4/21/24, 9:17 AM India’s Broken Education System Threatens Its Superpower Dreams - WSJ

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India’s Broken Education System Threatens

Its Superpower Dreams
Creating a competent manufacturing workforce is country’s biggest challenge

By Megha Mandavia Follow

April 21, 2024 9:00 am ET

India’s young people need jobs, but relatively few get training to work on a production line; the Renault Nissan automotive plant in Chennai.
PHOTO: DHIRAJ SINGH/BLOOMBERG NEWS

India kicked off the world’s biggest election in human history on Friday. Prime Minister
Narendra Modi is favored, but whoever wins has a big challenge ahead: India urgently needs
jobs for its millions of young people, but its education system often produces the wrong kind
of graduates.

If that can’t be remedied, India’s ambition to become a second “world’s factory floor” to rival
China could unravel before it properly begins.

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4/21/24, 9:17 AM India’s Broken Education System Threatens Its Superpower Dreams - WSJ

There are some lessons to be learned from India’s software and outsourcing boom of the
2000s. India’s famed information technology sector did a stellar job training students in
software engineering and allied fields by working with universities to craft courses. It
currently employs more than 5 million workers, according to government estimates.

But that is a woefully small number compared with the size of the labor force: India churns
out around 10 million postsecondary graduates a year, according to Morgan Stanley.

Moreover, as India increasingly reorients its economy toward manufacturing—with

investments from Apple suppliers such as Foxconn and, potentially, from Tesla—those grads
won’t necessarily be the kind of workers it needs. Only 3.8% of India’s total workforce had
undergone formal vocational training as of mid-2023, according to government data.

India scores decently well on basic metrics such as literacy: Around 96% of young people can
read and write, according to figures from data provider CEIC, and around three-quarters of
the labor force has had some high school education, according to Morgan Stanley.

But digging deeper into the figures, especially for postsecondary education, raises concerns.
The 2023 India Skills Report, compiled by online testing firm Wheebox in partnership with the
Confederation of Indian Industry and others, showed only a modest improvement in
“employability” among young graduates—increasing to 50.3% in 2022 from 46.2% in the
previous year. Wheebox’s test measures basic skill-sets such as numeracy and English
competency, among others. Only 28% and 34% of polytechnic and industrial institute grads,
respectively, were employable in 2023, according to Morgan Stanley. That bodes ill for India’s
ambitions to become a manufacturing heavyweight, unless it changes quickly.

Generous agricultural subsidies also artificially inflate demand for farm laborers. In other
words, many educated graduates don’t have the skills they need, while many young workers
with less education have strong incentives to stay in the countryside. Nearly 83% of jobless
Indians are youth, according to the India Employment Report 2024 by the International
Labour Organisation.

Improving paltry budgetary allocations to education and skill development and creating
better tie-ups with industry to impart up-to-date vocational training would help. India’s
central government currently spends below 3% of gross domestic product on education.

And while the Indian government has taken steps to rope in the private sector, skills training
remains largely government-driven. That dependence adversely affects the number and
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4/21/24, 9:17 AM India’s Broken Education System Threatens Its Superpower Dreams - WSJ

quality of trained candidates, according to the National Skill Development Corp set up by the
Ministry of Finance.

India doesn’t have forever to solve these problems: Factory automation is becoming ever more
sophisticated, and India’s own fertility rate is already heading down, which will eventually
start chipping away at its demographic dividend.

China is already getting old before many of its people are rich, even after one of the most
spectacular economic booms in history. India still has plenty of work to do to avoid the same
fate.

Write to Megha Mandavia at megha.mandavia@wsj.com

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