Indian engineering colleges sold off as students fail to sign up

Following a rush to establish IT engineering colleges in more rural parts of India in the past 10 years, a lack of demand is forcing many to be sold off.

A candidate fills in an application for the Common Entrance Test to secure an engineering seat in Bangalore. Aijaz Rahi / AP Photo

“A Rs 6.5 crore [Dh3.8 million] engineering college for sale” reads the advertisement on a property website.

Tucked away between advertisements for spacious commercial units and large plots of land, it further states that the 840 square metre building is constructed on 10 acres of land, has 400 computers, an auditorium that can seat 400, four buses and is just 40km from the city of Hyderabad in southern Indian state of Andhra Pradesh.

The advertisement is unusual.

In a region where IT and software engineering has been a preferred subject among most students, the sale details underline a worrying trend across south India. What began with a rush by private educational trusts to set up engineering colleges in the southern states of Andhra Pradesh, Tamil Nadu and Karnataka a decade ago, is now seeing distress sales as the institutions fail to attract students to fill the available places.

The former vice chancellor of the Anna University, E Balagurusamy, has been widely quoted in the Indian media as stating that “as many as 100 colleges”, both engineering and others, were currently up for sale in Tamil Nadu alone.

“This is because they just don’t have enough students. When there are no students, where is the revenue,” he says.

In Andhra Pradesh, an estimated 100,000 places across its 714 engineering colleges are vacant. Officials of the Andhra Pradesh State Council of Higher Education that conducts admissions say nearly 400 colleges have admitted they had fewer than 100 students and some have even reported zero admissions.

In neighbouring Tamil Nadu, there are more than a dozen colleges where the intake for the academic year 2013 to 2014 has been fewer than 100 students. At least 10,000 of the 50,000 engineering places on offer remained vacant at the end of the latest admission season in the Coimbatore region, ususally considered a popular educational hub.

“Barring the 50 odd elite colleges in the state, most others have seen abysmal enrollments,” says an official from the southern regional office of the All India Council for Technical Education (AICTE) requesting anonymity.

“One of the reasons could be the fact that the seats in select colleges have been increased,” the official adds.

“Also, deemed universities can admit any number of students. Both these aspects have affected private colleges that have opened in the last five to six years.”

According to a July report in The Hindu newspaper, nearly 80,000 out of about 200,000 engineering college places are vacant in Tamil Nadu. In Andhra Pradesh, which has the most number of engineering colleges in South India, the figure is even higher at more than 100,000 seats, while Karnataka has about 20,000 vacant engineering seats.

About a decade ago, private trusts stormed into the education sector, creating establishments across these states. Most described themselves as “state of the art” institutions aimed at “providing quality technical education to rural youth”.

But many of them failed to meet required standards over a period of time.

“There are routine surprise checks we conduct and an expert team follows it up with a set of questions,” says says an official from AICTE’s south-western region, explaining how many colleges had subsequently been put in the “no admission or reduced admission category”, says an official from AICTE’s south-western region.

“In many cases, we find the colleges lacking facilities they promised their students when they opened. Such colleges are put in a reduced admission or no admission category for a period of time. If they are unable to improve standards and attract students, they sometimes choose to close down.”

Last year, the council issued warning notices to 71 institutions. Many of these had failed to fill even 50 per cent of their seats.

Brokers dealing with commercial properties are now helping college managements discreetly strike deals with buyers, most of whom are players in the education field.

“I am in the process of finalising deals for 12 institutions,” says one such mediator, who gave his name only as Selvam.

“Most owners are very hesitant to talk about this publicly but in private they admit that running these institutions is becoming very, very difficult. The properties are being sold between 50 and 100 crore rupees [500 million and 1bn rupees]The teaching and non-teaching staff is also part of the bargain in some cases.”

Admitting there was a distress sale by colleges, the Coimbatore association of management colleges affiliated under Anna University has stated that with “rules getting more rigid, running an institution has become tougher”.

Furthermore, universities are now being more discerning in granting recognition to private institutions and as a result no new engineering and business schools have opened in India in the past few months.

The economic slowdown has also contributed to this and resulted in graduates from established institutions find themselves unable to find work. A number of principals of these colleges fear engineering as a desirable course could be losing its sheen because of the slower hiring this year at software companies, which is where many students head to after completing the standard four-year programme.

As a result, while top colleges are increasing their capacity and taking in more students, a number of second-rung engineering institutes are operating at far less than half their capacity, as students opt for the sciences or humanities instead of engineering, which was once considered a stepping stone to high-paying software jobs.

Industry estimates for the future have further dissuaded many students from pursuing engineering despite colleges jumping in with attractive discounts and flexible payment schedules.

India trains an estimated 1.5 million engineers every year. However, industry body the National Association of Software and Service Companies (Nasscom) has estimated that hiring in the IT sector will drop by up to 17 per cent this fiscal year “mainly due to an increased push towards automation and lower attrition in the sector”.

“It is a simple demand and supply thing,” says another broker, who gave his name only as Mahalingam.

“In my town, near Coimbatore, there are colleges everywhere, within a kilometre of each other.

“And there are students from all across India who come here to study also,” he says.

“But the students are getting accommodated in the better colleges, leaving the more recently opened institutions empty. The entire process is complicated and many are now discovering that they just cannot run these colleges efficiently.”