PREFACE

Whether the insurer is old or new, private or public, expanding the market will present
multitude of challenges and opportunities. But the key issues, possible trends, opportunities
and challenges that insurance sector will have still remains under the realms of the
possibilities and speculation. What is the likely impact of opening up Indias insurance
sector? The large scale of operations, public sector bureaucracies and cumbersome
procedures hampers nationalized insurers. Therefore, potential private entrants expect to
score in the areas of customer service, speed and flexibility. They point out that their entry
will mean better products and choice for the consumer. The critics counter that the benefit
will be slim, because new players will concentrate on affluent, urban customers as foreign
banks did until recently. This seems to be a logical strategy. Start-up costs-such as those of
setting up a conventional distribution network-are large and high-end niches offer better
returns. However, the middle-market segment too has great potential. Since insurance is a
volumes game. Therefore, private insurers would be best served by a middle-market
approach, targeting customer segments that are currently untapped.

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OBJECTIVES
A project report on Insurance is carried out on the basis of few objectives. Some of them are:

To encourage the expansion of capital markets;

To accelerate the intermediation competence in the insurance sector, and to release

latest out new schemes and services;

To contribute to all-inclusive sectored reforms

To facilitate and improve the corporate administration and introduce sound

commercial structure

To sustain health modifications and private health insurance.

To enable the investors to take a close view of the fund performance over the years

To motivate the selling of insurance schemes

To monitor the insurance schemes transactions

To trigger long term strategic planning

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RESEARCH METHODOLOGY

Methodology is a systematic procedure of collecting information in order to analyze

and verify a phenomenon. The collection of information is from two principle sources. They
are:

1. Primary Data

2. Secondary Data

1. Primary Data:

It is the information collected directly without any references. In this study it is

gathered through interviews with concerned either individually or collectively, sum of the
information has been verified or supplemented with personal observation conducting
personal.

2. Secondary Data:

The Secondary Data was collected from already published sources such as, reference
from Text Books and Journals relating to Demonetization. The data collection includes:

(a) Collection of required data from News Papers, Book.

(b) Reference from Text Books and Journals relating to Insurance Sector and
Education Sector in India.

COLLECTION OF DATA

The data can be collected from secondary sources. The basic premises of my study is
secondary data. Secondary Data The Main sources of Secondary data are combination of
information from the internet, research journals and books of the related topic.

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 INTRODUCTION

Insurance may be described as a social device to reduce or eliminate risk of loss to life and
property. The risks which can be insured against incline fire, the perils of sea, death and
accidents and bulglary. Any risk untingent upon these may be insured against at a premium
commensurate with the risk involved. Thus collective earing of risk is called insurance.

In the words of John Magee, Insurance is a plan by which large number f people
associate themselves and transfer to the shoulders of all, risks that attach to individuals."

"Insurance is a contract between two parties whereby one party called insurer undertakes
in exchange for a fixed sum called premiums, to pay the other party called insured a fixed
amount of money on the happening of a certain event."

Insurance is a protection against financial loss arising on the happening of an unexpected

event. Insurance companies collect premiums to provide for this protection. A loss is paid out
of the

premiums collected from the insuring public and the Insurance Companies act as trustees to
the amount collected.

For Example, in a Life Policy, by paying a premium to the Insurer, the family of the insured
person receives a fixed compensation on the death of the insured. Similarly, in a car
insurance, in the event of the car meeting with an accident, the insured receives the
compensation to the extent of damage.

It is a system by which the losses suffered by a few are spread over many, exposed to similar
risks. Insurance is a mechanism for transferring risk and reducing risk by having a large
number of individuals who share in the financial losses of the group. Risk inhibits action and
is highly subjective on an individual basis. Insurance objectifies risk. People trade the
possibility of financial loss for the relative certainty of the premium paid and reimbursement
for loss.

Some people believe insurance is similar to gambling or opening a savings account. Neither
is true. When you place a bet, you create a risk and you have the chance of losing all or
making more than your wager. Insurance companies write policies for pure not speculative
risks and indemnify you when you have a covered loss. In the insurance industry, the word
"indemnify" means you cannot be put in a better position than you were before the loss.
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 BASIC INSURANCE TERMINOLOGIES

Insured
The person known as the policyholder, a person with insurance coverage.
Insurer
A company licensed to transact the business of insurance and issue insurance policies.
Policy
It's the written contract between an insurance company and its insured. It defines what
the company agrees to cover for what period of time and describes the obligations and
responsibilities of the insured.
Premium
It's the amount of money a policyholder pays for insurance protection.
Claim
It's the notice to the insurance company that under the terms of a policy, a loss maybe
covered.
Indemnity
Legal principle that specifies an insured should not collect more than the actual cash
value of a loss but should be restored to approximately the same financial position as
existed before the loss.

Agent

A licensed person or organization who sells insurance and represents the insurance
company to the policyholder.
Broker
An organization or person paid by the policy holder to look for insurance on their
behalf.
Deductible
It's the amount of the loss which the insured is responsible to pay before the insurance
company pays the benefits.
Expiration Date
This is the date on which the policy ends.
Grace Period
A period (usually 30 or 31 days) following each insurance premium due date, other
than the first due date, during which an overdue premium may be paid. All provisions
of the policy remain in force throughout this period.
Limit
It's the maximum amount paid by the insurance company under the terms of a policy.
Underwriting

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 The process of classifying applicants for insurance by identifying characteristics such
as age, gender, health, occupation and hobbies. People with similar characteristics are
grouped together and are charged a premium based on the group's level of risk.

REQUIREMENTS OF AN INSURABLE RISK

1) From the perspective of the insured:

The risk must be high. Losses with extremely high odds and extremely low odds
might best be handled in other ways.

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 The loss must be unaffordable.
The premium must be affordable or, at least, low in comparison with the possible loss.

2. From the perspective of the insurer:

The loss must be fortuitous (unexpected in terms of timing and magnitude).

The loss must non-catastrophic with neither the possibility of many losses at one time
or any one loss of overwhelming magnitude.The losses must be personal because only
people can suffer losses.
The loss must be definite in time, place and amount. This allows for a reasonably
accurate prediction of loss and thus calculation of premium.

CONCEPT OF INSURABLE INTEREST

The insured party must have an insurable interest in the person or property
covered.This means that he or she must stand to suffer a loss should the peril occur.
Generally, insurable interest must exist at the time that the loss occurs.

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 Requiring insurance supports the principle of indemnity, which states that an insured
should collect no more than the actual loss.

CONCEPT OF INSURANCE INDUSTRY

The important feature of insurance industry is the fact that not much capital is required to
start and develop the business the equity base is always much smaller than the liabilities
undertaken and the resources generated. The resources accumulation in the form of reserves
Investment and other assets are much more enormous than the equity base. The need for
additional capital infusion in response to inflation and consequent increase in management
expenses and other input is very little and non-existence. The premium income generated and
proper husbanding of the resources take care of this aspect.

WHY DO PEOPLE IN INDIA TAKE INSURANCE?

People in India have been viewing Insurance, especially life insurance as a form of
Investment . These are the common reasons why people in India take up insurance:

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Insurance safeguards a person /his family /his business against possible losses on account of
risks and perils. It provides financial compensation for the losses suffered due to the
happening of any unforeseen events.

Under Section 88 of Income Tax Act , a portion of premiums paid for life insurance
policies (LIC) are deducted from tax liability. Similarly, exemption is available for
Health Insurance Policy premiums.
Money paid as claim including Bonus under a life policy is exempted from payment
of Income Tax.
Encourages Savings : An insurance scheme encourages thrift among individuals. It
inculcates the habit of saving compulsorily, unlike other saving instruments,wherein
the saved money can be easily withdrawn.
The beneficiaries to an insurance claim amount are protected from the claims of
creditors by affecting a valid assignment.

CONSUMER NEEDS AND PREFERENCES

The growth in insurance industry has been spurred byproduct innovation, vibrant distribution
channels, coupled with targeted publicity and promotional campaigns by the insurers.

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Innovation has come not only in the form of benefits attached to the products, but also in the
delivery mechanism through various marketing tie-ups both within the realm of financial
services and outside. All these efforts have brought insurance closer to the customer as well
as made it more relevant. One of the crucial areas in the insurance sector is the adoption of
new technology in the industry. It is an accepted fact that the insurance business is
technology-driven. It has the potential to save costs, and hence, the scope for reducing the
price of product. The coming years will witness a total revolution in the ways of doing
business. E-commerce will be increasingly used in all the sectors, including banks and
insurance and products will be sold on the internet. Insurance plans for children are fast
becoming popular, as they not only offer payouts that can be timed to coincide with certain
milestones in a childs life, but also financial security if the parent dies. All the life insurance
companies are now expressing a keen inclination toward childrens insurance plans and are
willing to come out with new innovative product lines in the future. According to industry
estimates, 20%30% of the business of many companiescurrently comes from children-
specific insurance policies alone. Emerging lifestyle trends amid a changing fabric of the
Indian society have also modified social and financial behavior. For instance, an increase in
the number of working women has led to a demand for life insurance policies, which in turn
has helped women through a micro-entrepreneurship initiative. Project insurance is another
area, which is increasingly gaining significant traction. This type of insurance has been
prevalent for decades for those who undertake diverse and risky projects, whether
government, public sector orprivate sector. With the new developments, particularly.

Indian insurance sector: stepping into the next decade of growth in the economic and
industrial areas, apart from projects such manufacturing units, sales units and medium-sized
factories, a large number of infrastructure projects such

as constructing roads, canals, flyovers and bridges, and industrial units are coming up in
significant numbers. There is, therefore, immense potential for this class of insurance. ULIP
is one of the most successful innovative products in India. As a product, ULIP gained
popularity post 2003, with an evolving market opportunity on the back of a booming equity
market, low household equity penetration and heavy channel incentivization. Product
innovation is likely to continue and traditional policies are set to gain some foothold in an
otherwise ULIP-driven market. Insurance companies are now coming up with usage-based
insurance, also known as pay-as-you-drive, which is a type of automobile insurance, whereby

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the costs of auto insurance depend upon the type of vehicle used, measured against time,
distance and place. This differs from traditional insurance, which attempts to differentiate
and reward safe drivers, giving them lower premiums and/or a no-claims bonus.The
evolving customer preferences and the need fordeveloping customized products is the new
mantra of

growth, which most companies are following. In line with the product philosophy to
introduce an innovative range of products that are most suitable to different customer needs,
companies are introducing more customer-friendly products. The role of customized products
is also seen in providing a competitive advantage.

TYPES OF INSURANCE

Insurance has been classified into:

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 Life Insurance
General Insurance or Non-Life insurance

LIFE INSURANCE

Life insurance is a written contract between the insured and the insurer, that provides for the
payment of the insured sum on the date of the maturity of the contract or on the unfortunate
death of the insured, whichever occurs earlier.

The different types of life insurance are:

Whole Life Assurance Plans

Term Assurance Plans
Annuities

NON LIFE INSURANCE

There are various broad categories of non-life or general Insurance as follows:

Health Insurance:

Just like one looks to safeguard ones wealth, these policies ensure guarding the insurer's
health against any calamities that may cause long term harm to ones life and even hamper
ones earning ability for a lifetime. Some examples of this type of policy are mediclaim
policy, personal accident, group accident, traffic accident, etc.

Business Insurance:

Risks of loss of profits/business, goods, plant and machinery are most profound in case of
business. Under this head they cover the most widely used policies that cover a business from
any loss of the above kind. Some of these policies are burglary insurance, shopkeepers
insurance, key-man insurance, marine insurance, public liability insurance, workmen
compensation insurance, air transit insurance, fidelity guarantee insurance etc.

Automobile Insurance:

Auto Policy is required to be taken to cover the risks that arise to the owner, vehicle and third
party. This includes the Compulsory Vehicle Policy (In India, by the Motor Vehicles Act,

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every car owner is required to covered against Act risks) and the Comprehensive Vehicle
Policy.

Fire Insurance:

This policy is required to be taken to prevent any loss of profits property from incidental fire.
Eg: fire insurance and fire consequential loss policy.

Travel Insurance:

Every year number of tourists die while travelling. They lose their baggages, passports etc are
left stranded in unfamiliar environments. Medical attention in a foreign land while very
expensive is also very difficult to find in foreign land. Travel policies are designed to take
care of all the problems that generally occur while travelling, whether domestic or foreign.

BRIEF HISTORY OF THE INSURANCE SECTOR IN INDIA

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The insurance sector in India has come a full circle from being an open competitive market to
nationalisation and back to a liberalised market again. Tracing the developments in the Indian
insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.

Till the end of 1999-2000, two government insurance companies, namely, Life Insurance
Corporation (LIC) and General Insurance Corporation (GIC) were the monopoly insurance
(both life and non-life) providers in India.

In the year 2000-01, the Indian Government lifted all entry restrictions for private sector
investors. Foreign investment insurance market was also allowed in the Indian market and the
face of the Indian Insurance sector changed dramatically. We will first take a brief look at the
old players in the market and understand the position they were in before the opening up of
the Insurance Sector.

LIFE INSURANCE CORPORATION OF INDIA (LIC)

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In 1956, 245 Indian and foreign insurers and provident societies that were prevalent in India
were taken over by the central government and nationalised to form the Life Insurance
Corporation of India (LIC) with a contribution of Rs. 5 crore from the Government of India.
LIC was formed to spread the message of life insurance in the country and mobilise people's
savings for nation-building activities. A monolith then, the corporation, enjoyed a monopoly
status and became synonymous with life insurance.

Today LIC has its central office in Mumbai and seven zonal offices at Mumbai, Calcutta,
Delhi, Chennai, Hyderabad, Kanpur and Bhopal and operates through 100 divisional offices
in important cities and 2,048 branch offices. LIC has 5.59 lakh active agents spread over the
country. The Corporation also transacts business abroad and has offices in Fiji, Mauritius and
United Kingdom. LIC is associated with joint ventures abroad in the field of insurance,
namely, Ken-India Assurance Company Limited, Nairobi; United Oriental Assurance
Company Limited, Kuala Lumpur; and Life Insurance Corporation (International), E.C.
Bahrain. It has also entered into an agreement with the Sun Life (UK) for marketing unit
linked life insurance and pension policies in U.K LIC sold 2,32,50,078 individual policies
and earned a first premium income of Rs.14,844.05 crore during the financial year 2001-02.
Post liberalisation, the company is bound to face stiff competition from the newer players in
the market. However, LIC has the first mover advantage and today the common man relates
life insurance with LIC and this will be the companies biggest advantage.

GENERAL INSURANCE CORPORATION OF INDIA (GIC)

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The General Insurance business in India was nationalized with effect from 1.1.1973 by the
General Insurance Business (Nationalization) Act, 1972 and a Government company known
as General Insurance Corporation of India was formed. 107 Indian and foreign insurers which
were operating in the country prior to nationalisation, were grouped into four operating
companies namely :

1. National Insurance Company Ltd.

2. Oriental Insurance Company Ltd.

3. New India Assurance Company Ltd.

4. United India Insurance Company Ltd.

The Government of India subscribed to the capital of GIC. GIC, in turn, subscribed to the
capital of the above four companies. All the four companies are government companies
registered under the Companies Act. All the above four subsidiaries of GIC operate all over
the country competing with one another and underwriting various classes of general
insurance business except for aviation insurance of national airlines and crop insurance which
is handled by the GIC and its subsidiaries have representation either directly or through
branches in 18 countries and through associate/ locally incorporated subsidiaries in 14 other
countries. A subsidiary company of GIC India International Pvt. Ltd. is operating in
Singapore and their joint venture company, Kenindia Assurance Company Ltd. in Kenya. On
the whole, the foreign operations of the general insurance industry have been profitable. GIC
was converted into India's national reinsurer from December, 2000 and all the subsidiaries
working under the GIC umbrella were restructured as independent insurance companies.
Indian Parliament has cleared a Bill on July 30,2002 delinking the four subsidiaries from
GIC. A separate Bill has been approved by Parliament to allow brokers, cooperatives and
intermediaries in the sector.

Currently insurance companies- both private and public-- has to cede 20 percent of its
reinsurance with GIC. GIC is planning to increase reinsurance premium by 20 percent which
works out at Rs. 3000 cr. GIC is actively considering entry into overseas markets including
West Asia, South-east Asia and SAARC region.

REASONS FOR OPENING UP OF THE SECTOR

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INDUCE COMPETITION

It was seen that though the waves of competition were sweeping across the economy, LIC
and GIC remain overstaffed, hierarchial monolithic monopolies with little competition even
between the subsidiaries. As a result, the consumers are deprived of benefits such as wider
range of products, efficient service and lower price of insurance covers.

LIBERALISATION EFFORT

The opening up of Insurance sector was a part of the on going liberalization in the financial
sector of India. The changing face of the financial sector and the entry of several companies
in the field of life and non life Insurance segment are one of the key results of these
liberalization efforts. Insurance business by way of generating premium income adds
significantly to the GDP.

HIGH PREMIUM AND LOW RETURNS

Pointing out that the insurance industry's funds are preempted through government-mandated
investments with low yield, the report said this affects the financial results of the insurance
companies. This is why rates of insurance premia are so high and returns on savings invested
in life insurance are so low. In the absence of competition, LIC's vast marketing and services
network was inadequately responsive to customer needs and there was excessive lapsation of
policies.

INSURANCE MOBILISATION

The entry of several private insurance companies, particularly international insurance

companies, through joint ventures, will speed up the process of insurance mobilisation. The
competition will unleash new schemes and benefits, which will give consumers a better
chance to save as well as insure. The penetration of Insurance in India is extremely low and
the opening up of the sector was seen as a way increasing penetration.

FLOW OF FDI

The policy of the government to open up the financial sector and the Insurance sector is
expected to bring greater FDI inflow in to the country.

POTENTIAL OF THE INSURANCE SECTOR IN INDIA

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LIFE INSURANCE STATISTICS

Indian Population 1 bn GDP as on 2000 (Rs billion) 20000

Gross Domestic Savings as a % of GDP 23%

Estimated Market by 2005 650 million

India has an enormous middle-class that can afford to buy life, health, and disability and
pension plan products. The low level of penetration of life insurance in India compared to
other developed nations can be judged by a comparison of per capita life premium. Despite
the fact that the market is vast in India for the Insurance business, the coverage is far less
compared with the international standards. Estimates show that a meagre 35-40 million, out
of a population of 950 million, have come so far under the umbrella of the insurance industry.
India has traditionally been a high savings oriented. Insurance sector in the Unites States is as
big in size as the banking industry there. This gives us an idea of how important the sector is.
Insurance sector channelises the savings of the people to long term investments. In India
where infrastructure is said to be of critical importance, this sector will bring the nations own
money for the nation.

Life Insurance sector is one of the key areas where enormous business potential exists. In
India currently the life insurance premium as a percentage of GDP is 1.3 percentage against
5.2 per cent in the US. But in the liberalized scenario, the life insurance premiums were
projected to grow at around 18% to 20% from Rs. 215 billion in 1998- 99 to Rs.592 billion in
2004-05 and to Rs.1450 billion by 2009-10. Corporate non-life premium was projected to
grow from Rs.84 billion in 1998-99 to Rs.386 billion in 2009-10 and personal line non-life
from Rs.4 billion to Rs.51 billion.

The potential market is so huge that it can grow by 15 to 17 per cent per annum. Now with
the entry of private insurance companies, the Indian Insurance Market may finally be able to
make deeper penetration into newer segments and expand the market size manifold.

REGULATORY AUTHORITY

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 INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

IRDA is formed as an authority to protect the interests of holders of insurance

policies, to regulate, promote and ensure orderly growth of the insurance industry.
With the Insurance Regulatory and Development Act, the focus shifted to the
following:
The Insurance Regulatory and Development Authority (IRDA) should give priority to
health insurance while issuing certificates of registration.
Policyholders' funds will be invested in the social sector and infrastructure. The
percentage may be specified by the IRDA and such regulations will apply to all
insurers operating in the Country.
Insurers will be expected to undertake a certain percentage of business in the rural or
social sector and provide policies to persons residing in rural areas, workers in the
unorganised and informal economically back.
In case the insurers fail to meet the social sector obligation a fine of Rs.2.5 mn would
be imposed the first time. Subsequent failures would result in cancellation of licenses.

DUTIES, POWERS AND FUNCTIONS OF IRDA

The following are the powers and the functions of the IRDA are as follows:

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 The IRDA issues, modifies, renews, suspends, withdraws and cancels all certificate of
registration for all parties that apply.
They are also responsible for the protection of the interests of the policy holders in
matters concerning assigning of policy, nomination by policy holders, insurable
interest, settlement of insurance claim, surrender value of policy and other terms and
conditions of contracts of insurance.
The IRDA specifies requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents.
It also specifies the code of conduct for surveyors and loss assessors.
The IRDA has been given the responsibility of promoting efficiency in the conduct of
insurance business.
It is in charge of promoting and regulating professional organisations connected with
the insurance and reinsurance business.
It has been entrusted with the control of the Insurance sector by calling for
information from,undertaking inspection of, conducting inquires and investigations
including audit of the insurers, intermediaries, insurance intermediaries and other
organisations connected with the insurance business.
It will also be responsible for the control and regulation of the rates, advantages,
terms and conditions that may be offered by insurers.
The IRDA will specify the form and manner in which books of account shall
bemaintained and statement of accounts shall be rendered by insurers and other
insurance intermediaries.
One of the most important functions is that of regulating investment of funds by
insurance companies and the maintenance of margin of solvency.
The other function is that of adjudication of disputes between insurers and
intermediaries or insurance intermediaries.

CURRENT PLAYERS

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In the first year of insurance market liberalisation (April 2-December 31, 2001) as much as
16 private sector companies including joint ventures with leading foreign insurance
companies have entered the Indian insurance sector. Of this, 10 were under the life insurance
category and six under general insurance. Since then, till June, 2002 two more joined the life
insurance sector. Thus in all there are 18 players (12 life insurance and 6 general insurance) in
the Indian insurance industry till date.

Life Insurance Companies:

Life Insurance Corporation of India

ICICI Prudential
HDFC Standard Life Insurance
Max New York Life
Birla Sun Life Insurance
SBI Life
Tata AIG Insurance
ING Vysya Life Insurance
Allianz Bajaj
Amp Sanmar
Old Kotak Mahindra Life
MetLife India Insurance

General Insurance Companies:

Bajaj Allianz General Insurance Co. Ltd

ICICI Limited
IFFCO-TOKIO General Insurance

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 National Insurance
New India Insurance
United Insurance
Oriental Insurance
Royal Sundaram
TATA AIG Insurance

FOCUS ON FINANCIAL INCLUSION

The approach to insurance must be in sync with the evolving times. The mission of the
insurance sector in India should be to extend the insurance coverage over a larger section of
the population and a wider segment of activities. Around 40% of the population does not have

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access to the organized financial services sector in India. There is a significant demand for
these services in excluded regions where it is difficult to provide these financial services.

Therefore, a large section of the excluded population has to rely on the informal sector
(moneylenders etc) for availing finance that is usually available at exorbitant rates. Apart
from the obvious and apparent benefits of improving living standards, financial inclusion has
a multiplier effect. By increasing the number of people in the umbrella, the value of the entire
national financial system increases. The consequent fuller participation by all in the financial
system makes monetary policy more effective, and thus provides an enabling environment for
non-inflationary sustainable economic growth.

Despite a robust growth of 30%40% in premiums during 20032008, the per capita
insurance premium is also low due to a large population base and the financial exclusion of a
large section of this population.

Need to increase financial inclusion in India

Since economic liberalization started in 1990s in India, financial inclusion has been at the
forefront of policy makers to ensure that the benefit of economic growth percolates down to
the poorest of the poor. The Eleventh Five Year Plan puts special emphasis to promote more
inclusive growth in the financial services sector. The need for the delivery of financial
services at an affordable cost to vast sections of disadvantaged and low-income groups is on
the rise. Financial inclusion is likely to increase in the light of limited social security by the
government. In India, the government provides very limited social security to its citizens as
reflected in the fact that less than 4% of the population is covered under any of the social
security schemes.

Further, the self-employed or those working for small enterprises are exempt from
contributing to the employees provident fund and need to make their own arrangements

for savings and a protection cover.

In the light of the need of protection instruments, there may be an expected increase in the
demand for financial products in the years to come.

DISTRIBUTION CHANNELS

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In the liberalized insurance market, there will be multiple distribution channels, which will
include agents, brokers, corporate intermediaries, bank branches, affinity groups and direct
marketing through telesales and Internet. Some channels will be cheaper than others. Hence
there will be competition among the channels. The new insurers will operate with the help of
multiple distribution channels but the existing insurers may be forced to operate only with the
help of agents. Hence, intense competition will grow among the old and new insurers in the
market to win the consumers. Firms will need to forge relationships with the partners for
strategic advantage. They need to have strong partner relationship management. For example,
local partners may have strong distribution channel in their line of business. That can be used
to sell insurance also in a cost-effective manner. All these will pose a great challenge to the
insurers in the liberalized insurance market.

DISTRIBUTION THROUGH BANKS

Distribution of insurance products through banks are considered to be the most popular banks
are considered to be the most popular medium as the private players prefer to utilise the wide
network of banks for the distribution of insurance policies in India. Like in the European
market, bancassurance can be an effective channel. In countries like Italy, France and Spain,
insurance companies have taken advantage of customers' typical loyalty to single banks and
pattern of long-term banking relationships by successfully selling their products through
these banks. Here banks can leverage their existing resources and earn supplementary fees
while widening their range of available services. In the face of strong profitability pressures
in their traditional banking services, banks will likely seize upon opportunities to expand their
offerings by including insurance products.

DISTRIBUTION THROUGH INSURANCE AGENTS

Insurance agents and development officers provide another vital link in insurance selling and
various surveys have proven this aspect. These intermediaries help the insurance companies
to keep in touch with policyholders, assist claimants, and act as advisors to those who invest

their claim proceeds.

NEW CHANNELS

Other approaches, like call-center, direct marketing, and the Internet will grow dramatically
in importance over the next several years. These ensure direct contact with the customers. It

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will enable firms to acquire, retain and build loyalty among customers while lowering
transaction costs. To make multiple channel delivery work, all channels must be integrated
tightly to deliver on the promise of service anytime, anywhere. Information gathered by each
channel must be combined to provide a consolidated view of the customer relationship and
identify likely financial needs. The online media is definitely considered to be one of the
most effective modes of distribution as a number of websites have already started offering
policies online. At present, 12 per cent of the world's insurance products are sold through the
Internet, a figure likely to grow exponentially with a likely increase in customer usage of the
Internet for their own research and product comparisons. Extensive use of information
technology can make the role of these intermediaries more effective and buyer-friendly.

CHALLENGES BEFORE THE INDUSTRY

The new as well as the old insurers will have to face a number of challenges in the liberalized
market.

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New Insurers

The new insurers will have to invest a minimum capital of Rs. 100 crores. The normal
gestation period is of five years. The generation of profit normally starts in the sixth year.
Hence the new insurers will have to be ready for locking up their capital for at least 5 years
before earning any profits. Besides they will face problems of shortage of trained manpower
for the insurance industry. The setting up of various offices and distribution network is a time
consuming process. Further the new insurers will have to compete with the established
insurance companies like LIC and GIC which have a corporate image and market presence
for several years.

Expectation of the consumers

Today LIC has more than 60 products and GIC has more than 180 products to offer in the
market. But most of them are outdated, as they are not suitable to the needs of the consumers.
Hence old as well as new insurers will have to offer innovative products to the consumers.
The consumers are particularly expecting good pension plans, health insurance, term
insurance and investment products like unit-linked insurance, from the life insurers. Similarly
the consumers expect innovative products from the general insurers for managing healthcare,
property insurance, accident insurance and other products related to the personal line of
insurance. The consumers also expect reduction in the premium of the insurance products as
the mortality rate in India has come down by three times in the last 50 years.

Distribution Channel

In the liberalized insurance market, there will be multiple distribution channels, which will
include agents, brokers, corporate intermediaries, bank branches, affinity groups and direct
marketing through telesales and Internet. Some channels will be cheaper than others. Hence
there will be competition among the channels. The new insurers will operate with the help of
multiple distribution channels but the existing insurers may be forced to operate only with the
help of agents. Hence, intense competition will grow among the old and new insurers in the
market to win the consumers. This will pose a great challenge to the insurers in the liberalized
insurance market.

Consumer Education

Page 26
Very soon the market will be flooded by a large number of products by a fairly large number
of insurers operating in the Indian market. Even with limited range of products offered by
LIC and GIC, the consumers are confused in the market. Their confusion will further increase
in the face of a large number of products in the market. The existing level of awareness of the
consumers for insurance products is very low, it is so because only 62% of the population of
India is literate and less than 10% well educated. Even the educated consumers are ignorant
about the various products of insurance. Hence it is necessary that all the insurers should
undertake the extensive plan for education of consumers. The consumer organizations and the
media also can play very important role in education of the consumers. This will result in
expansion of the insurance market and will also enable the needy consumer to purchase
appropriate products.

Consumer Grievance Redressal

The insurers will have to face an acute problem of the redressal of the consumers, grievances
for deficiency in products and services. The Insurance Regulatory Development Authority
(IRDA), the regulatory body has already appointed Ombudsman for looking into the
grievances of the policyholders, his judgement will be binding on insurers. Further, under
Consumer Protection Act 1986, the consumer courts are operating at district, state and the
national level.

CURRENT SCENARIO OF INSURANCE INDUSTRY

Introduction

Page 27
The insurance industry of India consists of 53 insurance companies of which 24 are in life
insurance business and 29 are non-life insurers. Among the life insurers, Life Insurance
Corporation (LIC) is the sole public sector company. Apart from that, among the non-life
insurers there are six public sector insurers. In addition to these, there is sole national re-
insurer, namely, General Insurance Corporation of India (GIC Re). Other stakeholders in
Indian Insurance market include agents (individual and corporate), brokers, surveyors and
third party administrators servicing health insurance claims.

Out of 29 non-life insurance companies, five private sector insurers are registered to
underwrite policies exclusively in health, personal accident and travel insurance segments.
They are Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance
Company Ltd, Max Bupa Health Insurance Company Ltd, Religare Health Insurance
Company Ltd and Cigna TTK Health Insurance Company Ltd. There are two more
specialised insurers belonging to public sector, namely, Export Credit Guarantee Corporation
of India for Credit Insurance and Agriculture Insurance Company Ltd for crop insurance.

Market Size

Government's policy of insuring the uninsured has gradually pushed insurance penetration in
the country and proliferation of insurance schemes are expected to catapult this key ratio
beyond 4 per cent mark by the end of this year, reveals the ASSOCHAM latest paper.

The number of lives covered under Health Insurance policies during 2015-16 was 36 crore
which is approximately 30 per cent of India's total population. The number has seen an
increase every subsequent year as 28.80 crore people had the policy in the previous fiscal.

During April 2015 to March 2016 period, the life insurance industry recorded a new premium
income of Rs 1.38 trillion (US$ 20.54 billion), indicating a growth rate of 22.5 per cent. The
general insurance industry recorded a 12 per cent growth in Gross Direct Premium
underwritten in April 2016 at Rs 105.25 billion (US$ 1.55 billion). The life insurance
industry reported 9 per cent increase in overall annual premium equivalent in April-
November 2016. In the period, overall annual premium equivalent (APE)- a measure to
normalise policy premium into the equivalent of regular annual premium- including
individual and group business for private players was up 16 per cent to Rs 1,25,563 crore
(US$ 18.76 billion) and Life Insurance Corporation up 4 per cent to Rs 1,50,456 crore (US$
22.48).

Page 28
Indias life insurance sector is the biggest in the world with about 360 million policies which
are expected to increase at a Compound Annual Growth Rate (CAGR) of 12-15 per cent over
the next five years. The insurance industry plans to hike penetration levels to five per cent by
2020.

The countrys insurance market is expected to quadruple in size over the next 10 years from
its current size of US$ 60 billion. During this period, the life insurance market is slated to
cross US$ 160 billion.

The general insurance business in India is currently at Rs 78,000 crore (US$ 11.44 billion)
premium per annum industry and is growing at a healthy rate of 17 per cent.

The Indian insurance market is a huge business opportunity waiting to be harnessed. India
currently accounts for less than 1.5 per cent of the worlds total insurance premiums and
about 2 per cent of the worlds life insurance premiums despite being the second most
populous nation. The country is the fifteenth largest insurance market in the world in terms of
premium volume, and has the potential to grow exponentially in the coming years.

Investments

The following are some of the major investments and developments in the Indian insurance
sector.

New York Life Insurance Company, the largest life insurance company in the US, has
invested INR 121 crore (US$ 18.15 million) in Max Ventures and Industries Ltd for a
22.52 per cent stake, which will be used by Max for investing in new focus areas of
education and real estate.

New York Life Investments, the global asset management division of New York Life,
along with other investors like Jacob Ballas, will own a significant minority
ownership in Centrum Capital by being one of the leading global investors in buying
the available 30 per cent stake worth US$ 50 million of Centrum Capital.

Max Life Insurance Co Ltd and HDFC Life Insurance Co Ltd have signed a merger
agreement, which is expected to create India's largest private sector life insurance
company once the transaction is completed.

Page 29
 Aviva Plc, the UK-based Insurance company, has acquired an additional 23 per cent
stake in Aviva Life Insurance Company India from the joint venture (JV) partner
Dabur Invest Corporation for Rs 940 crore (US$ 141.3 million), thereby increasing
their stake to 49 per cent in the company.

Insurance firm AIA Group Ltd has decided to increase its stake in Tata AIA Life
Insurance Co Ltd, a joint venture owned by Tata Sons Ltd and AIA Group from 26 per
cent to 49 per cent.

Canada-based Sun Life Financial Inc plans to increase its stake from 26 per cent to 49
per cent in Birla Sun Life Insurance Co Ltd, a joint venture with Aditya Birla Nuvo
Ltd, through buying of shares worth Rs 1,664 crore (US$ 244.14 million).

Nippon Life Insurance, Japans second largest life insurance company, has signed
definitive agreements to invest Rs 2,265 crore (US$ 332.32 million) in order to
increase its stake in Reliance Life Insurance from 26 per cent to 49 per cent.

Bennett Coleman and Co. Ltd (BCCL), the media conglomerate with multiple
publications in several languages across India, is set to buy Religare Enterprises Ltds
entire 44 per cent stake in life insurance joint venture Aegon Religare Life Insurance
Co. Ltd. The foreign partner Aegon is set to increase its stake in the joint venture from
26 per cent to 49 per cent, following governments reform measure allowing the
increase in stake holding by foreign companies in the insurance sector.

GIC Re and 11 other non-life insurers have jointly formed the India Nuclear Insurance
Pool with a capacity of Rs 1,500 crore (US$ 220.08 million) and will provide the risk
transfer mechanism to the operators and suppliers under the CLND Act.

State Bank of India has announced that BNP Paribas Cardiff is keen to increase its
stake in SBI Life Insurance from 26 per cent to 36 per cent. Once the foreign joint
venture partner increases its stake to 36 per cent, SBIs stake in SBI Life will get
diluted to 64 per cent.

Government Initiatives

The Union Budget of 2017-18 has made the following provisions for the Insurance Sector:

Page 30
 The Budget has made provisions for paying huge subsidies in the premiums of
Pradhan Mantri Fasal Bima Yojana (PMFBY) and the number of beneficiaries will
increase to 50 per cent in the next two years from the present level of 20 per cent. As
part of PMFBY, Rs 9,000 crore (US$ 1.35 billion) has been allocated for crop
insurance in 2017-18.

By providing tax relief to citizens earning up to Rs 5 lakh (US$ 7500), the

government will be able to increase the number of taxpayers. Life insurers will be
able to sell them insurance products, to further reduce their tax burden in future. As
many of these people were understating their incomes, they were not able to get
adequate insurance cover.

Demand for insurance products may rise as peoples preference shifts from formal
investment products post demonetisation.

The Budget has attempted to hasten the implementation of the Digital India initiative.
As people in rural areas become more tech savvy, they will use digital channels of
insurers to buy policies.

The Government of India has taken a number of initiatives to boost the insurance industry.
Some of them are as follows:

The Union Cabinet has approved the public listing of five Government-owned general
insurance companies and reducing the Governments stake to 75 per cent from 100
per cent, which is expected to bring higher levels of transparency and accountability,
and enable the companies to raise resources from the capital market to meet their fund
requirements.

The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue
redesigned initial public offering (IPO) guidelines for insurance companies in India,
which are to looking to divest equity through the IPO route.

IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1)
bonds that are issued by banks to augment their tier 1 capital, in order to expand the
pool of eligible investors for the banks.

Page 31
 IRDAI has formed two committees to explore and suggest ways to promote e-
commerce in the sector in order to increase insurance penetration and bring financial
inclusion.

IRDAI has formulated a draft regulation, IRDAI (Obligations of Insures to Rural and
Social Sectors) Regulations, 2015, in pursuance of the amendments brought about
under section 32 B of the Insurance Laws (Amendment) Act, 2015. These regulations
impose obligations on insurers towards providing insurance cover to the rural and
economically weaker sections of the population.

The Government of Assam has launched the Atal-Amrit Abhiyan health insurance
scheme, which would offer comprehensive coverage for six disease groups to below-
poverty line (BPL) and above-poverty line (APL) families, with annual income below
Rs 500,000 (US$ 7,500).

The Uttar Pradesh government has launched a first of its kind banking and insurance
services helpline for farmers where individuals can lodge their complaints on a toll
free number.

The select committee of the Rajya Sabha gave its approval to increase stake of foreign
investors to 49 per cent equity investment in insurance companies.

Government of India has launched an insurance pool to the tune of Rs 1,500 crore
(US$ 220.08 million) which is mandatory under the Civil Liability for Nuclear
Damage Act (CLND) in a bid to offset financial burden of foreign nuclear suppliers.

Foreign Investment Promotion Board (FIPB) has cleared 15 Foreign Direct

Investment (FDI) proposals including large investments in the insurance sector by
Nippon Life Insurance, AIA International, Sun Life and Aviva Life leading to a
cumulative investment of Rs 7,262 crore (US$ 1.09 billion).

IRDAI has given initial approval to open branches in India to Switzerland-based

Swiss Re, French-based Scor SE, and two Germany-based reinsurers namely,
Hannover Re and Munich Re.

ADVANTAGES AND DISADVANTAGES

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Human beings are exposed to different types of risks such as loss of property by fire, theft,
accident, untimely death of the earning persons, professional or business failure etc. Such
risks may cause a large scale financial losses. It is not possible to eliminate such risks but can
be reduced and or recovered. It is insurance which bears the risks and assures the recovery of
the financial losses so caused.

The concept of insurance may be illustrated with the help of the following example. Suppose
that, in a village there are 100 houses with the monetary value within the range of $400 to
$60. As the experience of the past, there is a probability of falling average 2 houses into fire
each year.

Every house is exposed to this risk and thus every family is likely to suffer from a loss of
around $50 each year. Therefore, all the houses may raise a common fund by collecting a
certain amount say $20 per annum per house/family so that the two householders who fall
under fire can be financially compensated.

Insurance is a means of compensating the probable losses caused by any uncertain events in
consideration to the payment of a certain fees called premium.

In order to understand the concept of insurance you should be familiar to the following
terms.

Insured
The person or party who seeks protection against a particular risk and pays a certain
amount in consideration to the recovery of the financial loss is known as insured.

Insurer
The party (i.e insurance company) which undertakes to protect the insured from the
specified risks and the loss so caused in consideration to a certain premium received
from the insured is known as insurer.

Premium
It is the fees paid by the insured to the insurer as the consideration of the insurance
contract for the assurance of the recovery of financial loss so caused.

Insured amount

Page 33
 It is the agreed financial value of the future loss caused by certain events. Insurance is
made for the recovery of this value.

Insurance policy

It is the contract between the insured and the insurer containing the details of the
terms and conditions of a certain insurance.

From the study of the above meaning and definition, insurance may be considered to
be a better means of shifting and dividing the business risks. Hence, insurance may be
defined as a contract between the insured and insurer by which the later undertakes or
compensate the former with a fixed sum of money as the recovery of the pre decided
financial loss in consideration to a certain premium. Nowadays, insurance has become
a business and it is initiated by insurance companies.

Page 34
 EDUCATION SECTOR IN INDIA

India's Education Sector

The typical Indian classroom was once characterized by students sitting through hour-long
teacher monologues. Now, technology is making life easier for both students and educators.
Schools are increasingly adopting digital teaching solutions to engage with a generation of
pupils well-versed with the likes of PlayStations and iPads, and trying to make the classroom
environment more inclusive and participatory.

Take Smartclass from Educomp Solutions, one of the first Indian companies in this space.
Smartclass is essentially a digital content library of curriculum-mapped, multimedia-rich, 3D
content. It also enables teachers to quickly assess how much of a particular lesson students
have been able to assimilate during the class. Once a topic is covered, the teacher gives the
class a set of questions on a large screen. Each student then answers via a personal answering
device or the smart assessment system. The teacher gets the scores right away and based on
that, she repeats parts of the lesson that the students don't appear to have grasped.

When we launched Smartclass in 2004 as the first-ever digital classroom program, it was an
uphill task convincing schools to adopt it," Dhar notes. "These schools had not witnessed any
change in a century.... It is a completely different scenario now. Private schools across India
today see [technology] as an imperative. A digital classroom is set to become the bare-
minimum teaching accessory in schools, just like a blackboard is today."

Dhar recalls that one major roadblock for Educomp's proposition in the early days was on the
price front. At US$4,000 (at the exchange rate of Rs. 50 to a U.S. dollar) per classroom,
schools found the product very expensive. To get over this hurdle, Educomp quickly decided
to make the initial investment and gave the schools an option to pay over a period of three to
five years. The strategy worked. Enthused by the market response, in January Educomp
launched an upgraded version -- the Smartclass Class Transformation System -- with more
features, including simulations, mind maps, worksheets, web links, a diagram maker, graphic
organizers and assessment tools.

Page 35
Huge Potential

According to the "Indian Education Sector Outlook -- Insights on Schooling Segment," a

report released by New Delhi--based research and consultancy firm Technopak Advisors in
May, the total number of schools in India stands at 1.3 million. Of these, private schools
account for 20%. Educomp's Dhar points out that only around 10% of the private schools
have tapped the potential of multimedia classroom teaching whereas in government schools,
it has barely made any inroads.

"The current market size for digitized school products in private schools is around US$500
million," says Enayet Kabir, associate director for education at Technopak. "This is expected
to grow at a CAGR [compound annual growth rate] of 20% to reach the over US$2 billion
mark by 2020. However, the market potential then might get as big as US$4 billion [i.e. if the
total population of private schools that could adopt multimedia actually adopt it.] Apart from
this, the current market size for ICT [information and communications technology] in
government schools is US$750 million. We expect this to grow five times by 2020 due to the
current low level of penetration in government schools."

In order to make its offering attractive to the schools, Pearson has devised a monthly payment
model under which a school pays around US$2 per student per month. "As the price point is
affordable, schools across all locations and fee structures find it viable to opt for our
solution," Iyer notes. "We focus on tier two and tier three towns and cities where penetration
is relatively low and desire for adoption of technology is high." HCL's Digischool program,
which launched about 18 months ago, has also made a strong beginning, with a client base of
more than 2,500 schools.

Partnering with State Governments

Meanwhile, state governments are also giving a boost to the adoption of technology in
schools. Edureach, a divison of Educomp, has partnered with 16 state governments and more
than 30 education departments and boards in the country, covering over 36,000 government
schools and reaching out to more than 10.60 million students. "Edureach leads the market
with 27% of the total schools where ICT projects have been implemented," says Soumya
Kanti, president of Edureach. "We are looking [to add] 3,000 more schools this fiscal year

Page 36
and 20,000 to 25,000 additional schools in the next five years." As of now, Edureach has
created digital learning content in more than 14 regional languages for these projects.

In the northern state of Haryana, CORE Education and Technologies is implementing a

US$59 million ICT project that aims to benefit 5 million students across 2,622 schools. Five
of these schools will be developed as "Smart" schools. CORE is also implementing ICT
projects in the states of Gujarat, Meghalaya, Punjab, Maharashtra and Nagaland. The scope of
work in these projects ranges from implementation of computer-aided learning in schools,
installing bio-metric devices to monitor attendance of teachers, and setting up computer
hardware, software and other allied accessories and equipments.

"The task has not been an easy one," admits Anshul Sonak, president of CORE. "There are
several logistical issues. Delivery of equipment to rural areas is a big challenge in itself....
There is lack of basic infrastructure -- either there are no classrooms or there are ones with no
windows.... Some schools don't even have toilets. Moreover, the power availability in these
areas is often poor and we have had to deploy generator sets in many schools."

But despite the challenges, educationists are optimistic. Rahul De, professor of quantitative
methods and information systems area at the Indian Institute of Management in Bangalore
(IIM-B) believes that "ICT can have a huge impact on our education system." He points out
that ICT can result in increasing the reach [of education] and in keeping the costs low. "With
increasing penetration of mobile phones and Internet kiosks, the potential is indeed
immense," he adds.

A study conducted by De in 2009 on the economic impact of free and open source software
(FOSS) in India found that it resulted in significant cost savings. "FOSS can play a huge role
in education," De notes. "In the state of Kerala, it has already had a huge impact in both
saving costs and providing state-of-the-art access computing to students in government
schools. FOSS has a huge number of packages for school students, many of which can be
ported to local languages and used in schools. It is also helping disabled students in a big
way, by enabling them to access digital resources using audio-visual aids."

Edureach's Kanti adds that a study by the Centre for Multi-Disciplinary Development
Research in Dharwad in Karnataka in 2006 revealed significant improvement in student
enrolment and attendance, as well as a reduction of student dropouts due to ICT

Page 37
interventions. "Yet another study conducted by the Xavier Institute of Management in
Bhubaneswar in 2007 revealed that computer-aided education has improved the performance
of children in subjects such as English, mathematics and science, which are taught through
computers using multimedia-based educational content."

GLOBALIZATION: IMPACT ON EDUCATION

The principal objective of education has been the development of the whole individual. The
minimum level of education that was necessary to achieve this goal in the agrarian society
was basic or primary and in the industrial age, secondary. In the present borderless
information society, education needs to be able to respond to additional demands of a rapidly
globalizing world by raising awareness of environment, peace, cultural and social diversity,
increased competitiveness, and the concept of a global village. Such education is to a
knowledge or information society what secondary education was to an industrial economy.
Education prepares the individual to connect - and live in harmony - with the environment
around him. Globalization has changed the size, nature and quality of that environment. The
challenge for higher education, therefore, is to reform, create and develop systems that
prepare the individual to work in a borderless economy and live in a global society. In other
words, our educational institutions need to produce global citizens.

The collapse of the Soviet Union in 1991 allowed liberal democracies to claim victory for the
capitalist system and contributed to increasing the pace of globalization that was already
under way. As globalization gained momentum, market substituted political ideology as the
dominant force guiding national and global policies. What followed next, therefore, does not
seem so illogical. National governments everywhere - partly in deference to the ascendancy
of the market and partly in response to pressure from the private sector to expand their sphere
of activities - began to relinquish control over the delivery of social goods. Everything began
to be viewed as a commodity that could be produced and delivered by the private sector in
line with market forces and according to the principles of supply and demand. One by one -
water, electricity, postal services, health, and now education, have been turned into a
commodity.

The withdrawal of state from higher education has also been helped by economists, who have
had an overly simple way of assessing the return on investments in higher education. The
basic problem is that they have measured the return on education exclusively through wage

Page 38
differentials. With reference to someone who has no education, someone who has been to
primary school, someone who has completed secondary school, and someone with a
university degree, one can ask how much more each earns than the previous. These
differences are then compared to the incremental amounts invested in their education to find
the return. The results generally suggest that higher education yields a lower return than
primary or secondary education - and they have been used to justify the skewing of
government budgets and development funds away from higher education institutions.

The rate of return calculations are flawed because they do not take account of the full range
of benefits to those who receive higher education. For example, higher education can enhance
health, openness, peace, and social development, and at the same time reduce disease, bigotry
and blind nationalism - so the private benefits to the individual and to society are not just the
direct labour productivity benefits, as the rate of return analysis suggests.

Higher education confers benefits above and beyond enhancing the incomes of those who
receive it. And many of these benefits take the form of public goods, such as the contribution
of higher education to enterprise, leadership, governance, culture, and participatory
democracy, and its potential for lifting the disadvantaged out of poverty. These are all vital
building blocks for stronger economies and societies and all routes by which the benefit of
investment in higher education multiplies throughout society.

Liberal democracies have traditionally operated on the principle of separation of activities in

the social sphere just as they have on the principle of separation of powers in the political
sphere. The private sector had been given a relatively free hand in the production and
delivery of economic goods while the state concentrated on the provision of healthcare,
education and other infrastructure goods, also known as public goods. Globalization has
changed all that. The rapid expansion of the influence of the private sector at the global level
necessitated a corresponding expansion in their sphere of activities by diversifying into the
production and delivery of public goods that had always been within the purview of the state.
The takeover was swift and remarkable in the sense that the effort did not meet much
resistance.

One of the major consequences of the globalization of education has been commodification
and the corporatization of institutions of higher learning. It is said that the for-profit education
market in the United States is worth more than $500 billion in revenue for the involved

Page 39
corporates. More than one thousand state schools have been handed over to corporations to
be run as businesses. But there is a fundamental problem with the way business models have
been applied to the delivery of education and other public goods. Unthinking adoption of the
private sector model prevents the development of a meaningful approach to management in
the public services in general or to the social services in particular based on their distinctive
purposes, conditions and objectives.

There is another, more serious, problem with corporatization of education. Corporations

operate on the principles of cost reduction and profit maximization. These require introducing
standardization and the packaging of product in compact, measurable, byte-like,
configuration. Applied to education, these approaches would possibly negate its basic fabric
and purpose. Education has always encouraged and represents openness, inquiry, diversity,
research and limitless learning. Corporatization of education would make it elitist - the one
provided by corporations for the masses and the poor who cannot afford going to the
traditional institutions of learning, and the other for the rich and the affluent.

The delivery of public goods and services is and should remain the primary responsibility of
the state. Representative government may not be the ideal or perfect arrangement for
governance but it represents the best that is available, and certainly more desirable than the
private sector management of public services such as education. If the state relinquishes its
control over education and education policy, we run the risk of diminishing it to the status of
a packaged for-profit product which it is not. Openness, diversity, scholarship, research and
disinterested learning will be its biggest victims.

Page 40
OVERVIEW

The central and most state boards uniformly follow the "10+2+3" pattern of education. In this
pattern, study of 10 years is done in schools and 2 years in Junior colleges, and then 3 years
of graduation for a bachelor's degree. The first 10 years is further subdivided into 4 years of
primary education, 6 years of High School followed by 2 years of Junior colleges. This
pattern originated from the recommendation of the Education Commission of 196466.

The National Council of Educational Research and Training (NCERT) is the apex body
located at New Delhi, Capital City of India. It makes the curriculum related matters for
school education across India. The NCERT provides support, guidance and technical
assistance to a number of schools in India and oversees many aspects of enforcement of
education policies. Other curriculum bodies governing school education system are:

The state government boards: Most of the state governments have one "State
board of secondary education". However, some states like Andhra Pradesh have
more than one. Also the union territories do not have a board, Chandigarh, Dadra
& Nagar Haveli, Daman & Diu, Lakshadweep and Puducherry Lakshadweep,
share the services with a larger state.

Central Board of Secondary Education (CBSE) which conducts examinations at

the 10th and 12th standards that are called as board exams

The Council of Indian School Certificate Examination (CISCE). CISCE conducts

three examinations, namely, the Indian Certificate of Secondary Education (ICSE
- Class/Grade 10); The Indian School Certificate (ISC - Class/Grade 12) and the
Certificate in Vocational Education (CVE - Class/Grade 12).

The National Institute of Open Schooling (NIOS) conducts two examinations,

namely, Secondary Examination and Senior Secondary Examination (All India)
and also some courses in Vocational Education.

International schools affiliated to the International Baccalaureate Programme

and/or the Cambridge International Examinations.

Page 41
 Islamic Madrasah schools, whose boards are controlled by local state
governments, or autonomous, or affiliated with Darul Uloom Deoband or Darul
Uloom Nadwtul Ulama //www.nadwatululama.org/.

Autonomous schools like Woodstock School, The Sri Aurobindo International

Centre of Education Puducherry, Auroville, Patha Bhavan and Ananda Marga
Gurukula.

International schools, which offer 10th and 12th standard examinations under the
International Baccalaureate, or the Cambridge Senior Secondary Examination
systems.

In addition, NUEPA (National University of Educational Planning and

Administration)[18] and NCTE (National Council for Teacher Education) are
responsible for the management of the education system and teacher
accreditation.

Pre-Primary education

Pre-primary stage is the foundation of childs knowledge, skills and behaviour. On

Completion of pre-primary education child is sent to primary stage but pre-primary education
in India is not a fundamental right. In rural India pre-primary schools are rarely available in
small villages and urban area on the contrary. But in cities and big towns there are many
established players in Pre-Primary education sector. The demand for the preschools is

Page 42
growing considerably in the smaller towns and cities but still only 1% of the population under
age 6 is enrolled in preschool education. Play group (pre-nursery): At play schools, children
are exposed to a lot of basic learning activities that help them to get independent faster and
develop their self-help qualities like eating food themselves, dressing up and maintaining
cleanliness. Age limit for admission in pre-nursery is 2 to 3 years Nursery: At Nursery level
activities help child unfold her/his talents, enables them to sharpen their mental and physical
abilities. Age limit for admission in nursery is 3 to 4 years. LKG: It is also called as Junior
Kindergarten (Jr. kg) stage. Age limit for admission in LKG is 4 to 5 years. UKG: It is also
called as Senior Kindergarten (Sr. kg) stage. Age limit for admission in UKG is 5 to 6 years.
LKG and UKG stages prepare and help children emotionally, mentally, socially and
[20]
physically to grasp knowledge easily in the later stages of school and college life. A
systematic process of preschool education is followed in India to impart knowledge in the
best possible way for better understanding of the young children. By following an easy and
interesting curriculum, teachers strive hard to make the entire learning process enjoyable for
the children.

Primary education

Indian School children

The Indian government lays emphasis on primary education, also referred to as elementary
education, to children aged 6 to 14 years old. Because education laws are given by the states,
duration of primary school visit alters between the Indian states. The Indian government has
also banned child labour in order to ensure that the children do not enter unsafe working
conditions. However, both free education and the ban on child labour are difficult to enforce
due to economic disparity and social conditions. 80% of all recognised schools at the
elementary stage are government run or supported, making it the largest provider of
education in the country.

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However, due to a shortage of resources and lack of political will, this system suffers from
massive gaps including high pupil to teacher ratios, shortage of infrastructure and poor levels
of teacher training. Figures released by the Indian government in 2011 show that there were
58,16,673 elementary school teachers in India. As of March 2012 there were 21,27,000
secondary school teachers in India. Education has also been made free for children for 6 to 14
years of age or up to class VIII under the Right of Children to Free and Compulsory
Education Act 2009.

There have been several efforts to enhance quality made by the government. The District
Education Revitalisation Programme (DERP) was launched in 1994 with an aim to
universalise primary education in India by reforming and vitalising the existing primary
education system. 85% of the DERP was funded by the central government and the remaining
15% was funded by the states. The DERP, which had opened 1.6 lakh new schools including
84,000 alternative education schools delivering alternative education to approximately 35
lakh children, was also supported by UNICEF and other international programmes. In
January 2016, Kerala became the 1st Indian state to achieve 100% primary education through
its literacy programme Athulyam.

This primary education scheme has also shown a high Gross Enrolment Ratio of 9395% for
the last three years in some states.[26] Significant improvement in staffing and enrolment of
girls has also been made as a part of this scheme. [26] The current scheme for universalisation
of Education for All is the Sarva Shiksha Abhiyan which is one of the largest education
initiatives in the world. Enrolment has been enhanced, but the levels of quality remain low.

Secondary education

Secondary education covers children aged 12 to 18, a group comprising 8.85 crore children
according to the 2001 Census of India. The final two years of secondary is often
called Higher Secondary (HS), Senior Secondary, or simply the "+2" stage. The two halves of
secondary education are each an important stage for which a pass certificate is needed, and
thus are affiliated by central boards of education under HRD ministry, before one can pursue
higher education, including college or professional courses.

UGC, NCERT ,CBSE and ICSE directives state qualifying ages for candidates who wish to
take board exams. Those at least 15 years old by 30 May for a given academic year are
eligible to appear for Secondary board exams, and those 17 by the same date are eligible to

Page 44
appear for Higher Secondary certificate board exams. It further states that upon successful
completion of Higher Secondary, one can apply to higher education under UGC control such
as Engineering, Medical, and Business Administration.

A significant feature of India's secondary school system is the emphasis on inclusion of the
disadvantaged sections of the society. Professionals from established institutes are often
called to support in vocational training. Another feature of India's secondary school system is
its emphasis on profession based vocational training to help students attain skills for finding a
vocation of his/her choosing. A significant new feature has been the extension of SSA to
secondary education in the form of the Rashtriya Madhyamik Shiksha Abhiyan

A special Integrated Education for Disabled Children (IEDC) programme was started in 1974
with a focus on primary education. [16] but which was converted into Inclusive Education at
Secondary Stage. Another notable special programme, the Kendriya Vidyalaya project, was
started for the employees of the central government of India, who are distributed throughout
the country. The government started the Kendriya Vidyalaya project in 1965 to provide
uniform education in institutions following the same syllabus at the same pace regardless of
the location to which the employee's family has been transferred. H The National Policy on
Education (NPE), 1986, has provided for environment awareness, science and technology
education, and introduction of traditional elements such as Yoga into the Indian secondary
school system.

Private schools

According to current estimates, 29% of Indian children are privately educated. [7]With more
than 50% children enrolling in private schools in urban areas, the balance has already tilted
towards private schooling in cities; and, even in rural areas, nearly 20% of the children in
2004-5 were enrolled in private schools.[32]Private schooling has come to be associated with
an apparent perception of quality and thus desirable in the eyes of the stakeholders,
irrespective of their socio-economic status.

Most middle-class families send their children to private schools, which might be in their
own city or at distant boarding schools such as Rajkumar College, Rajkot, the oldest private
school in India. At such schools, the medium of education is often English, but Hindi and/or
the state's official language is also taught as a compulsory subject. Pre-school education is
mostly limited to organised neighbourhood nursery schools with some organised chains.

Page 45
Montessori education is also popular, due to Maria Montessori's stay in India during World
War II. In 2014, four of the top ten pre-schools in Chennai were Montessori.

Many privately owned and managed schools carry the appellation "Public", such as the Delhi
Public Schools, or Frank Anthony Public Schools. These are modelled after British public
schools, which are a group of older, expensive and exclusive fee-paying private independent
schools in England.

According to some research, private schools often provide superior results at a multiple of the
unit cost of government schools. The reason being high aims and better vision. However,
others have suggested that private schools fail to provide education to the poorest families, a
selective being only a fifth of the schools and have in the past ignored Court orders for their
regulation.

In their favour, it has been pointed out that private schools cover the entire curriculum and
offer extra-curricular activities such as science fairs, general knowledge, sports, music and
drama. The pupil teacher ratios are much better in private schools (1:31 to 1:37 for
government schools) and more teachers in private schools are female. There is some
disagreement over which system has better educated teachers. According to the latest DISE
survey, the percentage of untrained teachers (para-teachers) is 54.91% in private, compared to
44.88% in government schools and only 2.32% teachers in unaided schools receive in-service
training compared to 43.44% for government schools. The competition in the school market
is intense, yet most schools make profit. However, the number of private schools in India is
still low - the share of private institutions is 7% (with upper primary being 21% secondary
32% - source: fortress team research). Even the poorest often go to private schools despite
the fact that government schools are free. A study found that 65% school-children in
Hyderabad's slums attend private schools.

International schools

As of January 2015, the International Schools Consultancy (ISC) listed India as having 410
international schools. ISC defines an 'international school' in the following terms "ISC
includes an international school if the school delivers a curriculum to any combination of pre-
school, primary or secondary students, wholly or partly in English outside an English-
speaking country, or if a school in a country where English is one of the official languages,

Page 46
offers an English-medium curriculum other than the countrys national curriculum and is
international in its orientation." This definition is used by publications including

Home-schooling

Home-schooling is legal in India, though it is the less explored option. The Indian
Government's stance on the issue is that parents are free to teach their children at home, if
they wish to and have the means. The then HRD Minister Kapil Sibal has stated that despite
the RTE Act of 2009, if someone decides not to send his/her children to school, the
government would not interfere.

Higher education

After passing the Higher Secondary Examination (the Standard 12 examination), students
may enrol in general degree programmes such as bachelor's degree in arts, commerce or
science, or professional degree programme such as engineering, law or medicine. [42] India's
higher education system is the third largest in the world, after China and the United
States. The main governing body at the tertiary level is the University Grants Commission
(India), which enforces its standards, advises the government, and helps coordinate between
the centre and the state. Accreditation for higher learning is overseen by 12 autonomous
institutions established by the University Grants Commission.

As of 2012, India has 152 central universities, 316 state universities, and 191 private
universities. Other institutions include 33,623 colleges, including 1,800 exclusive women's
colleges, functioning under these universities and institutions, and 12,748 Institutions
offering Diploma Courses. The emphasis in the tertiary level of education lies on science and
technology. Indian educational institutions by 2004 consisted of a large number of technology
institutes. Distance learning is also a feature of the Indian higher education system. The
Government has launched Rashtriya Uchchattar Shiksha Abhiyan to provide strategic funding
to State higher and technical institutions. A total of 316 state public universities and 13,024
colleges will be covered under it.

Some institutions of India, such as the Indian Institutes of Technology (IITs), Indian Institute
of Science have been globally acclaimed for their standard of under-graduate education in
engineering. Several other institutes of fundamental research such as the [Indian Association
for the Cultivation of Science (IACS), Indian Institute of Science (IISc), Tata Institute of

Page 47
Fundamental Research (TIFR), Harish-Chandra Research Institute (HRI), are also acclaimed
for their standard of research in basic sciences and mathematics. However, India has failed to
produce world class universities both in the private sector or the public sector.

Besides top rated universities which provide highly competitive world class education to their
pupils, India is also home to many universities which have been founded with the sole
objective of making easy money. Regulatory authorities like UGC and AICTE have been
trying very hard to extirpate the menace of private universities which are running courses
without any affiliation or recognition. Indian Government has failed to check on these
education shops, which are run by big businessmen & politicians. Many private colleges and
universities do not fulfil the required criterion by the Government and central bodies (UGC,
AICTE, MCI, BCI etc.) and take students for a ride. For example, many institutions in India
continue to run unaccredited courses as there is no legislation strong enough to ensure legal
action against them. Quality assurance mechanisms have failed to stop misrepresentations
and malpractices in higher education. At the same time regulatory bodies have been accused
of corruption, specifically in the case of deemed-universities. [52] In this context of lack of
solid quality assurance mechanism, institutions need to step-up and set higher standards of
self-regulation.

Our university system is, in many parts, in a state of disrepair...In almost half the districts in
the country, higher education enrolments are abysmally low, almost two-third of our
universities and 90 % of our colleges are rated as below average on quality parameters... I am
concerned that in many states university appointments, including that of vice-chancellors,
have been politicised and have become subject to caste and communal considerations, there
are complaints of favouritism and corruption.

The Government of India is aware of the plight of higher education sector and has been trying
to bring reforms, however, 15 bills are still awaiting discussion and approval in the
Parliament. One of the most talked about bill is Foreign Universities Bill, which is supposed
to facilitate entry of foreign universities to establish campuses in India. The bill is still under
discussion and even if it gets passed, its feasibility and effectiveness is questionable as it
misses the context, diversity and segment of international foreign institutions interested in
India. One of the approaches to make internationalisation of Indian higher education effective
is to develop a coherent and comprehensive policy which aims at infusing excellence,
bringing institutional diversity and aids in capacity building.

Page 48
Three Indian universities were listed in the Times Higher Education list of the world's top 200
universities Indian Institutes of Technology, Indian Institutes of Management,
and Jawaharlal Nehru University in 2005 and 2006. Six Indian Institutes of Technology and
the Birla Institute of Technology and SciencePilani were listed among the top 20 science
and technology schools in Asia by Asiaweek. The Indian School of Business situated
in Hyderabad was ranked number 12 in global MBA rankings by the Financial Times of
London in 2010[60]while the All India Institute of Medical Sciences has been recognised as a
global leader in medical research and treatment. The University of Mumbai was ranked 41
among the Top 50 Engineering Schools of the world by America's news broadcasting
firm Business Insider in 2012 and was the only university in the list from the five emerging
BRICS nations viz Brazil, Russia, India, China and South Africa. It was ranked at 62 in the
QS BRICS University rankings for 2013 and was India's 3rd best Multi-
Disciplinary University in the QS University ranking of Indian Universities after University
of Calcutta and Delhi University. Loyola College, Chennai is one of the best ranked arts and
science college in India with the UGC award of College of Excellence tag.

Technical education

From the first Five-year Plan onwards, India's emphasis was to develop a pool of
scientifically inclined manpower. India's National Policy on Education (NPE) provisioned for
an apex body for regulation and development of higher technical education, which came into
being as the All India Council for Technical Education (AICTE) in 1987 through an act of the
Indian parliament. At the federal level, the Indian Institutes of Technology, the Indian
Institute of Space Science and Technology, the National Institutes of Technology and
the Indian Institutes of Information Technology are deemed of national importance.

The Indian Institutes of Technology (IITs) and National Institutes of Technology (NITs) are
among the nation's premier education facilities.

The UGC has inter-university centres at a number of locations throughout India to promote
common research, e.g. the Nuclear Science Centre at the Jawaharlal Nehru University, New
Delhi. Besides there are some British established colleges such as Harcourt Butler
Technological Institute situated in Kanpur and King George Medical University situated in
Lucknow which are important centre of higher education.

Page 49
Central Universities such as Banaras Hindu University, Jamia Millia
Islamia University, Delhi University, Mumbai University, University of Calcutta, etc. too are
pioneers of technical education in the country.

In addition to above institutes, efforts towards the enhancement of technical education are
supplemented by a number of recognised Professional Engineering Societies such as:

1. Institution of Mechanical Engineers (India)

2. Institution of Engineers (India)

3. Institution of Chemical Engineering (India)

4. Institution of Electronics and Tele-Communication Engineers (India)

5. Indian Institute of Metals

6. Institution of Industrial Engineers (India)

That conducts Engineering/Technical Examinations at different levels (Degree and diploma)

for working professionals desirous of improving their technical qualifications.

The number of graduates coming out of technical colleges increased to over 7 lakh in 2011
from 5.5 lakh in FY 2010. However, according to one study, 75% of technical graduates and
more than 85% of general graduates lack the skills needed in India's most demanding and
high-growth global industries such as Information Technology. These high-tech global
information technologies companies directly or indirectly employ about 23 lakh people, less
than 1% of India's labour pool. India offers one of the largest pool of technically skilled
graduates in the world. Given the sheer numbers of students seeking education in
engineering, science and mathematics, India faces daunting challenges in scaling up capacity
while maintaining quality.

Vocational education

India's All India Council of Technical Education (AICTE) reported, in 2013, that there are
more than 4,599 vocational institutions that offer degrees, diploma and post-diploma in
architecture, engineering, hotel management, infrastructure, pharmacy, technology, town
services and others. There were 17.4 lakh students enrolled in these schools. [74] Total annual
intake capacity for technical diplomas and degrees exceeded 34 lakh in 2012.

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According to the University Grants Commission (UGC) total enrolment in Science,
Medicine, Agriculture and Engineering crossed 65 lakh in 2010. The number of women
choosing engineering has more than doubled since 2001.

Open and distance learning

At the school level, National Institute of Open Schooling (NIOS) provides opportunities for
continuing education to those who missed completing school education. 14 lakh students are
enrolled at the secondary and higher secondary level through open and distance learning. In
2012 various state governments also introduced "STATE OPEN SCHOOL" to provide
distance education.

At higher education level, Indira Gandhi National Open University (IGNOU) co-ordinates
distance learning. It has a cumulative enrolment of about 15 lakh, serviced through 53
regional centres and 1,400 study centres with 25,000 counselors. The Distance Education
Council (DEC), an authority of IGNOU is co-coordinating 13 State Open Universities and
119 institutions of correspondence courses in conventional universities. While distance
education institutions have expanded at a very rapid rate, but most of these institutions need
an up gradation in their standards and performance. There is a large proliferation of courses
covered by distance mode without adequate infrastructure, both human and physical. There is
a strong need to correct these imbalances.

Literacy

According to the Census of 2011, "every person above the age of 7 years who can read and
write with understanding in any language is said to be literate". According to this criterion,
the 2011 survey holds the National Literacy Rate to be 74.07%. [77] The youth literacy rate,
measured within the age group of 15 to 24, is 81.1% (84.4% among males and 74.4% among
females),[78] while 86% of boys and 72% of girls are literate in the 10-19 age group.

Within the Indian states, Kerala has the highest literacy rate of 94.65%
whereas Bihar averaged 63.8% literacy. The 2001 statistics indicated that the total number of
'absolute non-literates' in the country was 304 million.

Public school workforce

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Officially, the pupil to teacher ratio within the public school system for primary education is
35:1. However, teacher absenteeism in India is exorbitant, with 25% never showing up for
work.[87] The World Bank estimates the cost in salaries alone paid to such teachers who have
never attended work is US $2 billion per year.

A study on teachers by Kremer etc. found out that 25% of private sector teachers and 40% of
public sector medical workers were absent during the survey. Among teachers who were paid
to teach, absence rates ranged from 15% in Maharashtra to 30% in Bihar. Only 1 in nearly
3,000 public school head teachers had ever dismissed a teacher for repeated absence. [89] The
same study found "only about half were teaching, during unannounced visits to a nationally
representative sample of government primary schools in India."

Higher education

As per Report of the Higher education in India, Issues Related to Expansion, Inclusiveness,
Quality and Finance, the access to higher education measured in term of gross enrolment
ratio increased from 0.7% in 1950/51 to 1.4% in 196061. By 2006/7 the GER increased to
about 11%. Notably, by 2012, it had crossed 20% (as mentioned in an earlier section).

Vocational

An optimistic estimate from 2008 was that only one in five job-seekers in India ever had any
sort of vocational training.[

Women have a much lower literacy rate than men. Far fewer girls are enrolled in the schools,
and many of them drop out. In the patriarchal setting of the Indian family, girls have lower
status and fewer privileges than boy children.[94]Conservative cultural attitudes prevent some
girls from attending school.

The number of literate women among the female population of India was between 26%
from the British Raj onwards to the formation of the Republic of India in 1947. [96] Concerted
efforts led to improvement from 15.3% in 1961 to 28.5% in 1981.[96] By 2001 literacy for
women had exceeded 50% of the overall female population, though these statistics were still
very low compared to world standards and even male literacy within India. [97] Recently the
Indian government has launched Saakshar Bharat Mission for Female Literacy. This mission
aims to bring down female illiteracy by half of its present level.

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ADVANTAGES AND DISADVANTAGES OF EDUCATION

Knowledge is power and for those reading this article, at least a basic level of that power of
education has been accessible. However there are instances in the world where the
distribution of education is skewed. The advantages and disadvantages of education although
seemingly quite clear can be explored to quite a detailed level.

It is usually the benefits of education that are extolled from time to time and there is much
strength in that argument since the one thing that separates man from animals is the ability to
advance knowledge and expertise from one generation to the next. On the other hand some
may argue about the difference between having an education and possessing knowledge.

Here we try and develop a debate about the advantages and disadvantages of education
keeping in mind all points of view.

Advantages of Education

Human Capital To build upon the previous point, when looked at from a macro
perspective, an educated population provides a more valuable human capital base to the
economy. A developed economy has maximum concentration of jobs in the tertiary sector
which requires a highly skilled work force which has expertise in specific fields. For instance
the most developed country in the world, the USA has the most skilled human resources with
maximum efficiency. Also, developing countries which adopt tried and tested technologies
from other nations require skilled engineers, technicians and managers who can put it to good
use. This can only be achieved by providing quality education to the population at a primary,
secondary and higher secondary level.

Broadens perspective This is one of the key advantages of education. Even if we consider
economic benefit of education but its most important contribution that it helps in changing
minds of people. Education makes people understand other cultures, religions, places and
culture. It helps gain understanding of what the world is all about. This very important if we
see from perspective of developing nations which are plagued by old notions. In countries
such as India girl and boy child are differentiated. Even worse women are considered cause
of girl child while science tells that it is the other way round. Similar old style dogmas exists
everywhere in the world and the only way to eradicate them is proper education.

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Hones potential An education provides individuals with the ability to develop their
potential to a much greater extent. Exposure to different fields and interests allows a person
to choose between a number of options and hone in on the one field that they have the ability
to excel in. This also helps develop interest in a number of other non-academic fields such as
art, culture, music, all of which are important to have a wholesome life. It improves
interaction between people and results in more efficient exchanges.

Better job prospects The conventional way of proceeding in life through the ages has been
in four stages: childhood and education, putting knowledge to work by obtaining a career,
raising a family, growing old and retiring from the daily conundrums of life. The logical step
after the initial childhood years is to attend an educational institute and gather as much
knowledge and information as possible for a better life in the future. This helps in developing
a better base for securing a career later thus advancing the individual into the next phase of
life. This helps in providing the basics such as food, water and shelter as well as a host of
other needs. Thus, a better education will ensure higher returns and subsequently a better

quality of life.

Dispels inequality For individuals who do not have a wealthy or fortunate background, the
provision of quality education puts them at the same footing as the vast majority of job
seekers allowing them to rise from their present level. This phenomenon, also known as
distributive justice, helps in reducing inequalities, both economic and social, in society.

Page 54
 CURRENT SENERIO OF EDUCATION SECTOR IN INDIA

Introduction

India holds an important place in the global education industry. The country has more than
1.4 million schools with over 227 million students enrolled and more than 36,000 higher
education institutes. India has one of the largest higher education systems in the world.
However, there is still a lot of potential for further development in the education system.

India has become the second largest market for e-learning after the US. The sector is
currently pegged at US$ 2-3 billion, and is expected to touch US$ 40 billion by 2017. The
distance education market in India is expected to grow at a Compound Annual Growth Rate
(CAGR) of around 34 per cent# during 2013-14 to 2017-18. Moreover, the aim of the
government to raise its current gross enrolment ratio to 30 per cent by 2020 will also boost
the growth of the distance education in India.

Market Size

The education sector in India is poised to witness major growth in the years to come as India
will have worlds largest tertiary-age population and second largest graduate talent pipeline
globally by the end of 2020. In FY 2015-16, the education market was worth about US$ 100
billion and is expected to reach US$ 116.4 billion in FY 2016-17. Currently, higher education
contributes 59.7 per cent of the market size, school education 38.1 per cent, pre-school
segment 1.6 per cent, and technology and multi-media the remaining 0.6 per cent.

Higher education system in India has undergone rapid expansion. Currently, Indias higher
education system is the largest in the world enrolling over 70 million students while in less
than two decades, India has managed to create additional capacity for over 40 million
students. At present, higher education sector witnesses spending of over Rs 46,200 crore
(US$ 6.93 billion), and it is expected to grow at an average annual rate of over 18 per cent to
reach Rs 232,500 crore (US$ 34.87 billion) in next 10 years.

Investment

The total amount of Foreign Direct Investments (FDI) inflow into the education sector in
India stood at US$ 1,383.62 million from April 2000 to December 2016, according to data
released by Department of Industrial Policy and Promotion (DIPP).

Page 55
The education and training sector in India has witnessed some major investments and
developments in the recent past. Some of them are:

KKR and Co Lp, the US-based private equity giant, plans to invest around Rs 700
crore (US$ 105 million) in coaching firm Resonance Eduventures Limited, which will
be used to buy back shares from existing investors and expand its presence to more
geographies.

UAE-based Gamma Group, outlined plans of investing around Rs 3,000 crore (US$
450 million) in the infrastructure, health and education sectors of Kerala, which is
expected to generate around 2,000 indirect and direct jobs in the state.

Welingkar Institute of Management Development and Research has signed two

memorandum of understanding (MoUs) with Israeli universities, namely Hafia
University of Israel and IDC Herzliya, which includes pledging cooperation in the
fields of study of technology, agriculture, archaeology, biology, etc.

International Finance Corporation (IFC) has invested US$ 15 million in education

venture Byjus for a minority stake, which is expected to help the test-preparation
platform to expand domestically and internationally.

Education technology companies in India raised around US$ 323 million across 26
deals in 2016, as against US$ 98 million raised through 23 deals in 2015##.

New York Life Insurance Company, the largest mutual life insurance company in the
US, has invested Rs 121 crore (US$ 18.15 million) in Max Ventures and Industries
Ltd for a 22.51 per cent stake, which will be used by Max for investing in new focus
areas of education and real estate.

Training and skills development firm NIIT has partnered with US-based edX to offer
online courses from leading international universities including MIT and Berkeley to
about 5 lakh people over the next three years.

Byjus, an education technology start-up, has raised US$ 50 million from the Chan
Zuckerberg Initiative, founded by Facebook founder Mark Zuckerberg, and existing
investors Sequoia Capital, Sofina SA, Lightspeed Venture Partners and Times Internet
Ltd.

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 India and Germany have signed an agreement on vocational education and skill
development with a budget of US$ 3.37 million, which will help create and improve
cooperative workplace-based vocational training in Indias industrial clusters.

Cisco Systems plans to invest US$ 100 million in India over the next 2 years, will be
used to fund early-stage and growth-stage companies in the country, open six new
innovation labs, three centres of expertise and train around 250,000 students by 2020.

Neev Knowledge Management Pvt. Ltd, which offers online and classroom-based
certification courses under the brand name EduPristine, has raised US$ 10 million
from Kaizen Management Advisors and DeVry Inc., which will be used to increase its
course offerings, and increase its presence to 15 cities across the country.

US based multinational technology major Intel Corporation, has partnered with

Extramarks Education, a digital learning solutions provider, to tap the US$ 40 billion
private school sector in India and thereby provide optimised learning solutions and
extend computing technologies to students and schools in the country.

EdCast, a technology education start-up based in Silicon Valley, plans to invest up to

US$ 50 million in education based technology and tie-up with around 500 educational
institutions to build digital content and curriculum for educational institutions in
India.

Tata Trusts, part of the Tata Group, has entered in to a strategic partnership with web-
based free learning portal, Khan Academy, and seeks to use technology to provide
free education to anyone, anywhere in India.

Venture capital fund Acumen has invested in two Hyderabad-based education start-
upsIgnis Careers (US$ 250,000) and SEED (US$ 650,000)working in the low-
cost school education space.

Government Initiatives

Some of the other major initiatives taken by the Government of India are:

The Union Budget 2017-18 has made the following provisions for the education
sector:

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 o The Budget has pegged an outlay of Rs 79,685.95 crore (US$ 11.952 billion)
for the education sector for financial year 2017-18, up from Rs 72,394 crore
(US$ 10.859 billion) in 2016-17a 9.9 per cent rise.

o The Government of India has allocated around Rs 17,000 crore (US$ 2.55
billion) towards skilling, employment generation, and providing livelihood to
millions of youth, in order to boost the Skill India Mission.

The Government of India and the World Bank have signed a US$ 201.50 million
International Development Association (IDA) credit agreement for the Third
Technical Education Quality Improvement Programme (TEQIP III), aimed at
improving the efficiency, quality and equity of engineering education across several
focus states.

Mr Radha Mohan Singh, Union Minister of Agriculture and Farmers Welfare, has
announced that the Central Government will open at least one Krishi Vigyan Kendra
in all districts of the country, which will provide advanced agriculture technical
assistance to the farmers near their farms itself.

The Ministry of Shipping has sanctioned Rs 10 crore (US$ 1.5 million) as part of the
first instalment to the Gujarat Maritime Board under the Sagarmala project, which
will be used for capacity building and safety training of 20,000 workers involved in
the ship recycling activities at Alanag- Sosiya recycling yard in Bhavnagar district in
Gujarat.

The Ministry of Skill Development and Entrepreneurship has launched the Pradhan
Mantri Yuva Yojana, which will provide entrepreneurship education and training to
over 700,000 students in 5 years through 3,050 institutes.

The Cabinet Committee on Economic Affairs has approved opening of one Jawahar
Navodaya Vidyalaya (JNV) in each of the 62 uncovered districts with an outlay of Rs
2,871 crore (US$ 430.6 million), which is expected to benefit over 35,000 students in
rural areas and provide direct permanent employment to 2,914 individuals.

The Catalyst initiative by the Government of India and United States Agency for
International Development (USAID) is expected to create awareness about digital
payments across 60 million traders and merchants in the country.

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 The Ministry of Labour and Employment will set up Model Career Centres (MCC)
across the country. Out of the 950 employment exchanges in India, 100 would be
developed as model centres with an investment of Rs 350 crore (US$ 52.5 million).
The Union Government also plans to set up 100 driver training institutes across India.

Mr Ravi Shankar Prasad, Minister for Law and Justice and Information Technology,
has stated that the Government of India will likely educate over 10 million people on
e-payments in rural India, through the newly-launched Digi Dhan Abhiyan or digital
financial literacy programme.

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved
'Pradhan Mantri Gramin Digital Saksharta Abhiyan' (PMGDISHA) to make 60
million rural households digitally literate. The outlay for this project is Rs 2,351.38
crore (US$ 353.70 million) to usher in digital literacy in rural India by March, 2019.

The Government of India has signed a financing agreement with The World Bank, for
International Development Association (IDA) credit of US$ 300 million, for the
Madhya Pradesh Higher Education Quality Improvement Project, which aims to
improve student outcomes, especially of disadvantaged groups in selected Higher
Education Institutions (HEIs) and increase the effectiveness of the higher education
system in Madhya Pradesh.

Prime Minister Mr Narendra Modi launched the Skill India initiative Kaushal
Bharat, Kushal Bharat. Under this initiative, the government has set itself a target of
training 400 million citizens by 2022 that would enable them to find jobs. The
initiatives launched include various programmes like: Pradhan Mantri Kaushal Vikas
Yojana (PMKVY), National Policy for Skill Development and Entrepreneurship 2015,
Skill Loan scheme, and the National Skill Development Mission.

o PMKVY is the flagship program under the Skill India Initiative and it includes
incentivising skill training by providing financial rewards on completion of
training to the participants. The Union Government plans to set up skill
development centres across India with an investment of Rs 12,000 crore (US$
1.8 billion) to create job opportunities for 10 million individuals by 2020
under PMKVY, as per Mr Bandaru Dattatreya, Minister of Labour and
Employment.

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o National Policy for Skill Development and Entrepreneurship 2015 is Indias
first integrated program to develop skill and promote entrepreneurship
simultaneously. The Union Government plans to provide Rs 7,000 crore (US$
1.05 billion) to states to spend on skill development, and thereby accelerate the
ambitious task of skilling 500 million Indians by 2022, and encourage creation
of an ecosystem of entrepreneurs.

o Skill Loan Scheme is designed to disburse loans of Rs 5,000 (US$ 75.3) to Rs

150,000 (US$ 2,260) to 3.4 million Indians planning to develop their skills in
the next five years.

o The National Skill Development Mission has created an elaborate skilling eco-
system and imparted training to 7.6 million youth since its launch in 2015 and
the government now plans to set up 1,500 Multi Skill Training Institutes
across the country.

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 CONCLUSION

Indias insurable population is anticipated to touch 750 million in 2020, with life expectancy
reaching 74 years. Furthermore, life insurance is projected to comprise 35 per cent of total
savings by the end of this decade, as against 26 per cent in 2009-10.

The future looks promising for the life insurance industry with several changes in regulatory
framework which will lead to further change in the way the industry conducts its business
and engages with its customers.

Demographic factors such as growing middle class, young insurable population and growing
awareness of the need for protection and retirement planning will support the growth of
Indian life insurance.

Various government initiatives are being adopted to boost the growth of distance education
market, besides focussing on new education techniques, such as E-learning and M-learning.

Education sector has seen a host of reforms and improved financial outlays in recent years
that could possibly transform the country into a knowledge haven. With human resource
increasingly gaining significance in the overall development of the country, development of
education infrastructure is expected to remain the key focus in the current decade. In this
scenario, infrastructure investment in the education sector is likely to see a considerable
increase in the current decade

Moreover, availability of English speaking tech-educated talent, democratic governance and a

strong legal and intellectual property protection framework are enablers for world class
product development, as per Mr Amit Phadnis, President-Engineering and Site Leader for
Cisco (India).

The Government of India has taken several steps including opening of IITs and IIMs in new
locations as well as allocating educational grants for research scholars in most government
institutions. Furthermore, with online modes of education being used by several educational
organisations, the higher education sector in India is set for some major changes and
developments in the years to come.

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BIBLIOGRAPHY

www.irdaindia.org
www.licindia.in
www.scribd.com
www.wikipedia.org
www.answers.com
www.google.com
www.wiki.answers.com
www.docstoc.com
www.insuranceguru.com

QUESTIONNNIARE

1] Do you have investment/ insurance plan on your name?

Yes No

2] In which company you would like to purchase investment plan?

Government owned company Public Ltd. Company

Private Company Foreign Based Company

3] Provide the reason behind choosing particular investment company?

Safety Brand Name

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Good Track Record Good Return

4] What kind of insurance policy/plan you would prefer to purchase at this stage?

Life Insurance Pension Plans

Life Insurance and Investment Plans Child Plans

Tax saving plans

5] What according to you is an ideal policy term?

3 to 5 years 6 to 9 years

10 to 15 years 16 to 20 years

21 to 25 years 26 to 30 years

More than 30 years Whole life policy

6] What motivates you to purchase insurance plan?

Advertisements High Returns

Family responsibilities Advice from friends

Financial advisor Company

7. What is your highest qualification?

Under graduation level Post graduation level

8. Do you aware about the facilities provided by government for the college
students?

Scholarship
Long distance learning
Woman education scheme
Other

9. What improvements do you find in yourself during your studies?

Improvements Tick Improvements tick

Bright career Other Technical knowledge
Practical knowledge Good reputation
Other Others

10. If any other please specify

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 _____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
11. In which direction more do you think the current education system is directed?
On the practical approach
On the Theoretical approach
Or Both of the above

12. On what parameters your institute is focused on?

Qualitative parameters Quantitative parameters

13. According to you, which are current problems or issues prevailing in Indian
education?

Problems Tick
partiality
corruption
Quota system
Merit system
other

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