Comment

India is currently experiencing a favourable demographic phase. The United Nations estimates suggest that the median age of India’s population will be 25 years in 2010, and 29 years a decade later. This is in sharp contrast to other Asian countries with much higher median age such as Japan (45 and 49 years, respectively), Korea (38 and 43 years, respectively), and China (34 and 37 years, respectively).

According to the United Nations, India’s working-age population (15-64 years) is projected to increase from 781 million (64.3% of the total) in 2010 to 916 million (67% of the total) in 2020. India’s working-age population share is projected to increase until about 2035; and then decline gradually. The projected addition of 135 million to the working-age group in just one decade has important policy implications for India’s own economic growth trajectory, competitiveness and social stability.

First, every country typically undergoes a three-stage demographic transition. The favourable demographic phase India currently exhibits represents the second stage of the transition when the share of working-age population in total population increases.

It is estimated that during the 30-year period beginning with the mid-1960s, policies designed to take advantage of the favourable demographic phase contributed nearly two-fifths of the total economic growth in the successful South East Asian countries. As with these countries, the favourable demographic phase represents only a one-time opportunity for India, which if not tapped, represents a permanent loss.

Second, the benefits associated with the demographic gift phase are not automatic. The demographic dividend phase entails a rapidly growing number of young people who need to be empowered with good quality education, while creating economically productive and sustainable jobs in sufficient numbers to absorb them. The balance between preserving existing jobs, which are not in sync with the current or anticipated structural transformation of the economy on the one hand and creating new livelihood opportunities on the other must shift in favour of the latter.

According to the Economic Intelligence Unit (EIU) projections, during the 2005 to 2020 period, India will need to create 142 million jobs (or 30% of the world’s total, nearly twice India’s share in the global population). Without substantial investments in human capital and its development, and reform of labour market institutions and practices, the demographic gift may actually turn out to be a demographic burden, adversely impacting growth and stability.

Third, the task of taking advantage of India’s favourable demographic phase requires an integrated package of complementary policies, including macroeconomic sustainability, and effective delivery of many public services such as basic education, health, and infrastructure.

Given India’s economic and labour market structures, the emphasis should not be on only the formal or organised sector employment, but on creating a business environment and ethos in which merit, entrepreneurship, and business formation can thrive. As an overwhelming proportion of employment growth and value generation in India is from small and medium enterprises, and from self-employment, policies at the Centre and in the States must facilitate rather than hinder their activities.

It is in the above context that the role and leadership of the Ministry of Human Resource Development (HRD) at the Centre and its counterparts in the States becomes extremely critical.

Recent history has however been severely disappointing in this regard.

After Independence, a full-fledged ministry, the Ministry of Education, was created in 1947. The Ministry of Education was merged with the newly-created Ministry of Human Resources Development in 1985, with a broader vision to develop India’s human resources, thereby transcending its limited role of merely overseeing education at the Centre.

Unfortunately, the formation of the HRD ministry has not led to a change in the mindset of the government or the nation in the above direction. Even after a quarter of a decade of existence, the ministry has done little to address the core issues that plague the formal education system; implement initiatives which favour merit; and create jobs and livelihoods. It has played a retrogressive role in not helping to strengthen lower levels of education, without which quality of higher education and skills cannot be enhanced.

There is, however, a renewed sense of optimism with the appointment of Kapil Sibal as the new HRD minister. Several policy initiatives have been articulated in the ministry’s 100-day plan. The recommendations of the National Knowledge Commission (NKC) and of the Yash Pal Committee on Rejuvenation of Higher Education are also expected to receive deserved importance in policy initiatives.

Thus, consistent with their recommendations, the University Grants Commission (UGC) and All India Council for Technical Education (AICTE) may be replaced by a new single body encompassing both education and research. This would simplify supervision, help improve accountability, and provide universities with greater autonomy and flexibility.

The role of the HRD ministry needs to be restructured. Its focus should not be on simply spending more money under the pretext of affirmative action and inclusive development on schemes which are badly designed, and indifferently implemented and monitored.

If India is to become a major knowledge-driven economy, the ministry must undertake urgent measures in overhauling the education system. Besides improving the quality and reach of primary, secondary, and vocational schools, effective oversight of the universities and Industrial Training Institutes (ITIs) is urgently needed.

India’s economic structure and social expectations are changing rapidly. Its educational policies and opportunities should therefore have sufficient flexibility to be consistent with it.

It is imperative to free the education system, including higher education from the straitjacket of governmental monopoly and anti-competitive regulations, while ensuring standards. It is the supply side of education involving physical infrastructure such as establishment of first-rate public and university libraries with extensive online resources and accessibility and increasing the number of quality faculty and researchers, which should be the priority. Restricted supply of quality education has inflated the number of Indians studying abroad, with attendant economic costs to the country.

It is time to establish full-fledged universities, which house education from undergraduate to post-graduate levels, and which pursue both teaching and cutting-edge research under one umbrella, with students drawn globally.

Simply labelling an institution as a Central University, IIM or IIT does not automatically bestow quality upon it. Developing high quality internationally competitive educational institutions is a medium-term process requiring considerable resources and leadership. As in other areas, it takes a long time to build quality, but only few misguided measures to destroy it.

The demographic dividend phase provides India with a tremendous competitive advantage in the knowledge economy of the twenty-first century. India must not squander this advantage.