India’s education system is severely capacity constrained. Young people comprise almost a third of the country’s population, but only a quarter of them enrol in higher education. We need to increase the number of higher educational institutions or seats in existing institutions by almost five times to achieve the NEP 2020 target of 50 per cent youth with a college degree.
For the 420 million youth in the age group of 15–29 years, there are only 40,000 higher educational institutions of varying quality, with current enrolment of about 45 million students. The growth in the number of public higher educational institutions has been insufficient. Private institutions dominate the landscape of higher education, with almost 50 per cent of the universities in this sector. Although their growth has been faster relative to the public sector, that, too, has been inadequate to meet the rising demand, as per the Youth Report of MoSPI in 2021. Needless to say, with the rise in income levels and the size of the youth population, the competition for admission into high-quality educational institutions has increased in recent years. Not surprisingly, the excess demand for quality education leads to an exodus of about half-a-million youth to foreign shores every year.
Limited and poor-quality education is a potential cause of unemployment, underemployment and unemployability of India’s youth. How can India increase its capacity to offer quality college-level education at home?
Recent events indicate that the world’s dominant education sector is about to experience transformative shifts, with ripple effects across the globe. The US remains the largest recipient of Indian students, but the Trump administration’s anti-immigrant stance is likely to have an adverse effect on Indian parents’ preference for a US education for their children. In addition, the doors to foreign students are closing elsewhere with cuts on the number of student visas and other immigration policy changes, especially in Canada and Australia — two other countries high on the list of preferred destinations for Indian students.
India’s large and aspirational youth population puts the country in a unique position to take advantage of the coming global shifts in the higher education industry to aggressively attract private investment as well as raise public investments in its educational institutions.
With massive cuts in federal grants to US universities, along with reductions in the number of student visas or optional practical training after completion of degrees, American higher educational institutions are likely to (and are starting to) experience significant decline in foreign student enrolments. Foreign students are one of the largest sources of revenue for educational institutions in the US, Canada and Australia. These institutions will increasingly need to raise revenue resources outside the US. There are several ways in which India could attract investments by these institutions.
The government recently enacted legislation to facilitate the establishment of campuses in India by foreign universities as envisaged by the NEP 2020. However, uptake of this policy has been lukewarm so far. India needs to actively pursue high-ranked foreign universities at both the central and state levels and facilitate the process of setting up standalone campuses by facilitating land acquisition and availability of other complementary inputs.
Domestic private investments in the education sector will continue to show robust growth, but while the number of private universities has doubled between 2011 and 2020, there is a deficit of trust in the quality of most private educational institutions. This can be circumvented by setting up joint programmes with foreign universities of global repute. Foreign universities entering into partnerships with Indian universities to offer joint degrees and set up campuses in collaboration with domestic institutions should be proactively encouraged and facilitated by the University Grants Commission.
The second strategy I would advocate for is investment in the existing public institutions that have been at the forefront of offering quality education for decades and carry high brand value in the country. Unfortunately, public higher education institutions are in dire straits today, with high vacancies in faculty positions that have not been filled for years, along with crumbling infrastructure. A case in point is the stagnant faculty strength of Economics departments in undergraduate colleges in Delhi University, while Ashoka University’s Economics faculty strength has grown multiple times to become the largest Economics department in the country within 15 years. This divergence indicates that there is no paucity of high-calibre candidates for faculty positions. Instead, hiring processes at public institutions have not been sufficiently adaptive. Further, public education must remain viable and effective in a relatively poor country such as ours, where the majority of students cannot afford to pay the high tuition costs charged by private educational institutions.
Expanding the capacity for quality education not only increases the human capital of the youth, it also raises youth employability while creating new job opportunities in the education sector and beyond. The education sector is one of the relatively more labour-intensive industries in India. Agglomeration economies created through education hubs have the potential to expand employment opportunities at all skill levels — from high-skilled teaching positions to mid- and low-skill providers for on-campus student services. The employment elasticity in the sector has been increasing over the years — for every 10 per cent increase in investment in the education sector, there is almost a 4 per cent increase in the number of people employed in the sector. The sector also has strong inter-sectoral linkages — both backward and forward — potentially stimulating expansion and job creation in other sectors such as publishing. A burgeoning education sector would, in turn, stimulate output in industries that hire high-skill graduates and thereby raise aggregate consumption in the economy. This can create a virtuous cycle of higher domestic demand, leading to higher private investments, and thereby, faster economic growth of the country.
Dynamic policymaking can ensure that India grabs this golden opportunity presented by the shifting global scenario to foster a boom in its education sector — investing in the human capital of our youth and, at the same time, creating new employment opportunities at scale.
The writer is professor of Economics, Indian Statistical Institute, Delhi, and visiting professor, NCAER
