Private medical colleges hit hard by note ban: India Ratings

NEW DELHI: Private educational institutions, specially engineering and medical colleges collecting donation and capitation fees in cash have been significantly impacted by note ban, said Fitch Group arm India Ratings.

The impact of demonetisation on the education sector has been mixed, said India Ratings and Research (Ind-Ra) report, while maintaining a stable outlook on the education sector for 2017-18.

"Institutions where donation and capitation fees are collected in cash and have been a significant component of revenue such as in engineering, medical, nursery colleges have been negatively impacted due to demonetisation," it said.

However, the increasing number of cashless transactions has the potential to bring in more transparency in the education sector, leading to increased interest of private sector, specially private equity/venture capital players, it added.

The government had demonetised old Rs 500 and Rs 1,000 notes on November 8 last year with an aim to check black money, counterfeit currency and terror financing.

The move lead to huge cash crunch in the economy as 86 per cent of the currency was scrapped.

Ind-Ra further said enrollments increased marginally in the school segment (FY15: 0.43 per cent yoy) and moderately in higher education (FY15: 5.88 per cent yoy).

The agency observed the education sector has the potential to grow due to a huge demand-supply gap.

"Besides new educational institutions, the existing institutions are continuously churning themselves both in terms of physical infrastructure and course content/curricula to keep abreast with the needs of the economy," the report said.