Shopkeepers to caterers, everyone feels the stress

Kota, Rajasthan: P.S. Rajpurohit and his colleague Bihari Lal haven’t studied in college, but these days more than anything else they are talking about the “illogical” change made by human resource development minister Kapil Sibal to the entrance examination format for admission to the Indian Institutes of Technology (IITs).

add_main_imageNarasigha Residency, the boys hostel they run in Kota, is 50% vacant with eight of its 16 rooms having found no takers. “We are facing a loss of more than ₹ 1 lakh every month due to the change in IIT pattern,” said Rajpurohit, the hostel manager.

The vacant rooms are part of the fallout from the single examination that Sibal wants to introduce for admission to all centrally funded engineering schools from 2013 to reduce stress among students appearing for multiple tests and reduce their dependency on coaching institutions. Centrally funded institutions will accord 40% weight to students’ scores in the Class 12 examination; for selection to IITs, aspirants would have to make it to the top 20 percentile in their board examinations.NextMAds

This has reduced the flow of students to Kota this year, hitting the test-prep industry that’s the town’s economic mainstay and the ecosystem, including hostels that house out-of-town students.

“This year the number of students coming to Kota has really come down and we are losing out,” said Rajpurohit’s colleague Lal.

Lokesh Gautam, who runs a video games parlour, says his earnings have been cut by more than half.

“Look inside, you will see the reality,” he says, gesturing towards the empty insides of City Heart Game Parlour in the Indra Vihar neighbourhood.

“Going by the trend of last few months, I may have to plan some alternative source of livelihood,” says Gautam, who hasn’t seen such a sharp decline in the four years he has run the business that depends on students looking for a spot of relaxation amid all the time spent on lessons.

His parlour isn’t alone. From rickshaw pullers to caterers who deliver meals to students, from grocers to branded apparel showrooms, every business is feeling the hit from the decline in the number of students enrolled in the coaching centres.sixthMAds

“If you look at the economy of the city, you will realize that the benefits from the education industry of Kota cascades to the bottom of the pyramid. It has affected them for sure,” says Pramod Maheshwari, chief executive of Career Point coaching school, referring to the hundreds of hostels spread across the city.

“If coaching centres are getting affected, then you cannot expect the allied economy to stay healthy,” he says.

According to students and test-prep companies, around 100,000 students come to Kota, a town of 1.5 million people, every year from across India to enrol in coaching schools. Each student spends ₹ 8,000 to ₹ 14,000 on expenses ranging from hostel rents to entertainment, apart from the fees they pay directly to coaching institutes.

Each student ends up spending at least ₹ 2 lakh a year, including the test-prep fees. Kota’s test-prep industry generates ₹ 2,000 crore every year, providing a livelihood to not just those who run the coaching centres, but every product and service industry, from road-side mechanics and landlords to fast-food chains such as McDonald’s and Dominos.

Sachin Jha, a businessman who has written a book on the town’s famous Bansal Classes and Kota, says the contribution of the test-prep industry to the local economy can’t be understated.

For example, hostels within a 5km radius from the hub of the coaching centres charge not less than ₹ 4,000 for a bed per month—comparable to the cost in a metropolis such as Delhi.

“You see a retail and real estate boom in the city. The infrastructure is growing,” he said.

“A place like Kota now has a mall, two more are coming up. You can see several retail brand stores like Levis, Blackberry or Raymonds. You have presence of Walmart through Best Price stores,” said Jha, who graduated from IIT-Delhi in 1994 and owns S.S. Poly Chemicals Pvt. Ltd, a chemical manufacturing firm.

He said hostels in Rajiv Gandhi Nagar deliver their owners a return of 24% a year.

“So the investments are fetching handsome returns. Students have liquid money, they are spending and the benefit is directly going to all categories of people,” he explained. “If for any reason, the coaching industry slumps, then it will have an impact on everything.”

Prem Kumar, who runs a stationery story a stone’s throw from Bansal Classes, says his sales have dipped by a quarter.

“Ask the students or the people in Bansal, everybody will tell the truth,” says Kumar, who has been running the shop for the last three years. “I came from Kanpur and if nothing works here, may go back. I will wait to see if it (sales slump) continues next year.”

The same story is told by Prem Chand Goyal, who runs a provision store; Deepak Yadav, who works at a tiffin service centre; and Pankaj Lahoti, who runs Sandeepan Mess.

“Last year, I used to supply 400 tifiins everyday and this time it’s less than 250. My tiffin centre owner gets angry and asks me why the number is low. What can I do?” asks Yadav, who belongs to Bihar.

Even branded retail stores have started feeling the pinch. “We have seen around a 35% fall in business this year,” said Manish Sharma, a salesman at a Peter England menswear showroom in Citymall. “On some days we are going home without even selling a single piece,” he said.

“If coaching stops, the Mall will shut down,” said Deepak Chauhan, a colleague of Sharma’s.

Businessman-author Jha foresees small coaching hubs coming up in other parts of India as students focus on performing better in the school board examinations.

Even then, he says, the big coaching schools of Kota are capable of surviving.

“The big players here have already got back return on their investment. If a difficult situation arises, they can provide 50% cost correction” to compete better, Jha says.