Meet Gudiya. She’s an eighth grade student in a public school in Hisar, a small town in
Haryana, India. The state of her school is dismal (absent or unqualified teachers, no
accountability, no infrastructure), but it’s her best and only choice. Since the
pandemic, her school has been shut. There are no classes – none offline and none
online. The teachers didn’t have the infrastructure to prepare and deliver instruction
online. Independent online education is impractical because Gudiya’s family has no
laptop or desktop and her father is the only one with a smartphone, which her two
elder sisters share for studying. Her education is at a standstill, and she’s being left
behind every single day.
Ed-tech’s 2020 promise has evaded her. Venture money has not put a tablet or phone in
her hand, there are no regular Zoom classes to attend, and personalized, gamified
learning is a wishful dream of the distant future. She does not lack ambition, a desire
to learn or hustle; she lacks access.
Gudiya’s story is one of over 225 million students in India who attend public schools
and low-fee private schools. Not only has ed-tech not improved education outcomes
for them, it has widened the gap between them and the 25 million others, fortunate to
have access to virtual education. Ed-tech startups are catering to the small population
of middle to high income students only (i.e. 10% of India’s school-going children), and
with good reason. Gudiya’s family does not have INR 25,000 (US $350) to spare every
year. They don’t even have INR 2,500 (US $35).
THIS is the dichotomy facing India’s ed-tech. It’s sobering to imagine >85% of India’s
students being left behind with no virtual (or offline) education today. However, to
merely lament on how poor the situation is, would be a dis-service. Institutional,
structural change of the public system is long and hard, but in the meantime, there IS
something we can do.
Bring ed-tech innovation to the public school system, i.e. the Government could give
grants to startups, for them to provide their infrastructure and solution to public
school students (~40% of India’s 250 million students). Imagine every such student
having a Byju’s or a Vedantu subscription and infrastructure. It would cost
approximately INR 100,000 Crore (US $13.5 billion) to provide every public school
student a Byju’s or Vedantu subscription for a year. This represents 16% of the yearly
education spend by the Indian Government.
Startups will have to customize their content and pedagogy to suit the context and
learning levels of public school students, and the Government’s funding will help spur
this innovation. The public system gains by enabling access to cutting-edge content for
its students, and startups gain because they now count millions and millions of new
students as customers, customers they could have never been able to acquire
otherwise. This further strengthens their product through more and wide-ranging data,
and improves efficiency and outcomes of the entire system.
It all sounds fairly straightforward and logical, but let’s go one level deeper and think
through the challenges.
- The first fairly obvious one would be – why can’t the Government system develop
its own content and infrastructure to educate its students? The answer lies in the
public system’s DNA. It’s not built to innovate and ship rapidly, and every day counts. Developing content, training teachers, procuring and distributing infrastructure, and instituting accountability is all possible – but not in the time frame we’re thinking about. It’s long term change, often affected across decades. Further, for every state Government to initiate its own such process will be overwhelming and time-consuming (since education is a concurrent subject i.e. one governed by both the Central and State governments).
- Second, where will the Government get these funds from? An outlay of INR
100,000 Crore (US$ 13.5 billion) represents 16% of India’s yearly education
budget. Even though there are some operating expense savings as schools are shut,
nearly 80% of the Government’s budget actually goes towards teacher salaries,
which are still being paid. There are two funding ideas here: i) Leverage and
incentivize the private sector’s CSR (Corporate Social Responsibility) spend and
private foundations’ existing spend on education, towards this large-scale
initiative, or ii) Increase the Government’s education budget for this year. It
sounds like a tough sell, but here are some fun facts. India’s national education
spend is a dismal 3% of the GDP, and has, in fact reduced as a percentage of the
GDP in the last few years. Compare this with a global average of 4.7%. In fact, India
ranks 144 among 191 countries in education spend as a percentage of GDP. India’s
National Education Commission recommended a spend of 6%, which has never
been achieved. If the Government did in fact increase budget to accommodate this
proposed solution, education spend would increase by 0.5% of GDP, to 3.5% of the
GDP, still well below targets.
- Third, securing buy-in from the public school teachers and staff i.e. will their jobs be obsolete? Change in public education systems has been held back traditionally due to unaligned incentives within the system – teachers often don’t have an incentive to support change, and have traditionally viewed technology as an enemy seeking to replace them. Teacher pay, retention or promotions are not linked to outcomes or even performance, and they’ve usually shown the highest resistance to change. This resistance has also usually politicized any large-scale overhaul of the teacher recruitment process. Under the proposed model, Government school teachers could still: a) Focus on the long-term roadmap of developing infrastructure, resource and content capability within the public system; b) Partner with startups to develop contextualized content and assessments for their students’ learning needs; c) Some teachers could also teach on live-class platforms like Vedantu, thereby helping these startups scale their capacity; d) Enable and support their students to adopt and understand this new way of learning, example via assessments and extra classes.
- Fourth, a working capital challenge for startups. Indian startups have always
struggled to receive revenue from the Government on time, resulting in a risky
working capital situation, even resulting in a few startups being shut down. This
problem is, however, relatively easier to mitigate and will require accountability
measures at every level of the Government’s payment machinery, along with
creative structuring of contracts for upfront payment to cover the startups’ content
development costs (capital expenses).
Make no mistake, these challenges and potential mitigants are also theoretical in
nature, and the biggest issue at the heart of this debate, is the Government’s incentive
and willingness to change, and startups’ willingness to build for real India’s ed-tech.
Traditionally, education has been the one sector where public system change has been
the slowest and most difficult. This is because any changes in QUALITY (not access) of
education take a significant time to reap results, and most Governments in power have
to focus on quick wins and optimize for the next elections. This is why India has nearly
achieved universal primary education for several years now, because access is easier to
improve and measure in a short time period. Quality, however, is not. If investments
are made in grades VI through VIII today, you have to wait for at least 7 years when a
VI grader takes her grade XII exams (school passing-out exams), to measure any real
progress. Private-public partnerships have moved education outcomes further in the
last several years, but a more concerted effort is required, particularly during the
While 2020 was the year of ed-tech for both entrepreneurs and investors, it wasn’t the
year of education for an overwhelming majority of children in India, who were left
behind, more than ever before. We must constantly think how we can flatten the
pyramid further – we don’t need to start a social enterprise or a non-profit or an impact
investing fund. Arguably, Google (and YouTube) did more to democratize education
than any ed-tech startup or social enterprise or non-profit. It’s clear that massive
commercial upside awaits those who can flatten the education inequality pyramid –
and as entrepreneurs, operators and investors in ed-tech, while we celebrate our recent
wins and covid tailwinds, we must constantly remind ourselves of this.
In upcoming pieces, I will cover:
- A thesis on Indian ed-tech: from Byju’s to Studyroom, and everything in between
- How ed-tech in India and China fundamentally differs from that in the US, and
- My favourite ed-tech startups globally, and recommended reading