In this week’s newsletter, we talk about new guidelines to curb the practice of coaching centres, a non-monetary measure of poverty, India’s IT sector’s Q3 performance and a lot more.
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Coaching Centre Crackdown?!
In 2023, 26 students committed suicide in the coaching capital of India — Kota. That’s one death every two weeks.
And maybe this record-high suicide rate was the final straw. Because the government has decided to do something about it. Last week, the Ministry of Education laid down a whole host of new guidelines to bring coaching centres under its thumb.
But before we tell you what these guidelines entail, we first need to address how we ended up in this mess, no?
Well, it all probably began in the 1980s with Bansal Classes (and no, we’re not blaming them in any way). A former engineer left his job at a nylon-making company after a health issue struck him. And he decided to put his engineering skills to use and help students prepare for exams. He began taking private classes in his dining room. Soon, his students began to clear the competitive exams and head to greener pastures. His fame spread far and wide. And by 2012, Bansal Classes had become an 8-storied behemoth that raked in over ₹100 crores yearly.
But this success was attracting others who wanted a piece of this extremely lucrative pie too. Maybe people realized that spending on education was quite inelastic in the country. That parents would choose to not spend on healthcare if their incomes were hurt. But education wasn’t to be disrupted.
And we’re not making this up. It’s something that India’s Economic Survey highlighted.
Maybe it’s because parents believed that getting a coveted engineering or medical degree would be the start of a better life for their children. They were willing to shell the big bucks. But the problem here was that the competition was insane. Heck, in 2022, for the NEET exam, which is the gateway to medical school, 18 lakh students vied for a puny 92,000 seats.
So coaching centres doubled down on their sales pitch. They decided to expand their cohorts. High schoolers weren’t enough. You needed to catch ’em young. So ‘Foundation Courses’ began. Students as young as 12 would enrol. That’s around the 6th grade. The parents didn’t complain because if starting early meant getting an edge over their other aspirants, so be it.
Okay, but what about regular school you ask?
Well, in many cases, the coaching centres had a secret handshake with schools. They’d teach them everything there was to know. And the school would let them sit for public exams — the 10th and 12th grades.
Coaching centres became quasi-schools. And the industry boomed — It turned into a ₹60,000 crore juggernaut.
But the pressure that came with these models was insane.
As The Ken points out, the coaching institute Allen has this weird system for its hostels. If you do well and rank better than your peers, you get to stay. Otherwise, you get booted out.
Just think about how would that affect the psyche of students?
But many centres didn’t care about any of this. They were there to rake in money. It was big business. So random centres began mushrooming across all parts of the country. And many of them paid no heed to safety norms. A few years ago, a coaching centre in Surat burnt down and killed 20 students — the structure had an illegal construction on the terrace, wooden staircases, no fire extinguishers, nothing.
Students were just a money-making machine.
So yeah, you can see why the government finally felt the need to intervene. And here’s a sampler of the guidelines.
For starters, coaching centres need to pay attention to the mental health of their students. They can’t just wash their hands off saying that it’s the parents who must first figure out if the child can handle the pressure or not. They want them to conduct workshops.
Then it says that coaching institutes can’t enroll students below the age of 16. Basically, students need to have cleared their 10th-grade exams before joining these centres.
And if they’re seen to be promising results, then that’s a red flag. The centres indulging in such dubious guarantees will be fined.
Also, centres must ensure that there’s a minimum of one square meter area for each student in a class. And that all fire and building safety norms are in place.
Sounds good, doesn’t it? Hopefully, this could help improve conditions and the lives of students. Even if it’s just by a tiny bit.
But coaching centres are already worried about some of these rules.
They’re saying stuff like, “Oh, the exams are hard. We can’t coach them adequately in a year or two. Students need a longer rope to adjust to the pressures of the competition.”
And you might be forgiven for thinking that they’ve got the best interests of the students at heart.
But it’s mostly just business. Students below the age of 16 make up around 20–40% of the population at many of these coaching centres. If these rules are enforced, that’s a large chunk of money that’ll fly out of the window.
And you can bet they’ll fight tooth and nail to protect themselves.
So yeah, we don’t know if these guidelines will end up like previous attempts at regulation. In 2012, the then minister of state for education called the coaching industry a monster and proposed a law to rein them in but nothing really materialised. In 2015, when cases of suicide ballooned in Kota, the Rajasthan government stepped in to formulate the rules. But it took 8 years for some form of regulation to shape up. And in Bihar, where coaching centres need to be registered since 2010, it still doesn’t seem to be happening.
So will this time be any different?
For the sake of the students, let’s hope so.
Until then…
PS: Watch the Netflix show called Kota Factory. It tries to lay bare all the problems of coaching centres. And the makers even decided to make it a black-and-white series. Just to drive home the point that the lives of students who end up in these coaching centres are devoid of colour and joy.
An explainer on Multidimensional Poverty
248 million.
That’s how many people we’ve pulled out of poverty in the past 9 years as per NITI Aayog.
But wait…when you hear poverty, you’re likely to think of the monetary aspect of it. If you know that it requires ₹x to lead a life with access to food, clothing, and shelter — the basics — then you can say someone has crossed the poverty threshold when they succeed in earning more than that. People are said to be in poverty if they don’t have enough money.
And it’s an idea that has been prevalent for over 200 years. Yup, the first real measure probably dates back to 1795 in the UK. A priest named David Davies decided to evaluate the lives of labourers in his region. He calculated how much money people would need to live in ‘tolerable comfort’. And he decided that anything below that would make them poor.
So yeah, we’re kind of used to having a standalone measure like the quantum of money to determine poverty. It’s fairly easy.
But that’s not what NITI Aayog measured. These folks decided to take a holistic approach and looked into something called Multidimensional Poverty.
What’s that, you ask?
Well, think about what outcome you get when using a number to measure poverty. You simply get to know who’s poor. You realize that these are the people who are unable to eke out a decent standard of living.
But it doesn’t tell you ‘how they are poor’.
For instance, back in the day, we arrived at a monetary value by first looking at how many calories a person needs daily. We came to the conclusion that 2,400 kilocalories for rural and 2,100 kilocalories in urban areas would determine the poverty line. Then we’d look at the wholesale price of certain food commodities and then say a person needs ₹x to buy the stuff needed to fulfill that requirement. But the problem with this is that you can meet the calorie count by consuming stuff like sugar. And that doesn’t consider the nutrition aspect at all.
So a person might be earning enough money to say they’re above the poverty line, but they’re nutritionally poor.
And it’s not just about nutrition, of course. That’s one example. It could be about children getting appropriate schooling, receiving a steady supply of electricity, having clean drinking water, or simply having access to bank accounts to receive government benefits that might be directly transferred to them.
Because being deprived of these elements creates a situation where poverty becomes a never-ending cycle that the family can’t get out of. The hardships compound.
And Multidimensional Poverty Indexes (MPI) seeks to measure just this. It takes into account numerous such variables — Health, Education, and Standard of Living — that present a more holistic picture of where things might be going wrong. And this helps governments refocus their efforts too. If they know malnutrition is a big problem, they can launch a scheme where fortified grains are included in the public distribution system. If the metric indicates that people are deprived of electricity, the priority could then be to ensure the electrification of all villages.
If some lack of purchasing power is compensated by welfare spending and direct benefit transfers, then that should be counted as income for the recipient.
Anyway, MPI is important because, quite often, things might be even more dire on this front than what simple monetary metrics indicate. For instance, the World Bank pointed out that 9% of people in the world lived in monetary poverty in 2018. But if you included all these other variables and measured multidimensional poverty, the number jumped to 14.5%.
So yeah, that’s what the NITI Aayog report tells us too. They measured multidimensional poverty and came to the conclusion that 248 million people have escaped the clutches of multidimensional poverty and that the prevalence of such poverty is falling dramatically.
Sounds good, no? It’s definitely something to cheer about.
But of course, not everyone agrees with using MPI as an indicator to gauge poverty and there have been some quibbles about the NITI Aayog paper.
For instance, some people might argue here saying that people are getting access to government benefits. These subsidies for foodgrains and cooking gas might be what’s helping. And that they may still not be earning the money required to keep them afloat. That if one day, suddenly, the tap on the benefits is turned off due to financial difficulties at the country level, the problems will be exacerbated.
But until then, as economist Ajit Ranade says, “If some lack of purchasing power is compensated by welfare spending and direct benefit transfers, then that should be counted as income for the recipient.”
It helps.
Next, as Santosh Mehrotra, a professor of Development Economics, highlights, there could be the problem of projections.
For instance, consider the year-on-year change in the 12 indicators for MPI. The government compared improvements or deficiencies recorded in the National Family Health Survey (NFHS) between 2005–06 and 2015–16. And then assumed a linear growth rate to calculate a drop in poverty for years where data might be missing — for 2014 for instance. And then, they took the survey data for 2019–2021 and simply extended the gains into 2022 and 2023. It’s a simple projection and the actual data may not back up the calculations.
But even then, there’s no denying that poverty has fallen.
A report recently published by the United Nations Development Programme (UNDP) uses similar survey data in India to discuss the state of poverty. It doesn’t interpolate or extrapolate data and the report notes that in 2005–06, 55% of India’s population lived in multidimensional poverty. This halved to 27% by 2015–16. And further fell to 16% during 2019–21.
So yeah, despite all the criticism, we definitely seem to be doing some good work on alleviating such poverty. And that is cause for cheer.
Today’s Discussion: Nazara Tech’s Comic Con India bet
Comic Con India will soon belong to gaming giant Nazara Technologies. This week NODWIN Gaming, Nazara’s esports subsidiary announced it was buying out Comic Con India for ₹55 crores in an all cash deal. And it’s probably a great bet.
See, Nazara Technologies is a mobile gaming and sports media company based out of Mumbai. And subscription earnings which are a big source of its revenue majorly come from gaming platform fees, advertising and sponsorship or media rights. But the gaming business is dynamic and businesses can only stay relevant when they diversify their revenues as much as possible. So that’s probably what Nazara is doing too.
And Comic Con could be that window of opportunity. That’s because Comic Con is an annual comic based convention where comic artists, merch businesses and comic enthusiasts come together at these events held across big cities globally. And the rise of pop culture in India has been giving Comic Con wings. When Comic Con India started out in 2011, it had just about 10,000 attendees. And the number has grown nearly 5x in about a decade, earning over ₹16 crores as of 2023.
And since Nazara intends to expand its presence in the global entertainment space, acquiring Comic Con actually makes sense. It could take Comic Con beyond popular cities like Bangalore, Mumbai, Delhi, Pune, Ahmedabad and Hyderabad where such events have great potential.
Do you think this diversification strategy will turn out well for Nazara Technologies?
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