This is the Excel ( Motherfle ) containing all the calculations , financing details and project structuring concepts for India's largest education project. It is also the worlds largest and most sophisticated education project based on innovative financing.
This is a 2 MB file, Please allow a few minutes for download. It is worth it.
1. The Nataraja Foundation
www.nataraja.org.in The Indian Primary & Secondary
Education Megaproject
27 th March ' 2010
This Excel workbook deals mainly with the
financial structures, cost estimates and
detailed financials of the Education
Megaproject.
Project Concepts and Objectives The actual project, the thinking behind it, it's
design criteria etc have been covered in detail in
the project concept document which is available
The Indian Primary & Secondary Education Megaproject for free download from the Nataraja Foundation's
website www.nataraja.org.in
Over the last 30 years India has spent very little money on building new schools . The focus has instead been on getting quick
results through projects that involved the least possible expenditure. So few new schools were built even though India's
population grew from from approx. 846 million in 1991 to almost 1.15 Billion people in 2009. In the schools that were built,
the quality of infrastructure is very poor. Planning commission data clearly shows that 44 % of schools at the primary level do
not have toilets for instance and 15 % do not have drinking water . Planning Commission data also reveals that nearly 45 % of Creating a lifestyle around the teaching
the SC / ST children drop out of school by class V and by class XIII in excess of 60 % drop out of school. Various studies profession
conducted by government of India as well as foreign agencies are showing that the percentage ( % ) of " Out Of School
Children " is falling but no one is talking about the third rate quality of the schools that the children are being enrolled in and Low cost yet very elegant housing for
the abysymal working conditions of the teachers who teach there. teachers under the programme.
As a result of all this, in 6 - 8 years time , over 100 Million children will exit the school going age group without any This particular house was built at a cost of
employable skills. This is going to create huge social problems in the country. Rs 750 / Sq Ft in 2007 in the Vernacular
Architectural Style.
Obviously something has gone terribly wrong with our entire approach to education and we need a robust strategy to solve
the problems in our education system. Location : Bangalore
Architect : RL Kumar
Therefore ...
www.vernarch.com
Central to the thinking behind this project is the belief that the main reason for the steep decline in the quality of human
resources in India has been the neglect of the teaching profession and teachers over the last several decades.
In India today a crane operator with 5 years of experience makes more money than an MA in Economics or a MSC in
Maths or a teacher with a proper BEd degree and with 10 years of teaching experience at the primary school level. This
has warped the economic choices that a fresh graduate makes and has resulted in the least qualified individuals
handling the most important of all the jobs in this country (The teaching of our children and tomorrows citizens ).
This project takes note of the fact that India reached the height of its glory when the teacher was at the head of our society
and therefore seeks to bring back this long lost Indian tradition through an innovative mechanism on a truly massive
scale. The project is focused on providing a sound basic education as it is more important to have a sound education at the
primary and secondary levels for a majority of our people than to spend billions of dollars on higher education and have most
of those people going abroad.
The whole project therefore is designed around the primary & secondary school teacher ( Project is not centered on the
student ) with a view to creating a simple yet elegant lifestyle around the teaching profession so as to attract the
best minds towards a career in teaching and thereby correcting a macro imbalance in our society. While doing this , the project
also reaches more under privileged children than any other past or currently planned programme of the Govt. Of India.
This Excel workbook concentrates on the financials of the project. For a detailed understanding of the various
issues, readers are requested to go through the Project concept document which describes the project is proper
detail.
Project Scale :
The project seeks to build a total of 30,000 New schools (with 600 students per school ) under the Public Private
Partnership ( PPP ) format during the period 2012 - 2023. Each school under the programme will share teaching
resources ( Teachers , Teaching aids etc ) with 14 other village schools in it's surrounding area so that a total of 420,000
additional schools are covered under the programme .
The main problem then is money and since the government does not have adequate conventional resources , Innovative
financing mechanisms needed to be found to finance this large education project. The project has therefore focused on
bringing in innovative ideas on the finance side and we have been able to find innovative ways to raise approximately US $
131.38 Billion as one time Capital expenditure to build the schools and US $ 42.57 Billion as yearly operational expenditure
to run the 30,000 new school system as well as it's huge teacher sharing programme that will reach an additional 108 Million
children in 420,000 assisted schools. As a result , once fully commissioned in 2023, a total of upto 126 Million children will
receive high quality education totally free of cost .
2. bringing in innovative ideas on the finance side and we have been able to find innovative ways to raise approximately US $
131.38 Billion as one time Capital expenditure to build the schools and US $ 42.57 Billion as yearly operational expenditure
to run the 30,000 new school system as well as it's huge teacher sharing programme that will reach an additional 108 Million
children in 420,000 assisted schools. As a result , once fully commissioned in 2023, a total of upto 126 Million children will
receive high quality education totally free of cost .
Phase Number of Hub Schools Number Of Assisted Schools Commissioning Schedule
( Teacher Sharing Programme )
Bootstrap I - - Q1- Q4 2011 250 New Teacher Training
Institutes to train 300 teachers
Phase II each per year + 60 New Centers of
Bootstrap II - - Q1- Q4 2012 Repeat Phase I Vernacular Archiecture to train 300
Master Masons Each every year
Phase I 6000 Hub Schools 84,000 2012 – 2014
Phase II 9000 Hub Schools 220,000 2015 – 2017
Phase III 15000 Hub Schools 420,000 2018 – 2023
Phase IV Possible repeat of total project ( another 30,000 schools ) 2023 – 2029
to cover 4,20,000 additional schools Project Schedule To be Extremely
_____________________________________________________________________________________ Aggressive
30,000 New Schools to be commissioned by 2023
_____________________________________________________________________________________
Notes :
1. Each Of Bootstrapping stages I & II will consist of 250 Teacher Training Institutes to train 300 teachers
each per year + 60 Centers of Vernacular Archiecture to train 300 Master Masons each year. Bootstrap II
will be a repeat of Bootstrap I
2. It is not possible to execute Phase I of this project faster as India currently does not have enough
trained teachers who possess the necessary capability / sensitivity to train young minds. This problem
will be overcome by 2016 after which project execution velocity will pick up.
3. Phase IV could essentially be a repeat order which will repeat phases I, II and III in half the time. It will
be possible to dramatically crash commissioning schedules due to retained learning within the
project enterprise.
4. Each day school will operate in two shifts to maximize coverage while keeping costs low.
Economic & Environmental Impacts of the Project :
The following are the main economic and environmental features of the project
which seeks to use Traditional yet very elegant Indian Architecture
( where building life is over 100 years ) without any significant maintenance :
1. This will be the worlds largest , multi-location environmental project as
it will use 80 % traditional earth based material and very little cement
and steel in the construction of the 30,000 schools. The C02 / Green
house gas addition by this project will therefore be virtually zero. It will
thus allow huge development without adverse environmental impacts.
2. Project will in addition lead to the planting of around 150 Million trees
all over India between 2012 and 2023.
3. While the project will lead to a direct expenditure of US $ 131.38 Billion
Billion over the period ( 2012 - 2023 ) on the creation of the low
cost , yet extremely elegant school campuses, It will provide
huge additional employment opportunities to millions of Indians . The
total money multiplier effect on the economy will be in the range of
3 ( conservative ) to yield a total GDP Net delta addition of US $ 300
Billion from the construction of this project alone. The high quality
Human Resourses that will be created by building schools
designed around the teaching profession will be additional.
Prepared By
Ashish Puntambekar
Project Designer , The Nataraja Foundation
(00-91-9867612368)
ashish.puntambekar@gmail.com
Analyst Note :
This model is provided for the information of Educationists, Indian Government Officials , Corporates , Financial
Institutions and NGO's and must be seen in conjunction with the project / business spreadsheets prepared for both
the stand alone day schools and residential schools as well as the optimised chain that comprimises the
megaproject.
The Project has been designed based on Information published by the Indian Planning Comission ( XIth Plan
3. Analyst Note :
This model is provided for the information of Educationists, Indian Government Officials , Corporates , Financial
Institutions and NGO's and must be seen in conjunction with the project / business spreadsheets prepared for both
the stand alone day schools and residential schools as well as the optimised chain that comprimises the
megaproject.
The Project has been designed based on Information published by the Indian Planning Comission ( XIth Plan
documents ) as well as other published material on the National Knowledge Commission / Ministry of HRD
websites. Published papers by experts on the Indian Education System have also been studied and means to
overcome the shortcomings pointed out by the experts have been incorporated in the project design.
While these agencies have not been a party to the conception of this project plan, the author would like to thank his
sources for making this plan possible through their data.
4. Project Design Basis / Education Philosophy
The Nataraja Foundation
www.nataraja.org.in
" Let the watchword be acceptance and not exclusion "
Sufi Saint Kabir Guru Nanak Dev
A project of this size and scale will be a dead and soul-less agglomeration of
buildings and computer networks without a sound philosophy which is timeless
and yet extremely advanced and which seeks, as it were , to bind people of
diverse faiths and lead them towards the realization of their potential as human
beings .
The following words of Vivekananda will therefore serve as a Pole Star for future
Indian thinkers on education “ Let the watchword be acceptance and not
exclusion. Not only toleration , for so called toleration is blasphemy. Toleration
Mother Teresa means that I think you are wrong and I am just allowing you to live. Is it not
blasphemy to think that you and I are allowing others to live ? I accept all
Rabindranath Tagore & Gandhiji
religions that were in the past and worship them all. I worship God with everyone
of them, in whatever form they worship him”.
Vivekanand Continues …
“ I shall go to the mosque of the Mohammedan ; I shall enter the Christian’s
church and kneel before the crucifix. I shall enter the Buddhist temple where I
shall take refuge in Buddha and in his law. I shall go into the forest and sit down
in meditation with the Hindu, who is trying to see the light which enlightens the
Dr. APJ Abdul Kalam in Class
heart of everyone.
Not only shall I do all these things but I shall keep my heart open for all that may
come in the future . Is Gods book finished ? Or is it still a continuous revelation
going on. It is a marvelous book – these spiritual revelations of the world . The
Bible , The Vedas , The Koran and all other sacred books are but so many
pages and an infinite number of pages remain to be unfolded ”.
Please Click Here To Access The Full
Copy of the Project Design Basis /
The Importance Project PhilosophyIn The Indian Tradition
Of The Teacher Document
Gurur Brahma,
Gurur Vishnu,
Gurur Devo Mahesh Varah.
Guru Shakshat Para Brahma,
Tasmai Shri Guruve Namah.
The teacher is Lord Brahma as he generates knowledge within us. He is like Lord
Vishnu as he sustains us and guides us on the right path. He is like Lord
Mahesha (Shiva) as he destroys ignorance and thereby enlightens us. My
Salutation to such a Guru, who is verily the Supreme God.
Note : The Project Design Basis / Education Philosophy can also be downloaded
from the following website :
www.nataraja.org.in
5. EDUCATION MEGAPROJECT - OVERALL CAPEX / OPEX SNAPSHOT OF PPP SCHEME
Cash Requirements Summary
Bootstrap 1 Bootstrap 2
US $ / Rs Exchange Rate ( 18th march ' 2010 ) 45.49 Phase I Phase II Phase III
Item 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Teachers Training Institutes ( Lot @ Rs 8 Crores Capex & 250 250
Rs 4 Crores Opex for each per year )
Pilot Projects ( Schools in 28 States + 7 Union Territories) … Assumed that 100 35 35 Assumed that In Actual Project
85 % day schools and 15 % Residential Schools % of Pilot Cost Construction 60 % Cost is borne
borne in the same in the 1st year and 40 % in the
year second year
Masons Training Institutes ( Lot & Rs 5 Crore Capex and Rs 60 60 The Nataraja Foundation
2 Crore Opex for each / year ) www.nataraja.org.in
Day Schools Nos Of 850 2125 2125 2550 2550 2550 3187 3187 3187 3187
Commissioning Sequence ( For Initiating Opex ) Institutions 850 2125 2125 2550 2550 2550 3187 3187 3187 3189
Cumulative commissioned 850 2975 5100 7650 10200 12750 15937 19124 22311 25500
Residential Schools 150 375 375 450 450 450 563 563 563 563
Commissioning Sequence ( For Initiating Opex ) 150 375 375 450 450 450 563 563 563 561
Cumulative commissioned 150 525 900 1350 1800 2250 2813 3376 3939 4500
Total Schools Construction Started Each Year 1000 2500 2500 3000 3000 3000 3750 3750 3750 3750
Commissioning Sequence ( For Initiating Opex ) 1000 2500 2500 3000 3000 3000 3750 3750 3750 3750
Cumulative commissioned 1000 3500 6000 9000 12000 15000 18750 22500 26250 30000
Costs Of Teacher Sharing Programme
Costs Of Teachers Guest houses ( A total of 4,20,000 14000 35000 35000 42000 42000 42000 52500 52500 52500 52500
Guesthouses will be built under the teacher sharing
programme )
Fuel Costs Of teacher sharing programme : Rs 11.56 115.6 404.6 693.6 1040.4 1387.2 1734 2167.5 2601 3034.5 3468 3468
Lakhs / School / Year to cover 14 assisted schools 0.12 Opex To Be added
IT System for Existing Schools … ( % Complete ) 20% 40% 40% Capex & Opex to be be added depending on system
Total Cost Of System with alerts @ Rs 500 Crores : 500 100 200 200 needs and the extent to which the teacher sharing
programme is implemented.
Taken as US $ 5 Billion
IT System for Megaproject Schools … ( % Complete ) over 10 years ( IT Infra )
( Launching of 12 Satellites + Using 4,00,000 Km of Existing 0 0 0 758 1895 1895 2275 2275 2275 2843 2843 2843 2843 0
Fibre Optic Across 30,000 Hub School and 420,000 Assisted Costs of
Schools Via VSATS ) Essential Items
in Crores
% Completion 30% 70% 100%
Forming and Staffing Of the ISIC with Average Salary @ Rs 450 135 315 450 450 450 450 450 450 450 450 450 450 450 450
20 Lakh / Year = Rs 450 Crores ( Fully Staffed as below )
( 50 Senior Educationists , 300 Finance Professionals, 1200
Project Engineers, 300 IT Professionals, 100 Lawyers, 300
Architects )
Opex Cost of Teacher Training Institutes 1000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Opex Costs of Masons Training Institutes 120 240 240 240 240 240 240 240 240 240 240 240 240 240
Development Of Vernacular Languages + Urdu+ Hindi + Sanskrit 933 2333 2333 2800 2800 2800 3500 3500 3500 3500
Capital Expenditure Rs.( Thousands Of Crores ) 3.00 13.319 32.371 45.273 54.405 57.813 59.153 66.824 71.938 73.949 73.949 35.610 10.051
( US $ Billion ) 0.66 2.93 7.12 9.95 11.96 12.71 13.00 14.69 15.81 16.26 16.26 7.83 2.21
Total Capital Expenditure ( Rs Crores ) 597651
Total Capital Expenditure ( US $ Billion ) 131.38
Operational Expenditure ( Rs. Crores ) 1476.84 2998.68 3133.68 9565.31 25551.05 41396.80 60458.36 79473.25 98488.14 122327.60 146097.05 169866.51 193632.60 193632.60
( US $ Billion ) 0.32 0.66 0.69 2.10 5.62 9.10 13.29 17.47 21.65 26.89 32.12 37.34 42.57 42.57
Sanskrit is possibly the worlds oldest language and it is dying in India. The Education Megaproject therefore allocates Rs 8000 Crores over 10 years to the promotion of Sanskrit in schools and for the digitizing of Sanskrit content as Sanskrit serves as
the basis for several Indian and even international languages. This will reverse the huge neglect it has suffered neglect over the last 100 years . All other Indian Languages ( Tamil, Bengali, Marathi, Telugu, Gujarati, Kannada etc. ) including most
importantly Urdu and Hindi together will receive an additional Rs 20,000 Crores over 10 years under the Megaproject for the development of digital content and opening of Institutions for scholars. Total Rs 28,000 Crores. Encouragement of local
languages will allow the poorest citizen to participate fully in the economy. We want every farmer and labourer to have an equal opportunity and language should not be allowed to be a barrier due to lack of Funds. The Education Megaproject has a
special large budget for Vernacular Language propogation.
7. TERM SHEET
Assumptions On Financing / Sources Of Funds :
The Nataraja Foundation
US $ / Rs Exchange Rate ( 18th march 2010 ) 45.49 www.nataraja.org.in
Sl. No. Source Description Estimate of Total Notional Amount % Of Source Amount Available Cash Available Each
Possible Corpus Potentially Available / Proposed For Each Year Year (
( US $ Billion ) Year ( Education ( US $ Million ) Thousands of Crores )
US $ Billion ) Megaproject
YEARLY FUND FLOWS / Annuities
1 Net Present Value Of Inceremental GDP 500 20 10% 2000 9098
Increase after GST implementation starting 1st
April ' 2010 ( Delta Over Current ) . The Total
Corpus in the next column is assumed and
calculated over a 25 year period with a discount
rate at 3 %. This cash flow will triple by 2025
when the size of the Indian economy is expected
to be US $ 4.5 Trillion.
2 30 % of a proposed new tax on the services 510 5.1 30% 1530 6959.97
component in future Infrastructure projects.
The base case estimate of the delta / net
additional Infrastructure investment in India over
the next 10 years is taken at US $ 1.7 Trillion
( Goldman sachs View ). This cash stream
will triple by 2025 when the size of the Indian
economy is expected to be US $ 4.5 Trillion.
3 Graduate Tax Collected From Employers In 10.11 2.53 80% 2022.42 9200
India. It is assumed here that there are 46
Million Graduates in India ( 2004 Estimate ). This
number today is larger. This cash stream will
double by 2025 when the size of the Indian
economy is expected to be US $ 4.5 Trillion.
Assumptions On Financing / Sources Of Funds :
8. US $ / Rs Exchange Rate ( 18th march 2010 ) 45.49
Sl. No. Source Description Estimate of Total Notional Amount % Of Source Amount Available Amount Available Each
Possible Corpus Potentially Available / Proposed For Each Year Year (
( US $ Billion ) Year ( Education ( US $ Million ) Thousands of Crores )
US $ Billion ) Megaproject
4 Quantized Tobin Tax on Forex Transactions. It 1.1 1.1 100% 1095 4981.16
has been assumed that the volume of daily
average forex transactions in India and by
companies doing business in India is of the order
of US $ 15 Billion. A Tobin Tax ( First
proposed by Nobel laureate James Tobin ) to be
levied at the rate of 0.02 % on the total volume of
the transaction which will be quantized as per the
size of the transaction with higher rates applying
to larger transactions to prevent speculation on
the Indian Rupee as it moves towards Capital
Account Convertability ). This cash stream will
triple by 2025 when the size of the Indian
economy is expected to be US $ 4.5 Trillion.
5 Yearly Rent From Re-developed PSU Land by 3.00 3.00 100% 3000 13647
the Indian Social Infrastructure Corporation
( ISIC ) Under The Urban Equity Withdrawl
Programme ( Phase I ) .
6 Yearly Rent From Redeveloped PSU Land by 10.00 10.00 100% 10000 45490
the Indian Social Infrastructure Corporation
( ISIC ) Under The Urban Equity Withdrawl
Programme ( Phase II ) .
9. Assumptions On Financing / Sources Of Funds :
US $ / Rs Exchange Rate ( 18th march 2010 ) 45.49
Sl. No. Source Description Estimate of Total Notional Amount % Of Source Amount Available Amount Available Each
Possible Corpus Potentially Available / Proposed For Each Year Year (
( US $ Billion ) Year ( Education ( US $ Million ) Thousands of Crores )
US $ Billion ) Megaproject
7 Teacher / Content Outsourcing Business : The 21.04 10.52 40% 4207.52 19140
Education Megaproject will be employing
approximately 1.74 Million Teachers across
India on 5 year Rolling Contracts. It is proposed
that the terms of the contracts be flexible enough
to permit teachers to organize themselves into
teams which could then, in an organized
manner , produce education content for the world
market. The revenue earned through this venture
will be shared by teachers and the ISIC in the
ratio 60:40 with the larger sum going to the
participating teachers. They will also participate
under the Aegis of the ISIC in a Teacher
Exchange Programme with schools in foreign
countries. For the purposes of this calculation the
total teacher strength is assumed as 1.5 Million. It
is further assumed that just 50 % of the teachers
will participate in this venture and that each
teacher's extra earning potential is Rs 5,50,000
each year.
8 Students on Fractional Vouchers / NRI Quota 5.10 5.10 100% 5103.80 23217.18
and SAARC / Foreign Students : A majority of
the students within the Megaproject will be on
Education Vouchers ( 60 - 70 % ). However some
37 % + of the students from middle class families
and well off families will be on fractional
vouchers with 2 / 3rd subsidy and an additional
2 - 3 % could be from SAARC countries or NRI /
Foreign Students who will pay a premium
( Double The Voucher value ).
ONE TIME FUND FLOWS - DIRECT FINANCE FOR CONSTRUCTION
9 Coordinated Equity Withdrawl By the ISIC on 40 40 100 40000 181960.00
PSU Owned Land in Metros and Large Cities
10 Un-Utilized Funds with various Ministries and 21.59 21.59 100 21590 98212.91
NGO's
11 Equity Infusion By Promoter groups for 25,500 6.74 6.74 100 6741.48 30666.98
Day Schools and 4500 Residential Schools
12 Committed and Un-Utilized Funds Lying with the 15.6 15.6 100 15600 70964.40
World bank and the Asian Development Bank, on
which the government of India is paying
Commitment Charges of over Rs 125 Crores
each year.
Assumptions On Financing / Sources Of Funds : `
US $ / Rs Exchange Rate ( 18th march 2010 ) 45.49
10. Sl. No. Source Description Estimate of Total Notional Amount % Of Source Amount Available Amount Available Each
Possible Corpus Potentially Available / Proposed For Each Year Year (
( US $ Billion ) Year ( Education ( US $ Million ) Thousands of Crores )
US $ Billion ) Megaproject
OTHER POTENTIAL SOURCES OF FINANCE
13 In early March ' 2010 , India's Foreign Exchange 278 2.78 1% 2780 12646.22
Reserves stood at US $ 278 Billion. This is a
huge sum and it has earlier been suggested by
several others that a small part of the RBI's
reserves should be used to finance Infrastructure
projects in India. Schools represent essential
social Infrastructure and the Education
megaproject could draw on some of this
resource.
14 Dis-investment in Indian Public Sector Entities 30 3 10% 3000 13647.00
and Banks. This represents a huge potential
scorce of funds . However successive
governments have been using dis-investment
proceeds to help bridge the huge fiscal deficits
that the government of India runs. In fact this
money is best used to finance productive capital
expenditure as in education projects that greatly
enhance the country's GDP.
If US $ 1.7 Trillion is to be invested in
Infrastructure over the next 10 years, the first
sector that will expand exponentially is
banking. Government of India will do well to dis-
invest it's stake in a few large banks to raise
additional resources while at the same time
allowing a greater private sector role in the
banking industry , with strict controls in place of
course.
11. Pg 1 0f 4
Remarks / Critical Assumptions
If net / delta addition to GDP is US $ 20 Billion each year
solely due to GST implementation, then government can
afford to earmark 10 % of that Delta to an Education Mega
Project from the Consolidated Fund Of India through a special
legislation that creates " The Education Megaproject Fund ". It
is being assumed here that the NCAER has taken a 25 year
period for calculating the Net Present value at a 3 % discount
rate. If they have taken a 15 year period instead , then the
yearly sums that will be available will be much larger.
A new tax proposal on the lines of the recently implemented
tax on the services component of housing projects ( 2010
Budget ) will need to be implemented to extend service tax to
the labour and services component of Infrastructure projects.
This will very easily generate a new cash source for creating
the human resources necessary to plan and build large
Infrastructure in India. Right now there is a shortage of 30
million trained people in the construction Industry alone
( Mckinsey 2008 ). So the imposition of a service tax on the
labour / skill component of Infrastructure projects is fully
justified . It is being assumed here that 30 % of an
Infrastructure Projects cost is services and Labour. It is also
being assumed that servoce tax on the Labour and services
component will be @ 10 %.
Employers are being taxed because they are getting access to
qualified graduates free of cost and have not paid a single
paise for their education. This tax will be levied at the rate of 3
% on the Cost to Company ( CTC ) of the employee and will
be paid not by the employee but the employer. Please note
that the current education cess and professional taxes are
separate taxes and are being borne by the employee.
Companies must also pay a tax because they are getting
trained manpower free of cost. We believe that companies will
not be able to pass this tax on to employees as companies will
also be competing with each others in a rapidly growing
economy where skills shortages are acute. Also it has been
realistically assumed that only 25 % of this tax is collectable
from graduates as many work in the un-organized sector.
Many housewifes are graduates too . If independent
professionals such as doctors can be taxed, the collection will
go up dramatically. Also it is assumed that 80 % of this tax will
go for primary education as a person spends 80 % of his time
in school.
12. Pg 2 Of 4
Remarks / Critical Assumptions
Given that India is going to be the largest growing market in
the world over the next few years we do not expect business
to move away from India due to the imporition of this tax. The
Imposition of this tax has been considered in the latest
meeting of the G 20 nations in 2009 and It has also been
supported for implementation by none other than our own RBI
governor Dr. D SubbaRao in Dec ' 2009. Since 90 % of the
worlds forex transactions are cleared in just a few financial
centres globally , it will not be difficult to impose this tax which
can provide much needed funds to Education and Healthcare
projects in Rural India.
Subsequent to the sale of 3000 Acres out of a total of 30,000
Acres of prime real estate in Indian Cities, The ISIC will
publish a Global Tender Inviting leading Urban Developers
from around the world to come to India to develop Large Real
Estate Projects. 27,000 Acres of Urban, Government owned
land will be put out on bids under a Public Private Partnership.
Indian companies will participate in the bidding rounds and will
compete with foreign companies. The bids will require project
developers to pay an upfront annuity / yearly instalment of US
$ 3 Billion for the 27,000 acres taken together over the first 10
years and submit plans for the development of Financial
centres where the ISIC will be the owner of 50 % in each
project. Developers will need to come up with ideas whereby
the net earnings to the ISIC will be of the order of US $ 10
Billion each year from the 27,000 Acres of prime real estate
starting from the 7th year after the Bidding. This effective
Urban Equity Withdrawl plan will provide funds for rural
development.
Phase II cashflows will begin to accrue from year 7 onwards
as the PPP projects in Urban Development begin yielding a
return of US $ 10 Billion to the ISIC as explained under V
above.
13. Pg 3 Of 4
Remarks / Critical Assumptions
It is being assumed that revenues from the Teaching Content
Development Business and the Overseas Teacher
Exchange Programme will be shared by Teachers / ISIC in
the ratio 60 :40, with 60 % of the revenues going to the
teachers. We have therefore included only the balance 40 %
of revenues as ISIC Income. Further , we do not believe that
this activity will disturb teaching activity in the country as
teachers have considerable amounts of free time and because
the schools have been overstaffed by design not just for
sharing teachers with 420,000 existing and deprived schools
but also with this kind of revenue opportunity clearly in mind.
Fees for Children will be quite affordable to parents as they
well be charged at 1/ 3rd of the value of the voucher. In the
case of Day schools fees will be in the range of Rs 25000 /
child and in the case of fully residential schools, fees will be in
the range of Rs 65,000 - Rs 75,000 which we believe are very
affordable for the Middle Class and above.
The procedure for this is explained in great detail in the project
concept document under construction phase financing.
This financing option has emerged through a study of the
Comptroller & Auditor General's report ( CAG Report ) for
2007 - 08. A special audit committee will be constituted to
trace and recover this money for the Education Megaproject.
This money will come from the Promoters of 30,000 Schools
over a 10 year period ( 2012 - 2022 )
This financing option has emerged through a study of the
Comptroller & Auditor General's report ( CAG Report ) for
2007 - 08. Usually World Bank / ADB Loans are available for
specific projects and cannot usually be re-assigned , We
believe it will be possible to lift the entire corpus for this single
Education Megaproject as the project subsumes within itself
areas as diverse as Women and Child health and education to
rural sanitation and rural roads etc.
Pg 4 Of 4
14. Remarks / Critical Assumptions
The Education Megaproject has not included Foreign
Exchange Reserves in its sources in the current Rev 03 of the
project. This represents a potential future source of finance.
The Education Megaproject has not included Dis-investment
proceeds in its sources in the current Rev 03 of the project.
This therefore represents a potential future source of finance.
15. The Indian Primary & Secondary Education Mega
Project
The Nataraja Foundation
Project Legal & Financial Structure
www.nataraja.org.in
Government Of India
Ministry Of HRD Ministry Of Finance
CONSTRUCTION
PHASE ( 2012 – 2023 ) Parliament
Ministry Of
Disinvestment
( FUTURE SOURCE )
Consolidated Fund Of India
Size Of The Indian Economy
US $ 1.3 Trillion ( 2010 )
Exchange Rate ( 18th Mar ‘ 2010 ) : Financing Concept is similar to the
1 US $ = Rs 45.49 Golden Quadrangle / Highways
Financing.
8 different sources of funds are
routed to a special " Education
Megaproject Fund " … A special
Act of Parliament will enable this.
INDIA BASED SOURCES OF FUNDS
1. Yearly Fund Flows
Sovereign
10 % of New Goods & Services Tax ( GST ) US $ 2.0 Billion / Year Guarantee
Receivables = US $ 2.0 Billion / Year
US $ 6.64 Billion / Year
US $ 6.64 Billion / Year
INDIAN & INTERNATIONAL
30 % of Proposed New Tax on Service BANKS
US $ 1.53 Billion / Year
Component of Infrastructure Projects
= US $ 1.53 Billion / Year
Collected From Employers of Graduates US $ 2.02 Billion / Year Securitize 10 year annual
Graduate Tax = US $ 2.02 Billion / Year Receivables at 6 %
and Draw US $ 49 Billion
Quantized Tobin Tax on US $ 1.09 Billion / Year
Forex Transactions = US $ 1 .09 Billion/Year
2. One Time Fund Flows
US $ 3 Billion
Education Megaproject
PSU Owned Metro / Large City Real Estate US $ 49 Billion For Capex
Fund Act
Equity Withdrawl = US $ 40 Billion
Education Megaproject Fund
Unutilized Funds ( US $ 21.59 Billion ) With
Various Govt. Ministries and NGO’s US $ 67.15 Billion for Capex
as per GAG Report 2007 -08 + US $ 3 Billion Annual Rent
US $ 67.15 Billion Special Act Of Parliament to give
Legal status to SPV and enable
Sale Of Navratnas, PSU's , Banks = US $ 0.00 Future standby source
Fast Track Execution based on
US $ 0.00 Billion
US $ 15.6 Billion Initial Sovereign Guarantees
US $ 5.56 Billion For Capex
30,000 Private School Operators ( Equity Infusion )
Indian Social Infrastructure ( ISIC Act )
Corporation ( ISIC )
US $ 15.6 Billion Sovereign Guarantee
Low cost Loans for Capex to Of Committed But For School Capex Loans
School Concessionaires. This Un-Utilized
is in addition to the US $ 15.6 Funds
Billion that is paid as a bullet
payment to the ISIC
World ADB
Bank
Capacity To Raise / Spend US $ 134.75 Billion OR Rs 612,977 Crores
Project Construction Cost = 131.38 Billion
( 30,000 Hub Schools + Infrastructure for Teachers Sharing Programme )
Financial plan therefore raises sufficient funds for construction
16.
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19.
20. The Indian Primary & Secondary Education Mega
Project
Project Legal & Financial Structure
The Nataraja Foundation
www.nataraja.org.in Government Of India
Ministry Of HRD Ministry Of Finance
BOT OPERATIONS
PHASE Parliament
Ministry Of
Disinvestment
( FUTURE SOURCE )
Consolidated Fund Of India
Size Of The Indian Economy
US $ 4.5 Trillion ( 2025 )
Exchange Rate ( 18th Mar ‘ 2010 ) :
1 US $ = Rs 45.49
Key Point to note is the size of the
INDIA BASED SOURCES OF FUNDS Indian Economy in 2025
1. Yearly Fund Flows
10 % of New General Service Tax Based US $ 6.0 Billion / Year
Students on Fractional
GST Receivables = US $ 6.00 Billion / Year
Vouchers
US $ 4.88 Billion / Year
and NRI / SAARC Quota
US $ 17.86 Billion /
30 % of Proposed New Tax on Service US $ 4.59 Billion / Year
Component of Infrastructure Projects
Year
= US $ 4.59 Billion / Year Teacher
Outsourcing
Business
US $ 4.207 Billion /
Graduate Tax = US $ 4.0 Billion / Year US $ 4.0 Billion / Year
Collected From Employers of Graduates
Year
US $ 3.55 Billion
Securitization
Quantized Tobin Tax on Forex Transactions = US $ 3.27 Billion / Year Facility Pending Grant
/ Year
US $ 3.27 Billion / Year
US $ 10 Billion
Yearly Rent From High FSI Re-Developed
PSU Properties all over India = US $ 10 Billion Education Megaproject
US $ 17.86 Billion For Fund Act
Opex
US $ 4.5 Billion US $ 12.64 Billion
Service Tax Feedback For Opex
Special Act Of Parliament to give
Service Tax US $ 10.0 Billion Annual Rent Received Legal status to SPV and enable
From Developer Partnerships Fast Track Execution based on
@ 10 % Initial Sovereign Guarantees
Education Megaproject Fund
Capacity To Raise & Spend US $ 45 Billion / Year
Indian Social Infrastructure ( ISIC Act )
Corporation ( ISIC )
US $ 45 Billion Revenue
For Created Ecosystem
Spend US $ 45 Billion On Primary & Secondary School Operations / year
+
PHASE II Expansion ( if Any ) through securitization of specific cashflows
18 Million Students On Education Vouchers
30,000 Private School Operators TEACH ( Including 108 Million Students
Under Teacher Sharing Programme )
= 126 Million Children
Service Providers Ecosystem
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23. INSTITUTIONAL STRUCTURES , LAND BANKS AND
URBAN EQUITY WITHDRAWL & MISC ISSUES
The Indian Primary & Secondary Education Mega Project
Government Of India
The Nataraja Foundation Ministry Of Finance
www.nataraja.org.in
Ministry Of HRD
Ministry Of
Disinvestment
( FUTURE SOURCE )
Parliament
ISIC Act
25 % Equity 75 % Equity
Central "The Indian Social Infrastructure Corporation " 28 State
Government sets up Governments
30,000 Acres The Primary & Secondary Education Megaproject SPV 900,000 Acres
Of Land For Setting Up Schools
Of Land all Over
This 9,30,000 Acres , can be visualized approximately as a strip of Land 62 India
Km by 60 Km. It is not much land for India taken as a whole. Out of this, with Land Bank of 9,30,000 Acres all over India
30,000 Acres can be easily spared / collected by the central government
from PSU's and government organizations in Metros and B category
Towns . The balance 9,00,000 Acres will be in Villages and towns in 28
States and 7 Union Territories all over India and will be given out on bids
for setting up Schools and Hospitals. Land For Equity Deal
Service Partners
PPP Contracts
The Indian Comptroller & Auditor General
Commercial Land Bank :
30,000 Acres to be held in Land Bank . Upto 24 % of Cherry Picked land to be sold to Finance 40 % Primary & Secondary Education Of India to Monitor All ISIC Cashflows + All
Capex of Primary & Secondary Education Project / Healthcare Megaproject . Balance 76 % land to Mega Project Sales & Lease Rentals Of ISIC Related Land
be given on rent in towns and cities to large city developers so as to earn Cash to meet project ( Executive Board ) Under This Project.
Operating Cash Requirements so as to subsidize Education and Healthcare provision to Low Income
Groups.
Note on PSU Land Based Urban Equity Withdrawl : 10 % of 30,000 Acres
Cherry Picked
If just 10 % of the land transferred in Metros and Large Towns to the ISIC from PSU's is Prime Real Estate in Big Issue Of initial capital (2015 - 2016).
prime real estate it will be approximately 3,000 Acres ( all over India as the SPV in all will Cities and Important Towns
to be sold to finance 40 % Stock : India Domestic & International Offering
have 9,30,000 acres, of which 30,000 acres will be held in the Land Bank while 900,000 will of Project Capex. All such
go for the school project & Healthcare project). This 10 % land will be worth approximately sales will be under a
Of 500 Million Equity Shares or Rs 100 each
180,000 crores ( Approximate land cost in a Metro per acre has been taken as Rs 60 Crores Transperant bidding For a premium of @ Rs 400 Per Share to raise
while actual prices range from Rs 400 Crores / Acre in Mumbai to Rs 2 Crores / Acre in a process and SPV land sold US $ 5.28 Billion as Equity
will have an FSI ranging
small town ). from 4 - 16 for creation
of Financial Centers in
Bonds : International Bond Offering Sufficient
The land bank will make the SPV one of the highest net worth companies on the Indian Stock major Towns. Thereby For 3 Years of Project Construction :
Exchanges. It will then be possible for the SPV to raise its own resources by selling land maximizing development of
scarce land as also available Targeted Debt / Equity Ratio = 3 : 1
( Through a competitive and transperant bidding process ) to developers or by issuing long funding for the project.
term tax free bonds on par with RBI bonds. Central and state governments will take land from Bond Amount = US $ 15.85 Billion
PSU 's and state government undertakings which are not utilizing the land optimally and Coupon rate =
transfer it to the ISIC which is working towards a National Mission. The Chief Secrateries of Duration = 5 Years
the 28 states will be on the board of the ISIC so each states interests will be fully protected.
Addressing PSU Concerns
To fully accomodate the commercial concerns of PSU and their government and private
shareholders, they will get an enhanced FSI ( either on the same plot or on their other Balance 90 % land to be
The US $ 15.85 Billion Bond issue will help finance any
properties that are not being given away ) . For instance if a PSU is giving away prime real given on rent by ISIC to large developers
from around the world ( including Indian shortfall in Capital Requirements.
estate in Mumbai city which currently has an FSI of 2.66 , they will get an FSI of 3.50 in developers ) to
another property in the same locality ( if they own two properties close to each other and are Provide Operating Cash
giving away only one property) or an FSI of 5.0 in a less valuable location, in a manner that Project Land to Finance Education, Food and Clothing
their commercial interest is protected. They could also be issued TDR's ( Transfer of 900,000 Acres in all to be and Hostel Facilities for needy students from
allocated for Social Low Income Families ( This will however be
Development Rights ) which they could trade on the market or they could receive cash for the just once source for OPEX ). Money to be
Infrastructure Projects in
enhanced FSI that accrues on the actual sale of their plots. So , If the Plot has been granted Education & Healthcare given directly by ISIC to the school operators
an additional FSI of 8 , Cash equivalent of 5.5 FSI will go to the Social Infrastructure without any involvement of local government.
Megaprojects and a cash equivalent of 2.5 FSI will be paid in cash or issued as TDR's to the All such payments and their use to be
monitored by Comptoller & Auditor General
PSU after the sale of land through a transperant bidding process to Indian or International Of India.
consortia , thereby avoiding any litigation from shareholders.
It must be understood however that increased FSI requires increased Infrastructure support
in terms of city amenities and better municipal infrastructure. This needs to be incorporated
into the city's development plan. The land transfers and sales however can proceed
immediately and need not wait for the city development plans to be changed. Execute US $ 131.38 Billion Primary &
Secondary Education Mega Project between
2012 - 2023
Bootstrap I Bootstrap II Phase I Phase II Phase III
Q1 - Q4 2011 Q1 - Q4 2012 2012-2014 2015-2017 2018-2023
School Megaproject Enabling School Megaproject Enabling Total Schools 6000 Total Schools 9000 Total Schools 15000
Infrastructure Infrastructure
Teachers
Teachers Training Training Day Schools 5100 Day Schools 7650 Day Schools 12750
100 100
Schools Schools
Residential 900 Residential 1350 Residential 2250
Master Masons * 30 Master Masons* 30 Schools Schools Schools
Training Schools Training Schools
* Master Masons to be trained in the * Master Masons to be trained in the
Vernarcular Architecture Style Vernarcular Architecture Style
Once trained , Master Masons and Teachers could organize themselves into Guilds ( Not Cooperatives ). The Masons Guilds could bid for contracts to build the schools / hospitals.
Note on SPV Executive / Regulatory Powers :
The BOO / BOT concession for the Primary & Secondary Schools will be given with all necessary clearences and professional affiliations in a single window. If a promoter group / concession awardee fails
to meet certain transparant criteria ( specified in a 1 page rule book ), the concession will be terminated and offered to a new developer ... there will be no appeal to any court and the 1 page rulebook will
be very clear on concession termination issues.
Same structural vehicle / arrangement can be used to finance higher education.
Governance : Project & Operations Phase
There are huge cashflows involved in both the project execution and operations phases of the Indian Primary & Secondary Education Megaproject . The execution phase will involve the raising and
expenditure of approximately US $ 131.38 Billion or Rs 597,651 crores between 2011 and 2023 and the operations phase will involve project revenues and rent allocations ( which will help approx. 126
million children to receive quality education free of cost ) of approximately US $ 42.57 Billion each year after 2023.
The scale of cashflows needs to be monitored in a transparent manner and the Megaproject needs to be open to public audit. It is therefore an explicit requirement of the project that it be executed in a
24. Governance : Project & Operations Phase
There are huge cashflows involved in both the project execution and operations phases of the Indian Primary & Secondary Education Megaproject . The execution phase will involve the raising and
expenditure of approximately US $ 131.38 Billion or Rs 597,651 crores between 2011 and 2023 and the operations phase will involve project revenues and rent allocations ( which will help approx. 126
million children to receive quality education free of cost ) of approximately US $ 42.57 Billion each year after 2023.
The scale of cashflows needs to be monitored in a transparent manner and the Megaproject needs to be open to public audit. It is therefore an explicit requirement of the project that it be executed in a
corporate setup, outside the concerned ministries , under government of India and to implement a context based communications platform for project MIS. In fact , it is better not to execute this
project , than to do it within a ministry or the existing education systems where information in-efficiencies and leakage of funds will undermine the very basis of the projects and lead to huge
cost and time over-runs.
The project needs therefore to be executed and operated in a corporate setup , under a Special Project Vehicle ( SPV ) set up under an act of Parliament ( The ISIC ) in the same manner as
organizations such as IOC, ONGC, NHAI , IIFC and UTI were set up. The chief secretary’s of all states , The Chairman of the National Knowledge Commission, The Secretary , Ministry of HRD, the
Deputy Chairman of the Planning Commission, The Minister of HRD will be members of the board. The responsibility for audit of the organization will vest with the Auditor General of India.
The Masons guilds are a very important part of this project as they will generate huge employment opportunities in rural india. As envisaged however , the guilds will essentially be self governing and
market forces. will decide their profitability. Government or local political control on these cooperatives will kill these guilds and therefore it is essential to protect their interests only through broad , non-
interfering regulation. The guilds must therefore never be turned into cooperatives which breed corruption and in-efficiency.
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28. Stand Alone ( Day School ) Facility With 300 Children X 2 Shifts, Full Time 51 www.nataraja.org.in
Teachers + 7 Visiting Faculty Zero Drop out rate is being assumed
IMPORTANT NOTE ON OPERATING FINANCIALS OF THE SCHOOLS: Floor Space Required ( Class
due to superior teaching inputs … Room + Hostel ) in Sq Ft @
Fractional Vouchers in Day schools Project will rely less on pull factors such
will provide 2/3 subsidy. Rs 850 / Sq Ft … This includes
This project works because the Education SPV provides for the total costs of education for 18 as Mid Day Meal Schemethe Hub Schools) . Theconstruction & Furniture
Million Children ( In & More on
Vouchers also include the cost of the teacher sharing programme which reaches another
For ease of calculations students 108 Million Children who are attopresent covered byrequired
Better and Inspiring Teachers keep
students in school.
the Sarva Shiksha Abhiyan ( SSA ). A total of 126 Million Children are are added in
on fractional vouchers therefore covered with the best teaching resources possible.
the end.
This spreadsheet Looks exclusively at the financial viability of the schools from the point of view of private developers / Consortia who
will be investing just Rs 0.88 Crore equity each and raising the balance of their 60 % share as Interest free debt during the construction
period from the World Bank / Asian Development Bank . Here again Government of India will back this debt with a revolving $ 10 Billion
sovereign loan guarantee and take on the cost of the debt during the construction period. After the construction is complete, the World Bank /
Asian Development Bank will be replaced in the financial structure by a commercial bank and the debt will carry a normal market rate of
interest . The project developer will pay back this loan and any interest that will be due.
The ISIC raises all the money required through unique and innovative financing. Please read the project concept document for more
details on financing
29. Stand Alone Residential Facility With 600 Children ( Residents )+ 200 Children as Day Scholars www.nataraja.org.in
, 51 Full Time Teachers + 7 Visiting Faculty Zero Drop out rate is being assumed
IMPORTANT NOTE ON OPERATING FINANCIALS OF THE SCHOOLS: due to superior teaching inputs … Floor Space Required ( Class
System has sufficient inbuilt Project will rely less on pull factors such Room + Hostel ) in Sq Ft @
This project works because the Education capacity for de-bottlenecking.
SPV provides for the total costs of educationfor Mid Day MealChildren&(More on Hub Schools) . Rs 850 / Sq Ft Furniture
as 18 Million Scheme In the The
construction &
… This includes
Vouchers also include the cost of the teacher sharing programme which reaches another 108 Million Children who to keep present covered by
Better and Inspiring Teachers are at
required
students in school.
the Sarva Shiksha Abhiyan ( SSA ). A total of 126 Million Children are therefore covered with the best teaching resources possible.
This spreadsheet Looks exclusively at the financial viability of the schools from the point of view of private developers / Consortia who
will be investing just Rs 1.75 Crore equity each and raising the balance of their 60 % share as Interest free debt during the construction
period from the World Bank / Asian Development Bank . Here again Government of India will back this debt with a revolving $ 10 Billion
sovereign loan guarantee and take on the cost of the debt during the construction period. After the construction is complete, the World Bank /
Asian Development Bank will be replaced in the financial structure by a commercial bank and the debt will carry a normal market rate of
interest . The project developer will pay back this loan and any interest that will be due.
The ISIC raises all the money required through unique and innovative financing. Please read the project concept document for more
details on financing
30. The Nataraja Foundation
www.nataraja.org.in
Economics Of The Teacher Sharing Programme :
It is felt that teachers ( many of them women ) will need a place to rest and refresh themselves during their work in the villages. A
guesthouse has therefore been created in the area close to each of the assisted schools. This will allow for further expansion of the
programme. The guesthouses will also allow for overnight stay.
Sample Teacher Guest houses
1. Teacher Guesthouses Cost : Rs 850 / Sq Ft
A small teacher guesthouse will be constructed in the environs of each of the 14 assisted village school
Teacher Guesthouse Costing :
Cost
Cost of 1200 Sq Ft guesthouse @ Rs 850 / Sq Ft 10.2
Land Development Cost @ 15 % of Guesthouse cost 1.53
Guesthouse Furnishing 2
Land Cost ( land given by government for free ) 0
Total Cost 13.73
Total Cost of 30000 X 14 Guesthouses ( 420,000 Guesthouses ) 57666
2. Vehicle / Fuel Costs For The Teacher Sharing Programme
Type Of Vehicle Qty Of Distance Mileage Cost of Diesel Total Running
Vehicle Travelled ( Rs / Litre ) Cost / Day
/ Day
Large Buses 2 50 4 40 1000.00
Mini Vans 2 50 6 40 666.67
Jeeps 4 75 10 40 1200.00
Cars 4 75 12 40 1000.00
TOTAL COSTS
Assumptions
All assisted schools will be within a 50 Km radius of the hub school
31. Each Small Vehicle Does 75 Km / Day on Average and Each Bus / Minibus travels 50 Km / Day
Cost of Diesel @ Rs 40 / Litre. Global petroleum markets are volatile and marginal pricing economics constrain upw
Mileage Assumptions
Km / Litre
Of Diesel
Bus 4
Mini Bus 6
Jeep 10
Car 12
Notes :
1. Driver & helper costs are included in staff costs
2. Teacher costs are included in the school costs and therefore not priced here.
32. Architect : RL Kumar (
Bangalore )
during their work in the villages. A
l allow for further expansion of the
Teacher Guest houses
s 850 / Sq Ft
14 assisted village school
Lakhs
Lakhs
Lakhs
Crores
Total Running Maintenance Total Total Operating
Cost / Year of 250 Cost / Year / Maintenance Cost of Fleet Per
Days Vehicle Cost Year
250000.00 30000 60000 310000.00
166666.67 25000 50000 216666.67
300000.00 10000 40000 340000.00
250000.00 10000 40000 290000.00
966666.67 190000 1156666.67
33. 50 Km / Day
al pricing economics constrain upward price view.