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Coaching centres are a sign of broken-window economics. See how China crushed it all overnight

How broken does our governance have to be, and how incredible our hypocrisy, that we cannot make profits from educating young Indians, but earn thousands of crores by giving them tuitions?

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Everybody who matters anywhere in our “system” is now trying to do something about the death by drowning of three young people in the basement library of Rau’s IAS Study Circle in Old Rajinder Nagar, western Delhi’s UPSC coaching hub.

The Delhi High Court has handed over the investigation to the CBI, while the Delhi government has sealed a whole bunch of such basements at multiple other coaching centres and announced that it will pass a law regulating such businesses. Some owners and senior management members have been arrested.

And to cap the absurdity, the Delhi Police have made world headlines by arresting the owner and driver of an SUV that merely happened to drive across the flooded street and, apparently, pushed the water into the basement to flood it.

Some of the owners of these coaching centres and superstar ‘teachers’ are appearing on selected media platforms, particularly those where they’ve had mutually beneficial commercial relationships, to express fake sympathy with the victims but mostly for self-exculpation.

Nobody is particularly pushed on the key question: If this is how much you charge, or you earn this much fame on Instagram from the reels you make, how come you’re still running ‘classes’ in these unsafe, unhygienic, slum-like conditions?

Or how is it that while they charge their students top dollar on the promise that they can game a system with a failure rate of about 99.8 percent, they do not spend on providing at least some basic facilities and safety?

This, in our ridiculous system where it isn’t legal to make profits from education. You run universities, colleges, schools but pretend you make no profits.

The coaching business has no such issue. Many are also either listed on stock markets or headed there. How broken does our governance have to be — and how incredibly touching our hypocrisy — that you can’t make profits from giving young Indians education, but can earn thousands of crores giving the same graduates of the same tuition?

One way of figuring out how big the coaching business is and how fast it’s growing is to just look at the GST the Centre has been collecting from them. As the figures in this fine story by Mrinalini Dhyani on ThePrint show, in 2019-2020, the GST collected at the rate of 18 percent was Rs 2,240 crore. Five years later, it has already gone up by about 150 percent to Rs 5,517 crore. It is estimated that it’ll go up to about Rs 15,000 crore by 2029.

The other way to understand the size and power of the business is simply to look at the front pages of your big daily newspapers across the country. These coaching centres have marketing budgets to buy acres and acres of that expensive real estate on newsprint, advertising not just their successful ‘students’ but their ‘teachers’.

Each is painted as a star. And each one’s name is suffixed with a ‘sir’. Or in the rare case of a woman ‘teacher’ (about one in 50 by my cursory count), ‘ma’am’. I suppose it is an early blooding of our future rulers in the ‘sir-ing’ or ‘ji-huzoori’ culture. It is also the biggest individual brand-building exercise in India outside the movie business. Because the superstardom of founders and teachers is essential to the success of a coaching business.

Now, teachers were usually self-effacing, generous and large-hearted people dispensing wisdom and knowledge to pupils with humility. The coaching business is a blot on teaching and its superstar phenomenon is two things: one, an insult to real, anonymous, modestly paid teachers and second, a reminder to us of how broken our regular education system is.

If the system wasn’t in such shambles, why would literally lakhs of young people hang around in cities for ‘coaching’?

Of course many of those selected will lend their faces to these advertisements, some will be paid for it and thereby begin their hallowed careers with a kind of a ‘bribe’. Check out Vidhu Vinod Chopra’s 12th Fail.


Also Read: Middle class is reacting like slighted lovers over Budget 2024. Their anger won’t last


The main reason the coaching business has crossed Rs 30,650 crore in size (take GST of Rs 5,517 crore at 18 percent as the base) and is booming is that our public education system is broken. In so many ways, this is the biggest instance of broken-window economics in our governance besides our electricity supplies.

The idea of broken-window economics, or the broken window fallacy, is credited to a 19th-century French economist and parliamentarian, Frédéric Bastiat. He used an imaginary shopkeeper, James Goodfellow, as an example. You break a window, hire a carpenter to fix it, he buys bread from what you pay him and pays the baker, and so on. Bastiat said this wasn’t a virtuous cycle. It is the broken-window fallacy. What is missed here is opportunity cost.

In this case, Mr Goodfellow has his shop and window, and the people in the chain have their jobs. and he could buy his son shoes and himself a book with the same money. That would be a virtuous cycle.

See how this plays out in our lives. We give subsidies for power, our grids are broken, our utility companies are broke, producers aren’t getting paid and banks who lent them money are struggling. Everybody is broke while the country has a power surplus. Our power is unreliable, goes off too often and the voltage fluctuates, so we invest in generators, inverters and voltage stabilisers, buy enormous amounts of diesel and burn it to pollute the air.

This worsens our air, which is already polluted because we burn our garbage, the combination of free power and water leads to stubble burning, and so on. The solution is to buy air purifiers for our homes, which cost more than air conditioners. All these — generators, stabilisers, inverters and air purifiers — make up our massive broken-window economics. Education is no different from it. The coaching business is only its worst manifestation.

Nobody wants to learn from the Chinese, but see how Xi Jinping addressed it in 2021. He demolished his entire tuition and coaching industry overnight. Reasons given: It was straining the finances of families, causing inequality, wasting families’ time and taking young people away from more fun things.

Everything, including coaching centres for China’s famed UPSC equivalent, Gaokao, was banned. There was to be no tutoring for profit, no IPO listings, no share sales, limits on online learning, no mergers, acquisitions, franchises, foreign collaborations. End of story.

Overnight, Chinese edtech companies lost more than $1 trillion on the stock markets, way more than the damage in the 2008 global financial meltdown. Jack Ma apart (he was dismantled differently), three of the top billionaires, Larry Chen, Michael Yu and Zhang Bangxin, lost between 50 and 90 percent of their wealth — all from edtech.

Going as far as Xi Jinping may look like going too far. But if you look at the problems he was addressing, it’s the same list in India. So something must be done. This coaching-tuition-profiteering model built on the back of a broken education system is a scandal and an abomination, and must go.


Also Read: Reforming UPSC, ending China-Pak curse, reviving farm reforms — to-do list for Modi 3.0


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7 COMMENTS

  1. Nothing has changed in the Indian education system over the decades. A system that focuses on elimination rather than on empowerment is bound to disappoint the young aspirants. Many who claim success in such a system find themselves not fit to be employed, as the “rote” process has numbed the basic elements of their learning and intellect.

    As a country… the glorification of some professions as elitist and others for “duffers” is causing more harm than good. And so the private colleges, coaching classes with exorbitant tuition fees backed by the government mandarins, paint rosy pictures of this “elitist” professions which is not everyone’s cup of tea or coffee.

    Most importantly until the Indian society eschews the dignity of labour the possibility of reforming the education system with equal opportunity of employment will remain a pipe dream.

  2. The Indian academics is a failed project because of its inherent bad design. Our Academic programme, right from the very beginning of school years, is designed by bourgeois and ruling class snobs. Our education syllabus is designed for enlightenment, not empowerment. And it is very conservative in approach. Even in properly governed and affordable schools/ colleges students feel bored and tired. Those who do well will do well anywhere. The things which are meant to be studied must have some relevance or immediately useful for the pupil, otherwise it becomes a rut, an anaesthetic for numbness.

    For instance, no student likes to attend prayers for even a single minute, teaching sanskrit and poems to even graduates is a worthless exercise and frustratingly idiotic (these are things of passion, not prescription). Two good World War movies can teach history better than whole worthless history course about wars. Our early minds are taught lofty ideals of Constitution and moral lessons which are things to be experienced firsthand, not learned second hand—are educated people morally superior, are they better at making friends, controlling anger, or less corrupt? And even after that we don’t even know the difference between a criminal case and a civil case; and don’t know that we cannot be arrested without a warrant.

    Our education system must be designed to suit our needs and to promote scientific temperament, to make us more skilful and employable, not adorable.

  3. Dear SG, The analysis is very good, but why are you offering draconian solutions like the one in China? Ours is a democratic system, changes will be slower but permanent. Here the sokytiin will be different, in fact it is already here, the AAP education model. AAP has turned around the government schools. You should have been the first to recognize it and write about it. Why New York Times has to recognize it. Since Modi came to power, many Indians got enamoured with his power and agilty to take even hard decisions, but miss the point that he is completely anti-democratic. Some of his decisions like demonetization have created havoc, but how many journos wrote about it. Why misuse the power of ED, CBI, IT against anybody who opposes BJP?

  4. Your diagnosis is correct but your solution is wrong. To say that when you will implement this we would have unicorns farting rainbows is incredibily shortsighted. First of all Indian school educationsystem in India is shoddy. If you say that this is because of lack of investment then you are again wrong. Private school teachers in tier 2 cities and towns are paid less than government schools yet they achieve better outcomes. The window is broken because we have voluntarily made things only about marks. On top many of your socialist compatriots have instituted high taxes on entrepreneur. These coaching classes are capitalistic free markets and the solutions are regulations not overregulations

  5. Excellent article. Fix the basics of primary and secondary education, then the coaching industry will self destruct. But this will also require breaking the myth of IITians and ex AIIMS making a lot of money which is not true. Statistics about the employment and salary of IITians and ex AIIMS after passing out must be surveyed and put in public domain. India needs a lot more than just engineers and doctors.

  6. I some one start selling… Human milk we have to out rightly ban it…. In no way you can sell and buy human milk and human blood… In the same way praying on the misery of jobless youth…. And extracting profit from them… Draining them emotionally and financially…. Should stop🙏🙏🙏🙏

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