New Delhi: India’s education sector is poised for robust growth, with institutional incomes expected to rise 11–13 percent this fiscal as well as the next, supported by higher enrolments and fee hikes, but margins would remain flat due to rising operational costs, according to a report released Monday.
The report released by credit rating agency CRISIL (Credit Rating Information Services of India Limited) states this fiscal will see the sector’s fifth straight year of double-digit growth, majorly driven by higher spending on education by households as incomes improve, particularly in urban areas.
The report, which covers two fiscal years—the current 2025–26 and the following 2026–27—is based on an analysis of 107 educational institutions across the Kindergarten to Class 12 (K-12) and higher education segments, including engineering, medical and other streams, with a combined income of nearly Rs 26,000 crore.
Crisil Ratings Director Himank Sharma said that overall income of educational institutions is expected to log healthy double-digit growth over the next few fiscals, mainly supported by fee revisions, along with growth in enrolments, albeit at a modest rate.
“Fee escalations are primarily driven by higher inflation, especially in the urban areas. Despite this, increasing spending on staff salaries and facilities will prevent any improvement in operating margins, which are expected to remain stagnant at around 27-28%,” he said in a statement.
Engineering, medical drive education income
According to the analysis, the K–12 segment, accounting for roughly a third of the sector’s revenues, is projected to grow at a steady 9–10 percent, supported by rising urbanisation, increasing affordability, and annual fee revisions at private schools. This reflects both demographic trends and improving incomes in urban centres, the analysis notes.
In the higher education segment, which also contributes about a third of total revenues, enrollment growth remains moderate at 3–4 percent for arts, science, commerce, and diploma courses, which form the bulk of student intake.
“However, engineering courses continue to log healthy demand—this is despite some turbulence in the job market amid the global slowdown and issues related to visas and immigration restrictions in the US—resulting in higher growth in total income,” the report states.
Analysing further, the report states that income growth in this segment is further boosted by the expansion of technology-focused courses, including cybersecurity, business systems, Artificial Intelligence, machine learning, and data science, as these courses also “fetch higher fees compared with other traditional courses.”
Meanwhile, the report highlights that in the case of medical education, demand for undergraduate MBBS courses continues to surpass supply, while other allied courses such as nursing, pharmacy, and physiotherapy witness moderate interest.
“The government’s thrust on increasing the number of undergraduate and postgraduate medical seats and augmenting education infrastructure will drive enrolments for medical courses in the near term,” the report stated.
Rising enrolments drive heavy investment
According to the CRISIL report, as enrolments rise, educational institutions are expected to spend significantly on capital expenditure, or capex, to expand their capacity and upgrade infrastructure.
Despite this heavy spending, the financial health, or credit profiles, of these institutions is expected to remain stable. This is because strong cash flows from rising fee collections reduce the need to borrow externally, the report states.
Nagarjun Alaparthi, Associate Director, Crisil Ratings said, “The credit profiles of educational institutions rated by us will be supported by strong cash flows from rising fee collections, which will be used for developing infrastructure. Gearing and interest coverage ratios are expected to be healthy at 0.37 times and 7.6 times, respectively, this fiscal, similar to the previous fiscal.”
A low gearing ratio, which measures the proportion of debt in an institution’s capital structure, indicates that they rely less on debt, while a high interest coverage ratio, which measures the ability to pay interest from earnings, shows that they can easily pay interest on any borrowings, keeping their finances strong and stable.
(Edited by Ajeet Tiwari)