The Week That Was: 3-7 Aug
This week, we wrote two pieces about India’s new education policy, one about IT services and another about the economy not doing particularly well in July.
On July 30, the National Education Policy (NEP) took the static 10+2 education formation and flipped it on its head. From a comprehensive Indian Express article:
In a significant shift from the 1986 policy, which pushed for a 10+2 structure of school education, the new NEP pitches for a “5+3+3+4” design corresponding to the age groups 3-8 years (foundational stage), 8-11 (preparatory), 11-14 (middle), and 14-18 (secondary). This brings early childhood education (also known as pre-school education for children of ages 3 to 5) under the ambit of formal schooling.
The 5-3-3-4 formation pays equal focus on building the foundation (defence), the middle and the final years with an especially important twist: there is a clear shift from rote learning to experiential. From inflexibility to the flexible. The policy acknowledges and builds on the understanding that there is more to learning than memorising and recanting multiplication tables.
Colleges will be made multidisciplinary. University affiliation will go and colleges can hand out degrees (like in the US). There will be a single regulator for all higher education. And then there will be “academic credit banks”, that will allow students to take a break in the middle of their programs and transfer credits across programs. (here is a good introduction to the credit system and credit transfer programs).
Another stated aim of the NEP is to increase Gross Enrolment Ratio (GER) into higher education from the current ~26% to 50% (by 2025). In other words, the policy wants every other student in India to go to college.
First, in June, we saw some green shoots in the economy. Then we had some doubts on whether a 10% fall in demand for energy was a good or a bad thing. Now it seems like we have conclusive evidence that economic growth is not going to happen for a while at least.
While the national lockdown ended with the “unlocks” that started in early June (now we’re in “unlock 3.0” territory), states and cities have continued to impose sporadic lockdowns after that (Bangalore, for example, was shut down for a week in the middle of July). And these localised lockdowns seem to have played havoc with supply chains, and July saw a faster contraction compared to June.
The resemblance is uncanny. Taken together, this bouquet of “mid tier IT Services firms” has not performed very differently from the “big four” as far as quarterly results are concerned. Most companies have seen flat, or mildly positive, profit growth; and flat, or mildly positive revenue growth.
Everyone seems to be talking about digital (though some might use different words for it). Everyone seems to continue to be winning deals. However, the big change in the last quarter is that these firms that were mostly used to employees working on premise, have had to move to a largely work from home model. It might take a quarter (or two) to see whether that is going to affect performance, and in what direction.