India must seize its demographic dividend before it fades

India’s youthful population is the envy of nations with an ageing workforce. While our median age is 28 years, Japan’s and Europe’s is nearly 50 years. The elderly, at one-third of their population, are growing, while the workforce dwindles. It has far-reaching consequences on economic growth, healthcare, political stability and lifestyle.

By 2030, India’s Gen Z and Millennials, those between 14 and 45 years old, will comprise half the population, a powerhouse of potential. However, in the 2040s, we too will face the challenge of an ageing population. Our total fertility rate is already below the replacement rate. There is a limited window of opportunity now to equip our young workforce for the jobs of tomorrow. Upgrading our public education system should be a priority.

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Developed nations have relied on high-quality, free public schooling and subsidised higher education to fuel growth. By the 1900s most of Europe and Japan had public schooling, first started in Prussia in 1763. Learning and earning developed in lockstep, starting with education in agrarian economies. Farm yield doubled. Technical training fed the industrialisation of Europe. Education didn’t follow jobs; it created new industries. In the US, MIT and other universities filed 70 per cent of all patents, and graduates founded companies like GE and Ford.

Free universal schooling was introduced in India more than a hundred years later in the Right to Education Act 2009. 160 million children were educated in China’s public schools annually, and the economic dividend is evident. Of India’s 130 million school children, less than half study in government schools. Alarmingly, nearly 100,000 have shut over the past decade. Private schools with better student performance are parents’ preferred option. In most states, politicians own about half of all educational institutions, exacerbating the problem. Parliamentary data reveals that of almost 5,000 legislators, only one politician's child attends a government school. India cannot afford to leave behind half of all schoolgoers from low-income groups in declining government schools if we wish to convert our demographic dividend into economic growth and stability. Private schools can only supplement, not substitute public schooling.

In higher education, 20 per cent to 30 per cent of GDP growth in advanced nations in the 20th century is attributed to human capital from universities. Post World War II, education systems and labour markets were reshaped for economic growth. Germany de-Nazified the curriculum and focused on vocational training. Scandinavia relied on public sector jobs and welfare. The US created skills and jobs in infrastructure with the Marshall Plan. Education reform and massification fuelled innovation and created jobs and middle-class growth.

In India, there is intense competition in admission exams for higher education. In engineering, for instance, 1 per cent of aspirants can hope to get into an IIT. Children of politicians, including the union education minister, spare themselves stress by studying overseas. 12 major incidents of paper leaks and systemic failure have occurred every year on average in the past decade, affecting millions. There’s a lack of accountability and action in all. In the latest NEET exam leaks, students have taken their own lives in despair, and youth have been protesting in Delhi for weeks. Official engagement with our youngest citizens deserves higher priority than it is getting. In our neighbourhood, China’s Gaokao, South Korea’s Suneung and Japan’s Kyotso are all similar exams. None suffers from chronic exam leaks.

There is a mismatch between labour demand and supply in India. Skill shortages and gluts exist side by side. There is an absorption lag in employment. 10 to 15 million students graduate each year, of which 1.5 million are engineers. An enviable critical mass for any country. However, low job creation in manufacturing, which has stagnated for a decade, has contributed to graduate unemployment at 40 per cent. At the same time, there is a shortage of vocational skills like welders and fabricators in MSMEs. Entry-level graduate jobs are under pressure due to the time and cost of retraining poorly skilled new hires, and companies are exploring AI solutions to eliminate jobs.

Education is underfunded. China spends 6 times more per student than India. Middle-income Brazil spends three times more, and the USA spends 30 times more. 45 million students study in 52,000 higher education institutions. An outdated curriculum requires investment in infrastructure, industry participation, academic research and teacher training to equip students with employable skills. Government spending on education has remained at 4 per cent of GDP for a decade, while its National Education Policy 2020 (NEP) requires a budget of 6 per cent.

Advanced nations have come full circle. Their shrinking workforce and ageing population are unable to sustain growth. India’s time is now. Adequate funding for universal education, leak-proof exams and job creation are vital to leverage India's demographic dividend before it’s too late.

(The author is a retired corporate leader. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)