INDIA: The COVID-19 outbreak has triggered a world economic disruption of significant magnitude with an escalating pace, resulting in steep recessions in many countries. The education sector has been highly affected due to this. Several private schools in India are struggling to pay their bills and loan dues due to poor student turnout during the pandemic. Some schools even believe that the third wave of COVID-19 may force them to shut down their schools for an indefinite time.
Private schools that operate in pre-primary, primary, and middle education categories (classes Nursery to Class VIIth) have been the worst-affected as they have remained shut the longest for close to 17-18 months.
Excluding a disastrous loss in the form of lack of access to education for children, the current situation can result in loss of livelihood for teachers and support staff.
Furthermore, many students studying in private schools have switched to government schools over the past three years. As per some reports, the reasons for the switch may include financial distress in households and permanent school shutdowns among the private schools.
Even as schools have reopened in most parts of the country, the attendance remains thin at about 20-30%. Meanwhile, parents are afraid to send their children to schools due to a lack of vaccination for children below 18 years of age.
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The stress among private schools is emerging mainly due to poor fee collections, which is not just affecting their cash flows but also impeding their ability to pay loan dues.
The Reserve Bank Of India (RBI) had announced a one-time restructuring scheme last year to aid borrowers including private schools affected by the COVID-19 pandemic. The scheme was to be invoked by December 31, 2020, and implemented within 180 days for corporate borrowers.
