Comprising over 31,000 institutions, the higher education system in India needs an investment of R10 lakh crore by 2020 to create an additional capacity of 25 million seats. The private sector, which accounts for 52% of the total enrollment, would invest R50,000 crore of this per year.

These are the findings of the annual Ficci-Ernst &Young report, which also reveals that the compound annual growth rate (CAGR) of the number of institutions at 11% is faster than that of student enrollments of 6%. In fact, more than 5,000 colleges have been added in the last one year alone.

Further, the market is expected to grow as the number of students enrolled in Classes 9-12, which is an indicator of potential demand for higher education, has increased at a CAGR of 5.7% over 1996-2008, in line with the growth in higher education enrollment

?The demand for graduates is there but the capacity in each institute is not very large. However, many institutes are going vacant because of lack of quality education,? explained Shobha Mishra Ghosh, director, Ficci’s education committee.

Geographically, the central region has experienced the highest increase in number of institutions, while the southern region has exhibited the highest increase in student enrollment. The Gross Enrollment Ratio (GER) currently stands at about 13.8%, with west India having the highest GER of 25.7%.

In fact, the report has pointed out that the government’s target of 30% GER by 2020 seems difficult to achieve at the current pace of development and, hence, it should go the US way and allow for-profit education as that will encourage investment in the sector. If India is to meet its 30% GER target by 2020, about 40 million students should be enrolled in the higher education system in 2020.

“The Indian government should consider allowing for-profit education while putting in place a regulatory framework to ensure that for-profit players impart a certain standard of education. This will enable greater private capital inflow for setting up new capacity and therefore assist in achieving the government?s GER targets,? the report recommends.

As for the infrastructure, 48% of universities and 69% of colleges have infrastructure deficiencies, the report says.

The report also says that currently, state private universities are concentrated in a handful of states?the top five states account for about 65% of such varsities as they have put in place enabling regulatory environments and provide government support.