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Tightening student visa norms in the USA, the UK and Canada is likely to aid Indian higher education institutions in the near to medium term, according to rating agency ICRA.
ICRA's analysis suggests that the credit profiles of these institutes, especially those catering to the medical stream, have witnessed steady improvement in recent years. ICRA projects the revenue of higher education institutions to expand by 9-11 per cent in FY2026, similar to the growth estimated for FY2025, on the back of expanding seat capacities, improving enrolments and addition of courses. With nearly 15-20 per cent of India's population estimated to be in the 15-24 age bracket, and with improving literacy rates, the demand for higher education in the country is projected to increase over the next decade. While increasing cost of higher education has remained a deterrent, improved access to credit (education loan) for students vying for higher education from various financial institutions has been providing support. Additionally, the Government of India's (GoI's) expenditure on higher education has doubled in the last 10 years, which, coupled with the rise in the number of universities from 642 in AY2011 to ~1,189 as of AY2025, has translated into a handsome revenue growth for major universities. Healthy admissions, along with annual fee hike of ~6-8 per cent has translated into a strong compounded annual growth rate (CAGR) of 15 per cent in revenue growth for these colleges during FY2020-FY2024. Suprio Banerjee, Vice president & Co-Group Head, Corporate Ratings, ICRA, said, "Other than the GoI's impetus on higher education, the recent tightening of student VISA norms in the US, the UK and Canada will also propel some of the Indian students targeting enrolment in international universities to explore options at home. The higher education sector in India is poised for growth owing to continued strong demand, increasing disposable family income, easy access to credit, and enhanced Government focus, through initiatives like the National Education Policy (NEP) 2020 and private sector participation." Banerjee added, "The operating surplus for the entities under study remained healthy at ~30-35 per cent during FY2020-2024 and is expected to remain strong at upwards of 30 per cent in FY2025 and FY2026. Despite intermittent sizeable capex requirements for capacity expansion, the debt coverage metrics are expected to remain healthy, driven by on-book liquidity to fund the capex as well as healthy surplus generation limiting the borrowing levels". The gross enrolment ratio (GER) for higher education has risen over the years to ~28 per cent in AY2022 from 21 per cent in AY2012. The NEP 2020's target has been to boost the GER in higher education to 50 per cent by 2035, which though ambitious, also reflects the large untapped growth potential for the sector. (ANI)
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