This Is No Child's Play

With galloping inflation and high cost education, parents must go for a melange of investments to realise the dreams for their children

- Aarati Krishnan

Building up a tidy sum towards children’s education is the top financial aspiration for most Indian parents and often takes precedence over every other goal.

Aware that an early start makes all the difference, many parents today are prepared to invest towards this right from the toddler stage.

But an early start will be of little use if you end up investing in the wrong class of products, based on emotional sales pitches that help line the pockets of product sellers more than investors. Here are some of the essential ingredients to building a healthy corpus for your child’s education.

Budget for high inflation

In India, the demand for quality education far outpaces the supply of seats offered by top-tier institutions. This mismatch, and the government’s efforts to make public education institutions more self-sustaining, has resulted in the cost of higher education galloping at a higher pace than the general inflation rate. Official data tells us that the CPI index for education increased at about 6% annually in the last eight years, but fees at the sought-after colleges have risen much faster.

In the IITs, for example, the total cost of a four-year B-Tech course adds up to ₹8-10 lakh today, a fourfold increase from about ₹2 lakh in 2012. The course fee at the top three IIMs is about ₹21-22 lakh against ₹1315 lakh in 2012.

The cost of putting your child through private colleges is significantly higher. BITS Pilani levies ₹20-24 lakh for a four-year B Tech degree. The cost of a BA (Hons), BSc (Hons) at the Ashoka University is close to ₹28 lakh.