According to a CRISIL report, despite low penetration of higher education in India and healthy demand for skilled manpower, higher educational institutions are struggling to fill seats and over one-thirds seats in engineering colleges and B-Schools are vacant
Low occupancy has impacted the ability of several lower-rung colleges to sustain operations and, as a result, a number of colleges would either close down or change hands over the next few years, said CRISIL.
Ajay Srinivasan, head of Industry Research, CRISIL Research, said, “Low occupancy rates are making it difficult for many lower-rung colleges to sustain operations. As a result, we expect a number of colleges to face closure or change in ownership over the next few years.”
Despite low penetration of higher education in India and healthy demand for skilled manpower, colleges are struggling to fill seats. As per CRISIL Research estimates, the average occupancy rate declined in 2011-12 to around 67% for engineering colleges and to about 65% for business schools (B-schools). CRISIL analysis indicates a wide variation in occupancy rates across various states and grades. For example, engineering colleges in Andhra Pradesh (AP) and Uttar Pradesh (UP) had an average occupancy of around 60% and 40%, respectively, which is much lower than the all-India average. Tier-4 B-schools, estimated to account for around 36% of the total seats, had an average occupancy of only around 50%.
Occupancy levels are under pressure due to the significant increase in the number of seats across colleges, shortage of skilled faculty, absence of industry link-ups, increasing awareness amongst students about the quality of education imparted by colleges, the ratings agency said.
The number of seats offered by AICTE-approved B-schools has increased almost fourfold to 3.52 lakhs in 2011-12 from 0.94 lakhs in 2006-07, while that for engineering colleges has zoomed to 14.85 lakhs from 5.50 lakhs during the same period. Moreover, there is also a significant concentration of supply, with Andhra Pradesh, Uttar Pradesh, Tamil Nadu, Maharashtra, Karnataka and Madhya Pradesh together accounting for close to 65% of the engineering seats on offer.
Quality of education is another major concern, as an overwhelming percentage of students passing out from lower-rung engineering colleges and business schools (B-Schools) lack skill sets needed to start working, after graduating, without extensive training. A number of corporates have actually started in-house courses to train students for the exact job roles.
In fact, CRISIL’s education grading programme for B-schools is aimed at bridging the gap between existing education quality and corporate expectations. “There is an urgent need for education institutes to re-establish their quality paradigm with the corporate sector. Our grading centrally factors corporate feedback, apart from it being based on parameters that are most relevant to the corporate sector, which include industry interaction, entrepreneurship, and practical exposure,” said Akash Deep Jyoti, Head of CRISIL Ratings,
Supply-demand factors are not the only troubles for private engineering colleges. Political decision-making is also a source of viability questions in Andhra Pradesh. According to a newspaper report as many as 75 private engineering colleges from Andhra Pradesh have stopped admissions for the current academic year and have put themselves up for sale in view of the state government’s decision to stagger the tuition fee reimbursement programme. As per the new guidelines, students with 75% attendance, 50% marks in the first year of plus-two, and an income of below Rs1 lakh a year, are eligible for reimbursement of tuition fees in Andhra Pradesh.
There are reports that some political leaders were busy negotiating with the troubled colleges for purchasing them at a cheaper rate. Recently, three such engineering colleges in Telangana region were sold to relatives of a politician, said a report.
‘The ebbing Investment Confidence Index showed no signs of revival in the current quarter and remained almost flat between July 2011 and December 2011:’ JP Morgan Survey
JPMorgan Asset Management India Pvt. Ltd., in association with ValueNotes, has announced the findings of the ninth survey of the Investment Confidence Index (ICI) in India. ICI captures the confidence of the retail and corporate investor sector, as well as, financial advisors on the Indian economic and investment environment.
The ebbing Investment Confidence Index (125) showed no signs of revival in the current quarter and remained almost flat between July 2011 and December 2011. After witnessing a series of highs and lows over five quarters, the ICI has declined continuously over the past year.
Although the overall investment sentiment currently appears subdued, the optimism about global and Indian economic growth is improving marginally. Most interestingly, corporate, advisors and HNIs (high net worth individuals) are now more optimistic than they were in July 2011, even as the mass of retail investors have become more pessimistic.
The survey findings indicate that retail investor confidence has faded in the last few months. Investor confidence (132) faltered 28 points since September 2010 (160) reaching its all time low. India Inc. (115) and the advisor community (127) are marginally more optimistic compared to their July 2011 lows. Among the three advisor categories, bank confidence (133) recovered by 18 points from July 2011, while IFA confidence (119) plummeted 17 points to touch its lowest.
Retail investors in Hyderabad (152) are relatively more upbeat than their counterparts across other seven cities. Ahmedabad investors (110) were the least optimistic. Majority of retail investors in Pune and Mumbai expect the Sensex to rebound from its current level and trade above 18,000 in June 2012.
Indian investors and advisors appear unaffected by the recent volatility in stock markets. 48% of retail investors and 76% of advisors expect the benchmark Index to trade between 17,000 and 20,000 in June 2012. Confidence within young investors (age 22-25 years) has witnessed a 36 - point fall since last year. Inflation and global uncertainty have been voted as the two most negative economic indicators. However, inflation concerns have dropped significantly among corporates and advisors, possibly because of reports about stabilisation of inflation rates.
Retail investment activity in mutual funds has picked up 9% from last quarter to reach 70%, while in stocks it fell 6%. With falling markets, risk-averse investors show lesser preference for stocks (from 70% to 56%) but increased preference for mutual funds (from 44% to 68%) since March 2011.
Rising gold prices appear to have affected investment activity in gold. As a result, percentage of investors investing in this asset class has fallen 19% since December 2010.
The investment sentiment of investors, with smaller wallet sizes (Rs2 to 5 lakhs), fell the most, while it has improved among HNIs. IFAs (Independent Financial Advisors) in Mumbai (106) continue to be the most sceptical, while Delhi/NCR
IFAs (139) are the most confident.
The investigation agency is probing more leads to trace the money sent from India to Singapore and may also arrest more people soon
The Economic Offences Wing (EOW) of the Mumbai police, which is investigating the multi-crore Speak Asia scam, may soon arrest some more people involved in the case even as the company’s chief executive Manoj Kumar, chairperson Harender Kaur and chief operating officer Tarak Bajpai are still absconding. In addition, according to GoDaddy.com, the domain name ‘speakasiaonline.com’ has been suspended due to invalid Whois information. (See here http://who.godaddy.com/whois.aspx?domain=speakasiaonline.com&prog_id=GoDaddy ).
Meanwhile, police officers have expressed an urgent need to create awareness among the people regarding many such ‘fly-by-night’ companies that promise huge returns.
According to an officer close to the development, several panellists of Speak Asia are still under the impression that the company’s server is seized by EOW and many times they are finding it difficult to convince the agents. “Practically, nobody from India can have a (physical) possession of a server which is located in Singapore. Yet several panellists still think that the Speak Asia scheme collapsed after we seized its servers during our investigations. This is not the case and we think there is a need to educate people about such money-multiplier schemes,” the officer added.
He said, “Huge amounts of money collected by Speak Asia from its panellists residing in India have already been remitted to Singapore. We are tracing the remaining money. People should understand that they are falsely made to understand that the company was operating from India.”
Moneylife has consistently exposed the dubious MLM schemes. It has also covered how many such companies are coming under the scrutiny of the police, especially from states like Maharashtra, Andhra Pradesh and Rajasthan.
Sources say that while forensic report of Speak Asia’s seized material such as computers, laptops is awaited; the EOW has gathered evidence against few more people connected with the scam. “There is possibility of more arrest from Mumbai as well as outside,” an official from the agency said.
The EOW is also keeping a strict vigil on several sites that promote and help in communication for several MLM and ponzi schemes. The department is even encouraging its officials to attend seminars organised by MLM and ponzi operators so that they would understand the modus operandi of these schemes.
Agencies across India are investigating the SpeakAsia scam. “We are closely in touch with agencies from other states which have also started their probe against the company. For instance, the Enforcement Directorate (ED) and the Series Fraud cell of Hyderabad police are also closely monitoring the probe.”
Speak Asia duped around 23 lakh investors to the tune of Rs2,000 crore. It promised a weekly income, merely on filling online survey forms. Initially the company paid the money to its panellists but stopped all the payments since May 2011. After complaints were lodged against the company, it came under the scrutiny of the EOW, Mumbai.
Earlier, the investigating agency had arrested Speak Asia’s chief operating officer (COO), Tarak Bajpai, along with few other employees. Currently Manoj Kumar, its CEO and Harendar Kaur, a Singaporean of Indian origin and company’s chairperson are absconding.