April 2013

Education…Economic Growth…Demographic Dividend……Converting perennial weakness into perpetual strength

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Ashis Sanyal
Consulting Editor, egov

Government needs to appreciate direct dependency between growth in education eco-system and economic growth


It was Mr Nandan Nilekani who had first time introduced now wellpublicised phrase of demographic dividend to this columnist, during his convocation address in TERI few years back. There are all sorts of statistics floating around about the unique demographic profile India is envisaged to have by the year 2030. It is said that by that time young middle class population in the age group of 18-45 years of this country would be more than 60% of the total population. In other words, India may become the young nation, so to say, by next 15 to 20 years time. Some experts would further refine this prediction by saying that growth f would be regionally uneven and skewed, centering around southern and western States and the western part of north-south line dividing India would achieve this feat by that time while the balance area may take another decade or so. Nevertheless, as of today, India has a relatively higher proportion of a youthful population than Europe, Japan and Korea. Experts estimate that the size of India’s workforce population will become 95 crore in the year 2026. Further, by 2020, the average Indian will be only 29 years old, compared to 37 years in China and US; 45 years in West Europe; and 48 years in Japan.
But what makes this situation so exciting? The social psychologists would say that the human brain remains most innovative and productive also, while passing through the age band of 18-45 years. By this logic Indian society is likely to wear the tag of most innovative and productive society by the year 2030! The macro-economists would say that this unique and unprecedented demographic profile of young middle class dominating Indian society would drive prosperity in all segments of the society. It is a fact that a middle class dominated economy would usher in an intense consumerism era and consequently would be in a position to sustain a high level of growth index for a significant period.
Is it then everything would be such hunkydory for India within next two decades of time? Let us now look for important catch in the entire assumption. It is a fact that in India the number of working age youth is bulging but the bulge is concentrated in economically poor regions, both in terms of savings and job potential. IMF suggested a caveat in the Asia-Pacific Regional Economic Outlook 2012 report that significant leap in the India’s GDP owing to this demographic dividend would only be possible when there is a right policy mix to effectively harness this livid mass of youthful energy. So the catch is that this huge young population should be employable and more so, should be gainfully employed. And unless they are adequately educated, be it traditional, professional or vocational, they cannot be employed. If they are not employed they will not earn. And if they cannot earn they cannot consume. Consequently, with less consumerism, the anticipated growth picture would be blurred and the entire prediction of demographic dividend driving the growth index would remain a fallacy. On the worst side, the entire situation may backfire. If a huge young population remains unemployed, there is a chance of unrest all over and what is currently manifested in 60+ districts in the country and is desirably on the wane, may unfortunately again surface in other districts as well.
All these above call for an immediate action on connecting the entire education eco-system to the process of growth of economy and also to develop a monitoring metrics for the same. Growth in education would drive and sustain the expected growth profile. Government needs to appreciate the direct dependency between all round growth in education for all segments of the society and sustainable growth of the economy. This appears to be part version of the concept of welfare economics proposed by Amartya Sen wherein he insisted that two social sectors of education and health should receive all premier investment from the government for some defined period. He further clarified that if it happens, then other aspects of development paradigm would fall in place one after another.
The entire argument gains paramount  importance as shortage of skilled employable workforce is becoming apparent with CII and BCG in their 2010 report stating that by 2025 India will lack trained workforce of around 50-60 million. Bulk of the growing working population is going to be absorbed in the secondary and tertiary sectors such as manufacturing and services industry where skill is required.
The demographic dividend will only be visible when we would provide young population with good education, skill and employment opportunities. To reach the large currently untapped potential base for traditional, professional and vocational education eco-system, abundant ICT interventions are absolutely necessary. Distance education, online teaching with digital content, online examination, online on-the-job refresher courses etc are among few, to be taken up more seriously with large investment. National Skill Development Corporation has to work in a more visible manner, with a performance metrics and adopting on-course corrections. All these are essential to derive the strategic advantage of the forthcoming demographic dividend and to convert our perennial weakness of growing population in to perpetual strength of more than a billion connected people.

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