The Hindu Business Line : CAs are ready to train, but there are few takers

FROM a meagre number of less than 2,000, when India became a Republic, chartered accountants have gone up in strength to more than a lakh. Growth rate is too gradual, at just above 8 per cent, as the table titled `How chartered accountants have grown to one-lakh-plus' would show.

Growing number of CAs

The Report of the Committee for Review of Education and Training (1998) projected the number of CAs to be around 1,47,000 by 2010. This is on the basis of a conservative annual growth rate of 5.5 per cent.

However, the annual growth rate from 1950 to 2000 works out to around 8 per cent on the basis of five-year annual compounding growth. While between 2001 and 2002 a major reduction in the growth rate was seen, between 2002 and 2003 the growth rate was at around 8 per cent.

Thus, assuming an annual compounding growth of 8 per cent, one may expect that by 2010 there will be around 1,90,000 CAs. At 6 per cent this number would be 1,65,000. However, a question that arises is whether there will be an addition of 55,000 CAs over the next seven years.

The odds seem to be against such a possibility because of the following reasons: One, delay in qualification as CA because articleship would run after passing PE2 exams; and, two, CA finalists belonging to the pre-1995 syllabus would be required to write both groups if they do not pass any of the groups in the coming exam.

Even at the current number of CAs, do we have enough of them for an economy as big as ours, for a billion-and-growing population that we can boast of, are questions that deserve attention, by drawing data from other countries.

However, if we look at the number of CAs from the angle of aspiring students who undergo the grind of articleship to join the ranks of `members', we seem to have a glut of capacity.

An articleship market

For starters, articleship is the period of about 2-3 years that CA students serve as apprentices in CA firms, to gain practical experience of how the profession is run. As on March 31, 1990, there were 18,218 fellow members in practice. Articleship vacancy that existed then can be calculated using the yardstick prescribed by the ICAI, factoring in the CA's experience in years: Thus, for a CA with three years of experience, vacancies would be three; five years, four vacancies; 10, five; and 15, six.

For the purpose of this analysis, let us not consider `additional vacancies' and also eligibility of associate members. On the basis of these conservative assumptions, vacancy position for the years 1992 to 2002 and the corresponding enrolment of the article clerks (cumulative and effectively for three years) are as shown in table, `Each apprentice has more than two vacancies to choose from'. The percentage of capacity utilisation is petering to sub-40 levels in recent years, from a peak of 50-plus in 1999.

Training seats are lying vacant

From available data we can safely assume that enrolment for PE2 will be between 26,000 and 32,000 for the next seven years.

Also, it would be reasonable to consider that 40 per cent of them will pass out in five attempts (that is, 15 per cent in the first two attempts and 15 per cent in the third and fourth attempts and 10 per cent in the fifth attempt). After the PE2 hurdle, they can join a CA firm as articled clerk or apprentice. See table, `Articleship capacity utilisation may halve before this decade ends'.

The projections in the table anticipate that about 18,000 students have the potential to complete, from among the backlog of Intermediated; and that 40 per cent of the students will clear the Final examination within three years, and they would add to the count of CAs. As regards vacancies it is assumed that the existing ones will continue with further changes after 2006.

Principals without students

Percentage of articleship capacity utilisation drops from the already low level of 37 in 2002 to a precipitous 19 by the end of the current decade. Effectively, it will be 12-15 per cent, it appears. CAs are ready to train but there are no takers.

Partly, this is because of shutting the doors of articleship to students who completed the Foundation course (now PE1) and delaying apprenticeship training to PE2 students till they finish their exams. Is there, therefore, a need for a rethink to evolve a strategy for effective utilisation of training capacity?

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