Decline In Engineering Enrolments, But Employment Opportunities Still High

Although there has been a decline in engineering enrolments, employment opportunities are still high for those who complete engineering, technology and related courses, says India Ratings and Research (Ind-Ra). It believes the employability for engineering courses was 50.0%-54.0% during FY15-FY18. Although Indian educational institutions generally lag behind their international counterparts, some of India’s top institutes (such as Indian Institute of Technology Bombay and Indian Institute of Science, Bengaluru) achieved a ranking of 162 and 170 in the world Quacquarelli Symonds world university rankings 2019, respectively. As regards the business aspect of it, in a report, Ind-Ra has maintained a stable outlook for the education sector for FY20 in view of by a marginal increase in the number of educational institutions (FY16: up 0.36% YoY) and enrolments (up 0.39% YoY) in the K-12 segment. Although India has an adequate number of higher education institutions, engineering and technology institutes have lately been struggling due to a fall in enrolments (FY18: down 3.56% YoY; FY17: down 2.82% YoY). This led to the closure of 106 engineering institutions across India in the academic year 2017-18.

Ind-Ra has also maintained a Stable Outlook on most rated educational institutions for FY20. The majority of Ind-Ra-rated educational institutions reported steady enrolments for FY19. However, in some cases in FY19, Ind-Ra observed strained liquidity and weakened debt servicing owing to a higher increase in operating expenditure than that in operating income. 

Educational institutions across all rating categories opt for debt-funded capacity expansion to garner market share. Such expansions often stretch their ability to service debt obligations and result in a fall in coverage ratio. In select cases, particularly small institutions, Ind-Ra found such expansions failed to stimulate demand, denting debt servicing ability.

Ind-Ra expects the education sector to witness growth in FY20, supported by sustained growth in enrolments both at schools and higher education institutions. In Ind-Ra’s view, national and global benchmarking of education, use of technology and allocation of more resources for R&D view will be the key drivers for improving the quality of education and educational institutions.

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