Updating Ajit Ghosh’s earlier estimates of employment and unemployment (employment in india, Oxford University Press, 2019), Ashok Modi estimates that India will need to create around 200 million jobs over the next decade to fully absorb the backlog of unemployment (and underemployment), i.e. per year About 20 million additional jobs. But there has been little growth in employment in recent years (Ghosh’s estimates show that employment actually declined between 2012 and 2018). Therefore, the idea of absorbing the massive unemployment backlog in a decade or two in any ‘business as usual’ scenario appears to be a pipe dream. This dire unemployment crisis lies at the core of Modi’s grim narrative in his just-published book, India is broken (Juggernaut Books, 2023).
Slow employment growth, very low employment intensity of GDP growth and surprisingly low labor force participation rates, especially among women, make India an exceptional case in Asia, if not the entire developing world. What is the account of this? In a 2017 paper, I argued that the employment challenge in India is a man-made problem caused by two types of policy distortions, namely industrial regulation and education policy (Sudipto Mundle, ‘Employment, Education and the State’). Indian Journal of Labor Economics, 2017, Vol. 60. No. 1). In this column I only discuss education policy.
Only a small fraction of the Indian workforce has the educational foundation necessary for high-skilled, high-productivity jobs. The education level of most Indian workers enables them to acquire low skills suitable for low productivity jobs. Barely 5% of employees have any skills training and only 2% have any formal skills certification, compared to more than 70% in advanced European countries such as the UK or Germany, and 80% in East Asian countries such as Japan or South Korea. To address this deficit, the government launched an ambitious skills development programme, but not surprisingly the results have been disappointing. Skill development cannot be successful without an underlying foundation of solid basic education. But India’s longstanding neglect of primary and secondary education has limited access to quality basic education.
This elitist bias comes through not through lofty goals of various policy statements, but through actual money and the implementation of policies and their results. The share of public expenditure on education in India, at around 14%, is almost at par with the average for Asian countries. But there is a sharp bias in its allocation. Per student spending on tertiary education is comparable to primary education in Thailand and Korea, almost double the primary per student outlay in Indonesia and almost four times that in Malaysia. In India, it is more than nine times! Universal primary education (>90% net primary enrolment) was achieved only during the last decade, nearly 100 years after the original demand for free, compulsory primary education in the Gokhale Bill of 1913, and 70 years after Indian independence. Most countries in East and South East Asia had already achieved this goal 50 years ago.
While this goal has finally been achieved, thanks largely to the Right to Education Act of 2009, the Annual Status of Education (Rural) Report (ASER) shows that learning outcomes remain dismal. Thus, in 2018, before the pandemic, nearly half of grade 5 children could not read a grade 2 simple text and more than 72% of them could not do simple division. As expected, learning outcomes have declined due to children being away from school for two years due to Covid. But this decline is mercifully quite moderate. The latest ASER report released on January 18 shows that now 57% of grade 5 students cannot read a simple grade-2 text and 74% of them cannot do a simple division. Indian students also perform very poorly in international learning proficiency tests such as PISA and TIMM, ranking near the bottom on the few occasions they have appeared in these tests. But students from other Asian countries like Singapore, South Korea, Japan and even China regularly come out on top in these exams.
Clearly, India still has a long way to go to catch up with its best performing Asian neighbours. This requires disruptive change. Many necessary changes are embedded in the National Education Policy (NEP) 2020. It emphasizes universal foundational literacy and numeracy, which entails a radical shift in goal-setting from inputs and expenditure to learning outcomes; preschool education; Enhancing teacher capabilities and linking teacher rewards to performance and the size of schools and management systems. Since the pandemic struck soon after the policy was introduced, its impact is yet to be seen, but the changes envisaged could be a turning point.
Education being primarily a state subject, a lot will depend on how state governments implement the NEP. Unlike welfare schemes and other popular issues with immediate electoral gains, education programs take time to show results and have not been a high priority for political leaders with short time horizons. However, some states have begun to demonstrate their performance on education and other public goods, and voters are rewarding them. If this catches on and political parties start competing on the basis of service-delivery performance and not just welfare schemes and other populist issues, it would be a great boon to citizens.
Sudipto Mundle is the chairman of the Center for Development Studies. These are the personal views of the author.
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