An education scandal in India that has been brewing for years

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The big story

Cram schools are a well-known phenomenon in India.

Thousands of aspiring students, primarily from middle-class families, relocate to Kota, a city in Rajasthan's desert region, to spend two years memorizing in order to pass competitive university entrance exams.

The system has intensified the gap between the wealthy and the poor, as they are limited to the poor-quality state-funded education.

In India, competition is intense for both employment opportunities and admission to prestigious institutions. Despite the large number of individuals entering the job market annually, the government has been unable to implement policies that can generate jobs quickly enough to accommodate them all.

High-stakes junctures in a person's life are entrance tests and examinations, which can either open doors to dreams or permanently close them.

To succeed, many people resort to unethical means such as cheating.

The government canceled admissions tests to elite medical schools in India last month due to reports of widespread cheating. The government stated that its cybercrime enforcement agency had indicated that the "integrity" of those "examinations may have been compromised."

The head of India's National Testing Agency was removed from their position after protests by students and opposition political parties.

However, it wasn't an isolated incident.

Government records and court filings exposed that one out of every six of the country's 398 medical schools were accused of cheating in 2015, according to Reuters news agency.

Cheating has also not been limited to university tests.

In the same year, a group of parents and friends were caught on tape climbing school walls to pass on answers during school exams. This led to the arrest of approximately 300 individuals, as well as the expulsion of 750 students.

The introduction of a reward by the local government led to an increase in cheating incidents. Students from lower castes were offered 10,000 rupees to get at least half the questions right. However, the financial reward resulted in teachers and supervisors colluding with students to cheat. Supervisors took bribes to allow others to help test-takers, while teachers looked the other way since cheating inflated their grades.

Earlier this year, the Indian government enacted a law imposing three to 10-year prison sentences to discourage cheating.

The issue may be with the quality of education in the country, resulting in many people holding qualifications but lacking the necessary skills.

Since 2009, India has not participated in the PISA program, in which it ranked 73 out of 74 participating countries, ahead of only Kyrgyzstan. A recent attempt to evaluate the country's education system in 2021 was abandoned due to the Covid-19 pandemic.

Could tech solve testing woes?

In 2011, Byju's recognized a market opportunity and aimed to secure a portion of the vast education industry.

During the pandemic, the company, which provides online tutorials and offline coaching, received billions of dollars in investments worldwide due to the high demand for online education services. In 2022, the company was valued at $22 billion, allowing it to sponsor the FIFA World Cup.

Byju's acquired an offline test preparation service called Aakash Education Services, which is expected to IPO this year.

Despite the company's remote learning services being enabled by technology and providing education at a lower cost to the masses, shareholders claim that the company's financial mismanagement and compliance issues are undoing all of their gains, putting the company at risk of bankruptcy.

Tech has the potential to provide a more affordable alternative to India's cram school system.

The use of technology in exams could facilitate cheating, as seen in the case of a Turkish student who allegedly employed artificial intelligence software to answer questions during a university entrance exam.

Need to know

India's government is reportedly urging its electricity generators to purchase equipment worth billions of dollars to increase coal-fired power output in the years to come. Major power firms, including state-run NTPC and private companies like Adani Power and Essar Power, are expected to put out tenders for an additional 31 gigawatts of capacity in the next five to six years.

At least 100 people were killed in a stampede at a Hindu religious event in northern India this week, with many of the victims being women and children. This is one of the country's worst such tragedies in recent years.

Meta's Threads gains 175 million users worldwide, with India being one of the most active, as local social media network Koo shuts down after a failed partnership deal.

What happened in the markets?

The stock market index reached a new high of 24,302 points and is expected to increase by over 1% this week. The index has increased by 11.8% in the year so far.

The Indian government bond yield is close to 7% and bond prices fell last week after being added to a JPMorgan emerging market government bond index.

This week on Biz Focus Hub, Rajat Kulshrestha, CEO of Space Machines Company, stated that the company is receiving "strong demand signals" from customers and capital markets in India regarding investing in the "future of space."

Anand Rathi Wealth's deputy chief executive, Feroze Azeez, stated that Indian companies' earnings have matched their share price growth over the past year. Additionally, he pointed out that foreign investor fund flows have increased since the election results were announced, which is predicted to sustain stock market momentum.

What's happening next week?

Next week, Prime Minister Narendra Modi will visit Russia, coinciding with a NATO summit in Washington, D.C. The Kremlin has stated that enhancing trade and economic cooperation will be a major focus of the Modi trip.

The U.S., China, and Russia have reported their inflation rates, while the U.K. will disclose its economic growth figures next week.

On July 10, Bansal Wire Industries and Emcure Pharmaceuticals will make their stock market debut.

July 7: France's second-round Parliamentary elections

July 8: Modi to visit Russia

July 10: Inflation: China, Russia

July 11: U.K. GDP, U.S. inflation