy of any policy of course depends on its implementation.
Under the Union Budget, stakeholders were awaiting to see whether the allocation of 4.6% in last year's budget would increase. There has, unfortunately, been a marginal decrease; but the Budget continues to emphasize on technology-based reforms and holistic improvements for students, teachers and administration in the sector. Tax-related aspects are also important. Traditional not-for-profit education receives tax benefits, but education service providers, including ed-tech companies, are subject to the goods and services tax (GST). This tax is effectively passed on to the end user, the student. Lowering the GST slab (even if not carried out under the Budget) will allow students greater access to education services. Tax benefits for start-ups and micro, small and medium enterprises apply to education sector players as well. As announced in the Budget, the tax holidays given for another year will encourage Indian companies alongside domestic and foreign investors.
The role of private players in the education sector will increase. These encompass education service providers, including allied services like training and content; ed-tech companies; public-private partnerships that will increase the funding and penetration needs of the sector, and private investments from foreign and domestic funds. Indian ed-tech, an investor favourite last year with about US$2 billion in funding, will remain attractive. Strategic transactions, especially joint ventures involving traditional education providers, including collaboration in massive open online courses, could see increased interest. In this space, regulated as not-for-profit, the repatriation of returns remains a challenge for foreign players. The easing of regulations in this area will increase interest from abroad.
Foreign education, particularly higher education, remains attractive. 2020 was a year of tentative adaptation for many foreign institutions interested in the Indian student market. This year will be more stable yet focus on reaching more students through hybrid means instead of full-time study on campus. Technology and content-based partnerships with Indian institutions will be key. Stakeholders will welcome any momentum in India's signing of MOUs in higher education with other countries as contemplated under the NEP. Clarity will be required, however, regarding "top 100" foreign universities setting up campuses per the NEP. In particular: how would these universities be identified; how many years would such classification remain valid; and whether other universities can establish campuses here as well.
Two questions on the future after 2021 remain. First, how effective the regulatory reforms following the implementation of the NEP will be. Multilayered regulation has often posed problems for both local and foreign players. Education is largely in the concurrent list of the constitution, and different regulators have overlapped in the sector. New regulators, such as the Higher Education Commission of India, proposed under the NEP should be appropriately set up to simplify the regulatory jigsaw. The legislation for this is expected during the year itself.
Furthermore, could India take the lead in making online/digital learning the primary means of education? Some green shoots for this are visible in the Budget details as well. This would increase access for students compared to brick-and-mortar institutions, and reduce the regulatory burden on education providers. Easing of property holding regulations for the affiliation and accreditation of institutions would be helpful in creating a deeper market, both for K-12 and higher education. Regulation to curb dubious operators would still be required. The central and state governments must legislate meaningfully and 2021 gives them that opportunity.
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