Many Engineering & MBA Colleges May Shut Down – CRISIL Report

According to a research conducted by CRISIL (an independent and integrated research house) it is expected that many Engineering & MBA Colleges (or Business Schools) are expected to shut down due to low occupancy of seats. The report from CRISIL highlighted that one third of seats in Engineering and Business Schools are lying vacant. This may lead to cost over run situation Institutes with low occupancy mayn’t be able to meet their operating expenses to get going.

CRISIL Research estimates that the average occupancy rate declined in 2011-12 to around 67 per cent for engineering colleges and to about 65 per cent for business schools (B-schools).

Occupancy levels are under pressure due to the significant increase in the number of seats across colleges, shortage of skilled faculty, absence of industry link-ups, increasing awareness amongst students about the quality of education imparted by colleges.

According to Ajay Srinivasan, Head – Industry Research, CRISIL Research, “Low occupancy rates are making it difficult for many lower-rung colleges to sustain operations. As a result, we expect a number of colleges to face closure or change in ownership over the next few years.”

The number of seats offered by AICTE-approved B-schools has increased almost fourfold to 3.52 lakhs in 2011-12 from 0.94 lakhs in 2006-07, while that for engineering colleges has zoomed to 14.85 lakhs from 5.50 lakhs during the same period. Moreover, there is also a significant concentration of supply, with AP, UP, Tamil Nadu, Maharashtra, Karnataka and Madhya Pradesh together accounting for close to 65 per cent of the engineering seats on offer.

About CRISIL Research

CRISIL Research is the country’s largest independent and integrated research house with strong domain expertise on Indian economy, industries and capital markets. We leverage our unique research platform and capabilities to deliver superior perspectives and insights to over 1200 domestic and global clients, through a range of research reports, analytical tools, subscription products and customised solutions.

Source: With inputs from CRISIL Research Report

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