Education and skill development fulfil two goals simultaneously: an economic goal to provide businesses with a skilled workforce necessary to enhance productivity, improve competitiveness and increase economic growth, and a social goal of creating employment, reducing poverty and inequality and helping people realize their potential.

Traditionally, education and skills-development policy have largely been driven by the state, but evidence now points to serious flaws in that model. The fast-moving modern economy is driven by rapid innovations in technology and requires constant learning and re-skilling. Slow-moving government bureaucracies are incapable of providing the direction that skill development requires in this day and age.

Several advanced economies are now looking at a substantially increased role of businesses in spearheading a market-based policy to ensure that education and training support industry. Increasingly, it is being realized that successful education and job-training policy should be a demand-based policy and not a supply-based initiative driven from the top by the government. It is this shift away from a supply-side towards a demand-side focus that is part of the new approach to vocational education. Under this approach, the system emphasizes the development of workers for the knowledge economy and to promote the effective integration between academic and practical skills and knowledge.

India suffers from an archaic supply-side skill policy primarily driven by the state. It still has a retrograde institution like the University Grants Commission (UGC) that has far outlived its useful life and needs to be shuttered before it can do more damage. As an example, of its outdated thinking, the UGC has a list of approved journals that is used for evaluating and promoting University faculty in India. A recent study found that almost 88% of these “UGC recommended” journals were either defunct or of very poor quality. In other words, the incentive system for Indian academicians ( promotions, raises etc.) is based entirely on dubious and sub-standard research with limited applicability for the industry. Is it any wonder then that India’s “best” Universities don’t rank anywhere in the top 200 Universities of the world. The country which gave the world one of its first University–Nalanda–now has no institutions of higher learning with any global credibility.

On the other hand, a private institution like the Indian School of Business, which is not controlled by the UGC, attracts world-class faculty and is ranked among the top thirty business schools in the world. Its faculty is required to publish in journals deemed to be of high quality by their peers and not by the UGC.

Studies show that only about 20% of India’s engineers are actually employable and an alarming 95% can’t write code–an absolute must in the modern digital economy. South Korea had the same problem not too long ago: more graduates than its economy needs, but a severe shortage of school leavers. And just like in India, families in S.Korea were spending fortunes in over-educating their young ones and going into debt in the process. It resolved that problem by incentivizing the business sector to develop bespoke on-the-job training programs that provide school leavers with the employable skills required by its technology-driven industry. Substantial tax benefits were given to companies that offered job training and had significant R&D collaborations with academic institutions. India could do the same by lowering ( and even eliminating) corporate tax for businesses that show demonstrable efforts to provide on-the-job skill development.

In a market-driven educational system, the two major stakeholders are the employees and employers. The state plays an essential role in developing incentives for these groups but has little impact on policy and content. Businesses that hire and create jobs will have greater powers to shape the design, content, and delivery of training to meet their needs. In return, they would be expected to invest more in training that offers a direct return to both the employer and the learner. In countries like the Netherlands and New Zealand, for example, employers are the primary drivers of standards and skills requirements and provide a considerable part of the financial and other resources to meet this. They proactively develop and deploy capabilities to meet business priorities, and have strong partnerships with schools, colleges, universities and training providers so they can understand and act on what industry needs.

Indian policymakers and planners talk cavalierly about leapfrogging and getting India to the Artificial Intelligence age. As with everything their solutions run through the government and its bureaucracy. But in a country where one out of four people is functionally illiterate, they are just blowing rhetorical smoke. Can anyone in their right mind imagine that India’s HRD Ministry is capable of skilling India’s masses into the AI age? Let’s get real.

India’s skill development must be driven by industry needs and supported by tax incentives. The government has a vital role to play but it is not in dictating policy and telling Universities and Colleges what to teach and where to publish. Let the industry and the job market determine what the students need to learn. The government’s role should be that of an information aggregator providing reliable and freely accessible data on all the educational institutions in the country ( educational quality, industry ranking, placement of students, fees, etc.), and on industry demand and supply trends. Armed with this critical information students will be better able to evaluate their educational choices and allow the free market to weed out sub-standard institutions. The free market for education will ultimately force institutions to raise their standards and provide coursework that meets the employment needs of businesses. Institutions that don’t provide their students with marketable skills will soon be weeded out.

India is at a critical juncture with its large “ young” population. With the right skill development policies, this could be a huge demographic advantage and help propel India’s GDP into double-digit growth. But unemployed youth could easily become a social nightmare if it finds itself priced out of the modern workforce. Since independence India’s educational policy has been driven by the HRD Ministry and the results are there for all to see. Indian Universities have no international standing, its industry has trouble competing internationally because it cannot find enough people with employable skills, and millions of supposedly ‘trained’ Engineers are applying for clerical jobs because they lack the skill necessary for a technology-driven world.

If India is to become a major economic power it needs a contemporary educational and job training policy driven by the market and not by the government.

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2018-07-26T22:40:35+00:00 April 13th, 2018|

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