Despite allocating over ₹1.2 lakh crore to education in the Union Budget 2025-26, India's formal schooling system is haemorrhaging student trust to a private coaching industry now valued at over ₹4.3 lakh crore, according to Technopak Advisors. The gap is not about money — it is about what the money measures.

Here is a number that should keep every education minister awake at three in the morning: ₹4.3 lakh crore. That is not a government budget line. That is the estimated size of India's private coaching and tutoring industry in 2025-26, according to Technopak Advisors. It is larger than the GDP of Goa, Manipur, Mizoram, and Nagaland combined. It is, in effect, India's shadow education system — one that nobody elected, nobody regulates with any rigour, and almost every ambitious family in the country pays into like a second tax.

Now place that against the Union Budget 2025-26 allocation of approximately ₹1.2 lakh crore for the Ministry of Education, a number the government rightly called historic. Record spending. New IITs. Digital classrooms. Samagra Shiksha funding. And yet, for every rupee the Centre pours into formal schooling, Indian families are pouring roughly three-and-a-half rupees of their own into a parallel apparatus whose sole purpose is to teach their children what schools, apparently, cannot.

The question is not whether India is spending enough on education. The question — the one policymakers keep dodging — is whether the formal system has quietly conceded the classroom to the coaching centre.

The Classroom That Swallowed the School

Walk into any middle-class neighbourhood in Hyderabad's Ameerpet, or Patna's Boring Road, or the dense lanes behind Kota Junction, and you will see the architecture of this concession. Buildings four and five storeys high, no playgrounds, projectors instead of blackboards, batches running from 6 AM to 10 PM. These are not supplementary institutions. For millions of students, these ARE the institution.

A 2024 FICCI-EY report on the Indian education sector found that post-pandemic enrolment in structured coaching programmes surged by over 40 percent between 2021 and 2025, with the sharpest growth in tier-2 and tier-3 cities where families aspire upward most urgently. The National Sample Survey Office's periodic surveys have consistently shown that middle-class Indian families spend between 20 and 40 percent of annual household income on education — with the bulk going not to school fees but to coaching, private tuition, and exam-preparation materials.

That money is not being wasted on a whim. It is a rational response to a system that has, structurally, decided to measure inputs rather than outputs.

Inside Talk

Here is what people in the education policy corridors say quietly but will not put on record: the government knows. Everyone knows. The Annual Status of Education Report (ASER) 2024, published by Pratham, found that roughly half of India's Class 5 students still cannot read a Class 2-level text fluently. The National Achievement Survey paints similar pictures in mathematics and science. These are not new findings — they are a recurring theme stretching back over a decade, budget after budget, policy after policy.

The talk in education circles, according to those India Herald has spoken to in policy research and school administration, is blunter than any official statement: "The system rewards building schools, not running them well. A minister can inaugurate a smart classroom. Nobody inaugurates a well-trained teacher." There is a persistent whisper that NEP 2020's focus on competency-based learning — a genuine structural shift on paper — is being implemented so slowly at the state level that coaching centres are filling the vacuum faster than reform can close it.

(This reflects policy-corridor chatter and informed speculation, not confirmed official positions.)

The uncomfortable truth, visible to anyone who has watched a Class 10 student's daily schedule in urban India, is that school has become the place you go because attendance is mandatory. Learning happens elsewhere — at ₹15,000 to ₹3,00,000 a year, depending on the exam you are aiming for.

The Kota Contradiction

Consider Kota, Rajasthan — a city whose entire economy now orbits around coaching. According to district administration data and coaching institute filings reported by The Indian Express, Kota hosted over 2.5 lakh students from across India in 2024-25, generating an estimated ₹8,000-10,000 crore in annual revenue for the coaching-and-hostel ecosystem. That is a single city, performing a function the formal education system was designed to perform.

The human cost is not abstract. The National Crime Records Bureau's data, and extensive reporting by NDTV and The Hindu, have documented a disturbing trend of student suicides in coaching hubs — a toll that led to government advisories, some cosmetic regulation, and no fundamental rethinking of why these centres exist in the first place.

They exist because JEE, NEET, UPSC, and state-level competitive exams are designed as filtration systems, not learning assessments. The exam is a sieve. The coaching centre is the machine that reshapes a student to fit through the sieve. The school, in this arrangement, is scenery.

What the Numbers Actually Reveal

India Herald's read of the structural fault line here goes deeper than the familiar "more spending needed" argument. The spending is there. What is missing is the incentive architecture. Consider: UDISE+ data shows India has built over 14.9 lakh schools with 97 lakh teachers. The Pupil-Teacher Ratio has improved. Infrastructure metrics — toilets, drinking water, electrification — have risen steadily. By every INPUT measure, the system is healthier than it has ever been.

But ASER 2024 simultaneously shows that learning OUTCOMES have barely moved, and in some states have regressed post-pandemic. The Annual Survey of Industries would call this a factory with rising capital expenditure and falling output. In education, we call it progress because we measure the factory, not the product.

This is the structural incentive problem that coaching centres exploit. They are, in market terms, an arbitrage on a measurement failure. The state measures schools built. Families measure futures secured. Coaching centres serve the family's metric. The school serves the government's.

Where This Goes Next

NEP 2020's competency-based framework, if implemented at scale and speed, could theoretically close this gap — it aims to shift assessment from rote memorisation to applied understanding. But four years after the policy's announcement, state-level adoption remains uneven, as documented by the Ministry of Education's own implementation tracker. The proposed National Testing Agency reforms for competitive exams, including adaptive testing and multiple-attempt windows, could reduce the pressure-cooker dynamics that fuel coaching dependency — but these remain in pilot or proposal stage.

The more likely near-term scenario, in India Herald's assessment, is that the coaching industry continues to grow, potentially crossing ₹6 lakh crore by 2028-29 as online-offline hybrid models reach deeper into rural and semi-urban India. EdTech platforms like Unacademy, Physics Wallah, and BYJU's (in whatever form it survives its current restructuring) are effectively industrialising coaching access. The parallel system is not shrinking. It is scaling.

The question policymakers will have to answer — and soon — is whether they continue to compete with this shadow system or finally redesign the incentive architecture so that the school itself becomes the place where learning happens, making the coaching centre redundant rather than indispensable.

That redesign would require something no education budget has ever funded: the courage to measure what a child actually learns, hold the system accountable for it, and accept the political cost when the numbers are ugly.

Until then, the coaching centre is not the disease. It is the symptom — of a system that has learned to count everything except what counts.

Reported and written with AI assistance under India Herald's editorial standards; a human editor governs publication.

Key Takeaways

• India's private coaching industry (~₹4.3 lakh crore, per Technopak Advisors) is roughly 3.5 times the Union Budget's education allocation, making it the country's de facto education system for aspirational families.
• ASER 2024 shows roughly half of Class 5 students cannot read Class 2-level text — meaning learning outcomes have barely moved despite record infrastructure spending documented by UDISE+.
• Post-pandemic coaching enrolment surged over 40% between 2021-2025, per FICCI-EY, with the sharpest growth in tier-2 and tier-3 cities where families spend 20-40% of household income on coaching, according to NSSO surveys.
• The structural cause is an incentive mismatch: the government measures inputs (schools built, teachers hired) while families measure outputs (exams cleared, futures secured) — coaching centres arbitrage this gap.
• NEP 2020's competency-based reforms could theoretically close the gap, but state-level adoption remains uneven four years in, per the Ministry of Education's own tracker.

Frequently Asked Questions

How big is India's private coaching industry compared to the government education budget?

India's private coaching and tutoring industry is estimated at approximately ₹4.3 lakh crore (Technopak Advisors, 2025-26), roughly 3.5 times the Union Budget's ₹1.2 lakh crore allocation for the Ministry of Education.

Why do Indian families spend so much on coaching despite free government schools?

The formal school system is optimised to measure inputs — infrastructure, enrolment, teacher ratios — while competitive exams (JEE, NEET, UPSC) reward intensive exam-specific preparation that most schools do not provide. Coaching centres fill this gap, making them a rational household investment, per FICCI-EY and NSSO data.

What does ASER 2024 say about learning outcomes in Indian schools?

ASER 2024, published by Pratham, found that roughly half of India's Class 5 students still cannot read a Class 2-level text fluently, indicating that learning outcomes have not kept pace with rising education budgets and improved infrastructure.

Can NEP 2020 reduce India's coaching dependency?

NEP 2020's competency-based assessment framework could theoretically shift focus from rote memorisation to applied learning, reducing coaching demand. However, state-level implementation remains uneven four years after the policy's announcement, according to the Ministry of Education's own implementation tracker.