Benjamin Franklin once said 'an investment in knowledge always pays the best interest'. And we cannot agree more. We always talk about various investments that need to be done to keep India's growth momentum intact. But one investment that we believe should be given the first and foremost priority is in the area of education. Without the focus on proper education and skill development, no country can manage to achieve prosperity.
And this becomes the subject of an utmost importance when it comes to developing countries like India. After all, India is having the second largest population in the world. And, this could be a boon in terms of availability of a massive human resource as well as in the form of a huge market. However, the sad part is that as per a study by McKinsey Global Institute (MGI), more than 285 m of the country's workforce do not have secondary level of education. Out of this, 150 m have not even completed primary education. Worth noting that India's workforce was estimated at 470 m in 2010. This means nearly half of the work force is grossly under qualified.
Hence, this large base of human resource is not in a position to support the potential growth of the country. And if not given due attention, the situation can go worse. And it is not just education; the Indian government needs to do more in terms of skill development of the growing workforce. India should focus on technical and vocational education. Countries such as South Korea and South Africa have already started the work in this regard. And they are reaping the benefit of the same. China, with which India is always compared in terms of growth rate, has done very well when it comes to creation of higher value-added manufacturing and export-oriented jobs. However, so far, India mostly created low-skill jobs such as in construction sector.
The saving grace is that in recent times, the Indian government has taken stock of the challenge of imparting the skills required by a growing economy. The Indian government announced the formation of the National Skill Development Corporation (NSDC) during the budget 2008-09. Based on public private partnership (PPP) model, NSDC aims to promote skill development by catalyzing creation of large, quality and for-profit vocational institutions. The overall target is skilling as well as up-skilling 500 million people by 2022. That is a definitely a welcome step.
However, the Indian government needs to do more. India has already allowed 100% Foreign Direct Investment (FDI) in the education sector . However, there are no incentives or concrete regulations in place in this regard. Then, due to over-regulation and under governance, even PPPs do not seem to offer returns or autonomy. There is an urgent need of right policy formation in the education sector.
Would NSDC be able to fulfill its mission? And more importantly, would the Indian government form the right policies to encourage investments in the area of skill development? Only time will tell.