Decentralise education, create jobs

India's young population can drive growth only if the government invests more in education

The Jantar Mantar agitation we witnessed recently showed that the government had not paid sufficient attention to the concerns of people below the age of 30, who constitute half the country’s population. The agitation was led by GenZ youth, many of whom were in higher or tertiary education, as well as those who were looking for jobs.

 

They number 367 million and constitute a major part of the generations relevant to our long-term growth. In essence, the core of the issue is the extent of government support for higher education and employment prospects for young adults.

 

When it comes to their access to education, there has been substantial progress not just in school education but also in tertiary education in universities and similar institutions. In the 40 years between 1983 and 2023, the percentage of people in the 20-29 age group with a graduate-level education rose from 4 per cent to 28 per cent, which, in absolute terms, translates into an increase from 5 million to 63 million.

 

We have also seen a significant reduction in caste and gender-based discrepancies in tertiary education and graduate employment. A truly valuable change is the fact that Scheduled Tribes with education can move away from traditional occupations in leather and waste collection.

 

The substantial availability of graduates has been a major part of the boom we have seen in our infotech companies, whose exports are about $250 billion at present, and the substantial rise in global capability centres (GCCs), of which there are about 2,100 now employing over 2 million people. In fact, one can go a step further and accept that the inward remittance of around $140 billion we receive from Indians abroad is substantially attributable to the growth in the number of tertiary- and high-school-educated Indians.

 

However, unemployment among the 15- to 29-year-olds remains high — nearly 40 per cent among the 15- to 25-year-olds, and 20 per cent among the 25- to 29-year-olds, and only a few secure stable salaried jobs within a year of graduation. The major challenge is the quality of education, the shortage of adequately qualified graduates who can work without substantial post-recruitment training by companies, and the surplus of poorly qualified graduates.

 

This is where government spending on education matters. The 2020 National Education Policy endorsed the goal of spending 6 per cent of gross domestic product (GDP) on education by the Central and state governments, which has been part of policy since it was proposed by the Kothari Commission way back in the mid-60s.

 

However, in practice, the share of government spending on education has remained more or less stagnant at around 4 per cent of GDP for a long period of time. The state governments spend 80-85 per cent of this budget, as they are the ones who establish and finance government-owned schools and colleges. However, the Central government is particularly important for improving the quality of education.

 

Using the data available in the budget documents, what one finds is a significant reduction in the share of spending on education by the Central government, from 3.7 per cent of its total spending in 2016-17 to 2.4 per cent in 2024-25.  Expressing this as a percentage of GDP, it was 0.47 per cent in 2016-17, and down to 0.33 per cent in 2024-25, well short of what the Central government’s education spending should be, which is 1 per cent of GDP.

 

This failure to increase spending on education to improve its content is reflected in the fact that nearly half of urban XI and XII class students spend about ~10,000 a year on private tuition. In rural areas, about one-third of the students rely on private tuition and spend about ~4,500 per year. Yet another indicator of this lack of spending by the government is the decline in enrolment to government schools and the rise in enrolment to private schools.

 

The youngsters are a major part of what we call a demographic dividend. Ignoring their concerns will convert this into a demographic disaster. There is a need for stronger action by governments to improve the quality of education and a more determined effort to meet the 6 per cent of GDP target that has been a part of policy for 60 years.

 

Providing education and employment generation for the youth does not seem to be a priority for the Government of India. It has focussed its policy mainly on reaching out to conglomerates and entrepreneurs to promote manufacturing growth, while spending attention focuses mainly on developing infrastructure. That is why we have a substantial increase in the share of government spending on transport, which shot up from 5.2 per cent in 2016-17 to 12 per cent in 2024-25. This development of infrastructure has not yet boosted manufacturing growth, and some of it was plainly wasteful, like the airports that were set up, many of which are hardly used by air travel services, and new highways that are often not capable of serving a current development need.

 

Promoting manufacturing is, of course, desirable and perhaps even more necessary as the rise in internet-sector services is now slowing down and, this year even declining, because of the major changes in infotech technology created by AI. A crucial part of action for promoting manufacturing is to improve the quality of knowledge and skills of graduates.  This is why higher spending on education at all levels, from primary to tertiary, is as necessary for accelerating the growth of industry as heavy investments in infrastructure, which is the current focus of the government’s strategy. Focusing on employment prospects for graduates also requires a manufacturing policy that promotes labour-intensive manufacturing activities, much of which will be from medium and small enterprises.

 

The Northern states account for the bulk of the additions to the workforce and will have to work vigorously to improve the quality of education and promote industry and other activities that offer decent jobs for high school and tertiary graduates. But the other states also need to increase their commitment to raising the quality of education.

 

Government action on education will require close cooperation between the states, which account for 80-85 per cent of public spending on education, and the Centre, which has a key role in setting standards and even goals for education reform. This will not work well if it becomes a process of dictation by the Centre. We may do well with the decentralisation of standards and the management of entry programmes by individual states, which vary greatly in the quality of education, the availability of high school and tertiary graduates, and the availability of decent employment.

 

What we need is an organised set-up combining the states and the Centre, comparable to what we have for goods and services tax, that will set a coherent policy and spending framework for the states and the Centre. In our country, with a rising number of educated young people who can be the basis for accelerated growth, the government’s development policy must pay much more attention to improving the quality of education and creating better employment prospects for tertiary and high school graduates. In a democracy, the primary goal of the Centre and state governments should be their impact on the lives and hopes of all citizens.

 

desaind@icloud.com