India’s large and young labour force could become a huge disadvantage by 2030

A new report by the the research arm of the State Bank of India (SBI), India’s largest bank, has a number of calls to action to its parent - the Indian government - some of which are put forth in an irreverent fashion. “Policymakers, wake up and smell the coffee!”, the report says, in the hope that the Indian government will get its act together and miraculously transform the country.

There is an urgency to SBI’s assessment. It says that India has only 10 years to graduate to a “developed nation”. If it fails to do so, it will, in a likelihood, always be classified as a developing country.

The reason? If India’s youth isn’t given adequate skills and opportunities, then the country’s so-called “demographic dividend” - its large and young labour force - will become a huge disadvantage by 2030. They won’t be able to contribute productively to the economy, and will hence, be a drag on resources and social programmes.

Developed vs developing

According to a number of multilateral organisations, such as the United Nations (UN) and the International Monetary Fund (IMF), developed countries are categorised as such because they’ve achieved a certain level of infrastructure or the general standard of living and are above a certain bracket with respect to gross domestic product (GDP) per capita.

The IMF categorises economies as developed or “high income” if their gross national income (GNI) per person is above $12,236. India currently languishes in the “lower middle income” bracket since its GNI per capita is between $1,006 and $3,955. Despite a slightly larger population, China is in the “upper-middle income” category.

A focus on education reform

The right to education does not translate into a right to quality education.

In order to prevent its demographic dividend from turning into a disadvantage, SBI says that India will need to dramatically improved education and skill development outcomes in the next decade. This entails the reform and increased investment in government schools, which education a large portion of the country’s children.

A few measures include the diversion of funds earmarked for private schools to government schools, for the purpose of upgrading facilities and infrastructure. In addition, teachers need to be better compensated.

A new education policy has been stuck in the drafting stage ever since the Modi administration came to power in 2014. Prakash Javadekar, India’s minister for human resource development, told the Hindu yesterday that he will be presented with a draft of the policy next week.

Higher education could also do with a revamp. The University Grants Commission, India’s higher education regulator, is currently in the process of taking suggestions from academics, students and university administrators on how to improve the higher education landscape in the country. The revamp is expected to cover entrance exams, the enhancement of technology and infrastructure and structural changes.

However, based on how these things usually go, the report by the SBI is unlikely to spur the government into immediate action. India’s education system has been in need of an overhaul for decades now. It’s a extremely large problem to deal with, and ten years is a short amount of time. It seems that India will be stuck “developing” for the foreseeable future.