Schools have to brace themselves for less-cash (if not cashless!) days ahead. After many years of taking most of their fees in cash, schools now face the situation of demonetization. CBSE has already mandated that its affiliate schools will not be able to collect fees in cash much longer and that dominates a large chunk of the private school market.
While it will reduce the circulation of black money in the private school market and the bodies running them under the garb of non-profit charitable organizations, the extra-curricular activities (viz. summer camps) that schools charged students for will go down at least in the short term, as lesser number of students would be willing to pay for them.
Higher education institutions were plagued with similar issues of high amounts of cash fees payment. With the already dire situation of most higher education institutions where more than 30% seats were empty on an average, lack of cash can hit them hard as enrolment numbers are bound to go down even further.
This may be the worst hit segment. Most of these institutions were completely cash driven which means they flouted the norms of not just income-tax but also service tax. With payments now coming in cash-less mode, they will find themselves in the ambit of tax compliance rules.
Institutes that refuse to take fees via non-cash modes have already started seeing a decline in their customer base and will continue to fad out unless they take some quick action on the same.
In contrast to all the gloom spreading around, this segment of the private education industry will flourish from demonetization. With the proliferation of plastic money and acceptance of payment methods like e-wallets, the number of people willing to pay for online courses will increase rapidly. The number of competitors in this segment ensure that only high quality will survive, but India is still a huge market to hold many players simultaneously in their niche areas.
While the long term impact of demonetization is definitely going to broaden the market albeit it is a path fraught with short-term pain. Keep dealing!