As large corporations move towards automation, the centre of gravity for new jobs will move towards SMEs, MSMEs and other services. The current Covid-19 imposed lockdown is accelerating innovations in work-from-home processes and systems, making work less and less location dependent. Some office jobs can now move away from the densely populated international cities to even tier 2 Indian cities, such as Indore and Nagpur. What Y2K did to software services, this pandemic can do to finance, management, accounting, HR, and other sectors.
Trump's pushback on immigration and China’s fast losing international equity presents a once in a lifetime opportunity for India to integrate its manufacturing with the global supply chains, as well as, become the office of the world. It is also now imperative for Indian outsourcing companies to climb up the value chain from being back-end service providers to management partners, offering technology enabled consulting to global clients. This necessitates a massive upgrade in human capital within the Indian workforce, generating the need for quality higher education at home, as opposed to just degree-centred learning.
State of higher education
The million dollar question is: has the supply of quality education in India been sufficient? An estimated two lakh students travel to the US for higher education every year. The number is higher if we count the UK, Europe and Australia. These students studying abroad contribute to the local economy through demand for accommodation, transportation, tourism, food and entertainment. As per estimates, India's outward remittances jumped from $4.6 billion in FY16 to $13.8 billion in FY19, a part of which is education spend abroad. Some of these students will be willing to stay back in India if quality higher education is readily available with good career prospects in their home country.
However, the mushrooming of coaching institutes, which has become an industry by itself, hints at a supply bottleneck. A student needs to score 99 per cent in board exams to be eligible for a bachelors in Economics in a top college. Similarly, the intake ratio in the elite engineering schools is somewhere around 1:100. The lack of seats in the elite schools and unregulated quality of education outside of the elite schools is a huge challenge in the Indian education sector. Most of the State Universities have declined in quality over a period of time, prompting the Central Government to start institutions under its fold. But there is a limit to government contribution as well. The demand-supply gap caused by foreign universities and corporate houses can only be resolved with healthy competition. Otherwise, this drain in human capital through migration and indifferent domestic supply becomes a lost opportunity. An educated and aware citizen not only contributes economically but also through other social interventions, which don’t have a market price.
Aftermath of NEP 2020
The NEP 2020 is a step in the right direction as it will help top foreign universities to participate in the Indian education landscape. The homework for this has been on for a while since the initiation of the National Institutional Ranking Framework (NIRF), which recommends all institutions to make disclosures about their assets and their investments in these assets. Besides ranking, educational institutions going for national and international accreditations also help in streamlining their organisational objectives and long-term goals towards quality teaching and research. Now that NIRF rankings are more or less stable and educational institutes are aligning towards accreditations, it becomes easier for foreign players to invest in the domestic market. Most corporates have been able to secure university licences, some even without a campus. They can now look forward to joint ventures and other forms of partnerships with international universities.
Post NEP 2020, higher education has the scope of becoming universally available instead of remaining a scarce, rationed resource.
Future of education
With expanding supply in the private sector, it is important for the government to ensure that there is a ready supply of need-based scholarships and education loans available for students. It is also important for the public universities to not go down the MTNL, BSNL route as public education is our best bet in the fight against growing fragmentation and social inequities. Surrendering the entire sector to business interests is not good for the country, as education has many positive social externalities, which cannot be measured with a price tag.
As India takes a step to reform demand-supply gaps, it is important for the State to put in place a strong, independent, higher education regulator, to correct and amend as and when required. What telecommunications, pharmaceuticals, airlines, energy and power sector reforms did to growth and employment in the early 2000s; education, along with health, agriculture, low-cost housing and integration of India with the global supply chains can do in the 2020s. India can not only educate itself, but also become a education hub for students in South Asia and Africa in the near future.
(The writer is a Professor, Economics Area, IIM Indore.)