Without good higher education, GDP not sustainable
Given India’s very young population, and the increased emphasis on education—in urban India, per capita expenditure on education is greater than that on cereals, a real first—most feel it is just a matter of time before India gets back to its 9% growth days. Indeed, as a FICCI-EY paper points out, by 2020, India will be one of the few countries in the world with surplus labour—so, given some freeing up in visa rules, India could even be a big exporter of talent. That India will have talent is taken as a given, but FICCI-EY point out, this is far from being true, since it is only countries that have a good higher education enrolment ratio do well—without this, worker productivity can’t catch up with wages, and countries fall into what’s called the middle-income trap. While India has the largest number of higher education institutes in the world—33,723 versus 4,140 in the US in 2013—they have very poor global rankings due to poor quality of teaching and research; India has just 6 institutes in the Global 500 versus 18 for China and 97 for the US. Which is why just around a fifth of Indian graduates are considered employable and just 60-70% of students in the 21st to 30th ranked B-schools and engineering colleges get placed after they complete their education. That’s also why around 2 lakh Indian students go overseas to study each year, spending upwards of $10 billion each year.
That is not a drain, it is also a huge opportunity, and the FICCI-EY report tries to detail how India can make the most of this. While greater spending on universities is an easy solution—over a third of faculty positions are vacant in state and central universities—if the money is made available, making Indian education world-class requires more. Allowing foreign universities in and encouraging collaboration with Indian ones is a solution, as is freeing up the hiring of foreign teachers. The real solution, however, requires setting a complete overhaul of how universities are run—reservations are anathema as far as quality is concerned and nothing short of complete autonomy for the better-run institutions (to begin with) is required. If India doesn’t get its reading, ‘riting, ‘rithmetic (3Rs) right, its demographic dividend is all set to become a demographic disaster with the changing nature of jobs in industry and services requiring an educated work force. With nearly half of today’s jobs, as an Oxford University study pointed out recently, in danger of getting automated in the next two decades, only a good education system can deliver a high return on investment (RoI).