Learning to grow: Strengthening education can drive economic growth

Amid the ongoing controversy over the National Education Policy (NEP) and the three-language policy, it is important to recognise that the focus should not shift from improving educational outcomes. If unaddressed, this will have long-term ramifications. The Annual Status of Education Report (Aser) has repeatedly shown that outcomes in Indian schools leave much to be desired. For sustained higher growth, educational outcomes must be improved at all levels. Thankfully, over the past few decades, the expansion in access to education across both high- and low-income states in India has contributed to significant productivity gains, especially among the poor. India needs to build on them. In this regard, a new article in the International Monetary Fund’s Finance and Development magazine shows how education has contributed to global poverty reduction and continues to drive inclusive growth across the world. 

According to research, education accounted for half of total economic growth and two-thirds of real income gains among the world’s poorest 20 per cent since 1980. It further notes that education’s effectiveness is amplified when integrated with technology because that enables employers to absorb skilled workers and make use of innovations effectively. Thus, investment in human capital is the key to allowing low-skilled workers to reap the gains of technological change. However, basic school education alone does not explain these large effects. The author’s findings show that returns from higher education tend to exceed the returns from school education. In India, a year of primary education is found to increase a person’s earnings by 2-3 per cent, and a year of secondary education increases earnings by 6-8 per cent compared to someone with only primary education. A year of post-secondary education augments earnings by more than 13 per cent over those of a person with secondary education alone.  Increased access to higher-education facilitates more workers to take up high-skill jobs. The findings suggest that policy must address shortcomings at all levels, and focusing on a particular level of education may not help.

  The NEP in India attempts to carefully balance the allocation of resources towards improving learning in schools and expanding access to higher education. Overall, school enrolment has seen significant improvement over the years. However, a large number of students fail to acquire basic foundational skills, including reading a text fluently or solving a numerical problem, which underscores the need to focus on improving learning outcomes. Higher enrolment and pass-out rates cannot simply resolve problems plaguing India’s education sector. Encouragingly, in the higher-education space, Indian universities are climbing QS rankings and upgrading the research ecosystem. This year, nine Indian universities have secured spots in the world’s top 50 in the QS subject-wise rankings. However, despite the improvement, there is a need to address shortcomings in industry-academia linkages and adopt more structural processes in academic appointments, which can go a long way in improving outcomes in higher education. Overall, research shows educational outcomes affect growth and development. Now that India has attained satisfactory levels of enrolment, the policy focus must shift to outcomes at all levels.