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India’s declining youth population doesn’t worry ed-tech firms

India’s school- and college-going population is set to fall 10% in the next 15 years. Yet, private schools, universities and ed-tech startups remain unperturbed

The latest population estimates from the government shows India’s school- and college-going population declining from 459 million in 2021 to 411 million in 2036—a drop of about 10%. But stakeholders in businesses targeting this large pool such as private schools, universities and education-technology ventures shrug off this decline that has been underway for nearly a decade now, and is expected to gain pace over the next 15 years.

India is woefully short of putting those 459 million in schools and colleges, they say. According to government figures, only about three in four in the school-going age band is in school. In the college-going age band, that number is one in four.

Likewise, those on education apps are a fraction of the overall number. “The current ed-tech penetration is only 1% of the total ed-tech market in India," says Zishaan Hayath, founder of Toppr, an ed-tech firm. “Even with fewer users, it will be a higher dollar market."

Education businesses are focused on how they can attract the current population seeking education and not worried about a shrinking of that base. Yet, the base is shrinking. India’s population in the age band of 5-18 years—the typical school-going population—peaked in 2011, at 351 million, and has been falling since. The census population projections (2011-2036) report sees this declining to 296 million in 2036. Similarly, India’s population in the age band of 19-23 years—typical for higher education—is expected to peak in 2021 at 127 million and decline to 115 million by 2036.

The main reason for this is the total fertility rate (TFR) in 15 states falling to 2.1 children or less between 2016 and 2020. According to the World Health Organisation, a country is said to have reached replacement fertility when its TFR falls to 2.1. At this level, its population stops growing, and only ‘replaces’ itself over time.

For India, the TFR is currently estimated at 2.2. Between 2020 and 2036, India’s population is expected to grow from 1.36 billion to 1.51 billion. However, the effect of Indians having fewer children will be felt in the 5-23 years band, whose share in the total population is expected to contract from 34% in 2021 to 27% in 2036.

The impact of falling TFRs will be more pronounced in some states. The government study gives out age-wise projections for 22 states and north-east states other than Assam as one region. Between 2021 and 2036, a decline is expected in the 5-23 age group in 22 of these 23 regions.

Delhi is the sole exception, registering a 6% increase. At the other end is Jammu & Kashmir, slated to register a 32% decline in this population band. In general, the reductions for eastern and southern states far exceed that for the rest of India.

However, those crafting businesses around education see considerable room for growth. In schools, the decline in school-going population has resulted in school enrolments falling from 261 million in 2015-16 to 248 million in 2018-19. Even then, this is about 75% of the total school-going population in India. Similarly, in the college age band, the enrolment in 2018-19 was only 26% of the population in that age bracket.

The New Education Policy, released in July, envisages increasing this to 50% in 15 years. “In the foreseeable future, the numbers are in favour of educational institutions," says Sandeep Sancheti, vice-chancellor, SRM Institute of Science and Technology. Sancheti also sees Indians studying more, and acquiring degrees and other certificates up to the age of 70 years.

Dinesh Singh, former vice-chancellor of Delhi University, expects a significant change in the qualification demand of jobs. “Open-learning schemes such as IGNOU [Indira Gandhi National Open University] are expected to gain momentum in the near future. Companies will focus more on add-on skills, and less on degrees and qualifications," he says.

Sajith Pai of Blume Ventures, a venture capital firm that has invested in four ed-tech startups, says edtech accounts for just $700 million of the total Indian education market of $135 billion. “This is expected to grow to $4 billion by 2025, while the education market will grow to $160-170 billion," he adds. A June 2020 report by Omidyar-RedSeer on edtech shows significant momentum in both the school and post-school spaces.

Part of the momentum in the school-going segment comes from what Divya Gokulnath, co-founder of Byju’s, terms a “significant mindset shift" due to the shutting of schools caused by coronavirus. “In a recent survey by Byju’s, 75% parents said they would want their kids to continue learning online even after the lockdown ends."

The potential of such opportunities, for now, outweighs the risks posed by the demographic shifts underway.

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