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Opportunity for PPP in India McKinsey study highlights

Opportunity for PPP in India McKinsey study highlights. January, 2014. There is an immense need for public-private partnerships ( PPPs ) to provide high quality school education to under-privileged children in India. All the possible options for under-privileged children….

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Opportunity for PPP in India McKinsey study highlights

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  1. Opportunity for PPP in IndiaMcKinsey study highlights January, 2014

  2. There is an immense need for public-private partnerships (PPPs) to provide high quality school education to under-privileged children in India All the possible options for under-privileged children… …can benefit significantly from PPP Government schools: serve between 30 and 60% of children in various urban locations; close to 13,000 schools in the top 20 cities • Well-structured private expertise could help improve the quality, where there is a significant challenge as per several studies • Already a form of PPP; however, no robust selection or performance evaluation • Well-defined PPP needed for quality enhancement Government aided schools (an existing form of public-private partnership or PPP); close to 6000 schools in the top 20 cities Affordable private schools Non-RTE compliant: Rs. 300-700/ month fee • Quality challenges • May not sustain without RTE compliance “RTE-superimposed” likely to be Rs. 1200-1500++/ month in fee • PPP critical to make them affordable and therefore scalable Donor-funded schools(sometimes with government infrastructure) • Very small in number/volume • PPP critical to reduce donor funding and therefore make them scalable 25% reservation in elite schools as per RTE (an existing form of PPP) • Enhancements may be needed to address implementation challenges

  3. PPPs in school education could be a `350-400 cr funding requirement with a scale of 2,500-3,000 schools in top 20 cities over next 5 years • Immense need for PPPsin Indian school education • Several factors coming together to make PPPs a reality • Government schools – Low quality; PPP critical for quality enhancement • Aided schools – Already PPP but not well-defined processes for selection and outcomes evaluation • Affordable pvt. schools – Not scalable and quality not consistently better • Donor-funded schools – Small in number and not scalable • Govts. are increasingly becoming willing (e.g., Punjab, Haryana, AP) and some have defined PPP policies (e.g., Mumbai, South Delhi, Gujarat) • Operating Foundations interested in running PPP schools • Donors willing to fund different PPP models • Specific PPP models emerging as feasible options + • PPP opportunity • Of total 18,200 government + aided schools in top 20 cities…. • Overall opportunity • English medium opportunity • Scale1 • Funding gap2 • Scale1 • Funding gap2 • # of schools • ` cr. per year • # of schools • ` cr. per year • Over next 5 years 2,500-3,000 350-400 1,000-1,200 150-180 • Over next 10 years 4,500-5,000 600-700 2,500-3,000 350-400 1 Assumes 40-50% govts. interested and 30-40% schools under PPP; assumes that English medium will grow to over 10% of total schools and will be prioritized for PPP 2 Assumes average funding gap across all feasible models to be around `2,000-2,600 per child per year

  4. International experiences show that several ‘must dos’ need to be put in place to ensure seamless implementation of PPP models • For Whole school PPP models (govt. infra, private teachersOR govt. teachers, private management) • 1 • Player selection • Tendering based on technical criteria: both objective(e.g., years of experience) and qualitative (e.g., learning outcomes in existing programs, proposed school, etc.) • No financial bidding; payment fixed per child and independent of cost • Independent steering committee to be set up by government to act as an Authorizer, consisting of reputed education leaders such as Director of IITor Vice Chancellor of local university, 1-2 private industry leaders, donors, civil society leaders, ex-officio government. representatives and potentially teacher union representatives • 2 • Decision rights and governance • Model 2(a) • Full control over teachers (e.g., hiring, firing, training, performance mgmt., etc.) • Complete autonomy on pedagogy and overall management • Model 7 • Autonomy over all regular activities of teachers (attendance, training, perf. mgmt.) • 3 • Funding mechanism • Escrow account to be set-up for all funds, and transferred by govt. at start of each year; Any withdrawal cheque needs authorization from school manager & assessment committee nominee • Funding to be a mix of fixed (upfront) and variable (based on outcomes) • 4 • Outcomes assessment & consequence management • Annual outcomes assessment to be conducted by a qualified 3rdparty agency appointed by the steering committee (potentially through a tender process, with 80% weightage to technical) • Funding linked to learning outcomes post 2 years; Only lead indicators such as teacher attendance, school facilities to be assessed in 1st 2 years • Outcomes based incentives and penalties (financial penalty; contract renewal / duration reduction /termination) to be put in place

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