India’s private school aspiration increasingly out of reach as inflation bites | Investment News

0

NEW DELHI (Reuters) – Indian financial consultant Waqar Khan has seen his income drop by around a fifth since the start of the coronavirus pandemic. When his youngest son’s private school raised tuition fees by 10% this year, he had no choice but to transfer him to the public system.

With three children and living in a small house in the capital, New Delhi, the 45-year-old can no longer afford private school fees for his 10-year-old son. He transferred his eldest son to a public school in early 2021.

“I had no choice,” Khan told Reuters, adding that rising education costs had come on top of an almost 25% increase in household spending over the past two years.

While inflation places the heaviest burden on the poorest, the relatively well-off are feeling the kind of pressure to make cuts to household budgets not seen in years.

Khan is one of millions of parents who have transitioned their children from private to public education since 2020, or from elite schools to cheaper ones. In 2021, four million children have moved from the private sector to the state, or more than 4% of all children in school.

It is a reversal of a trend that has swept India over the past two decades, as more and more families in an increasingly prosperous society have opted for private education to give their children an advantage in the labor market.

But today, inflation means that such aspirations are becoming unaffordable for some.

“My family life is broken. I often feel distressed and helpless that I cannot provide a good education for my children despite all the hard work,” Khan said.

Her daughter, a 12th grader, is still at the school where her 10-year-old was, because he failed to find a place for her in the public system.

For the rapidly growing middle class, the appeal of English classes and better teaching is huge.

The private sector covers a range of schools and fees, from a few dollars a month to hundreds, and thus serves low- and middle-income families as well as the wealthy.

In addition to school fees, transport companies that take children to school have raised prices by more than 15% this month in Delhi and other places to cover higher salaries and fuel, said the parent associations.

Arjun Singh, 47, who drives a school van and owns three school taxis, said he hiked his charges by up to 35% in April due to rising costs. Compressed natural gas (CNG) prices for its vehicles have nearly doubled, he said.

Broad-based inflation is biting hard, hitting 6.95% in March – a 17-month high and above the central bank’s target, and economists say households are bracing for the worst as businesses pass on the costs.

Many private schools have raised tuition and other fees by more than 15% this year, said Aparajita Gautam, chairman of the Delhi Parents Association, although some delayed doing so during the worst of the pandemic.

His association demonstrated in several private schools in the capital, attracting the attention of the media and the authorities.

In response, the Delhi government simplified the procedure for registering for public education and promised to audit schools’ accounts, while trying to encourage schools to cap fee increases at 10%, with little hit.

“Most private schools require parents to accept steep hikes or face adverse consequences,” Gautam said.

In the city of Kolkata, nearly 70% of private schools raised fees by up to 20% last month, and some parents have called on authorities to pressure schools to soften the blow.

Schools defend higher tuition fees.

Sudha Acharya, head of the National Conference of Progressive Schools and principal of the ITL public school, understood that many parents were going through difficult times, but schools were facing mounting costs.

“Without increasing tuition again, maintaining quality is a bit difficult,” she said.

The Center Square Foundation, a Delhi-based consultancy, found in a 2021 study that a majority of 450,000 private schools in India, 70% of which charged up to 1,000 rupees ($13) per month per student, suffered financial losses of 20%-50% during the pandemic.

As parents defaulted, some schools cut teachers‘ salaries and thousands of schools, especially those catering to low-income families, closed, according to school associations and state authorities.

Enrollment in private schools has soared to more than 35% of students, from around 9% in 1993, and nearly 50% of households spend nearly 20% of their income on children’s education, according to government and industry estimates.

A family with a monthly income of 20,000 to 50,000 rupees ($260 to $650) may pay 2,000 to 10,000 rupees per month for school fees and an additional 1,500 to 5,000 rupees for transportation.

There are about 90 million Indian children in private schools altogether.

Federal and state governments spent 6.43 trillion rupees ($84 billion) to fund around 1.1 million schools in 2019/20, or about 3.1% of gross domestic product compared to 6% recommended by various government panels.

Economists said the rising cost of private education was not fully factored into the inflation data, as it is weighted at just 4.5% in the consumer price index based on a ten-year-old model.

Devendra Pant, chief economist at India Ratings, the Indian arm of ratings agency Fitch, said rising education costs were part of a second wave of inflation households were facing after a rising world prices for crude oil and other raw materials.

“This would have a significant impact on monthly household budgets and could force many to cut back on spending on other products and services.”

Some parents have been caught in a nightmarish trap that could completely deprive their children of an education.

Sanjay Kumar Vaghela, an Ahmedabad city driver who had to borrow money after losing his job, said he could not afford the higher school fees for his daughter or pay the 18,000 rupees he still owed to his school.

The school asked him to pay the outstanding fees before issuing a transfer certificate, without which no public school was willing to admit his daughter, he said.

“My daughter can stay uneducated forever because I have no money to pay,” he said.

($1 = 76.4830 Indian rupees)

(Additional reporting by Sumit Khanna in Ahmedabad, Rupak De Chowdhuri in Kolkata, Swati Bhat in Mumbai; Editing by Mike Collett-White and Robert Birsel)

Copyright 2022 Thomson Reuters.

Share.

About Author

Comments are closed.