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Photo: Mint

Opinion | Turbocharge India’s youth for a sustainable economic comeback

The Centre, private sector and even the IMF could help unlock resources for much-needed online education in the country

India, with a median age of around 25 years compared to 40 in China and the US, and 50 in Europe, has the world’s largest youth bulge, exceeding 500 million. Although this has positioned the country well to sustain growth, this is not automatic. It needs to be turbocharged to prevent a youth advantage from becoming a demographic disaster. A transition from farm to factory jobs, home ownership and economic security are causes and consequences of investment in human capital.

India’s investment in human capital has simply not kept up with the size of its youth bulge, the pace of structural transformation, and technological advances. The country will continue to add 12 million new workers every year to its labour force for the next two decades. Agriculture, which employs more than half of that force, will not be able to employ new entrants. Non-agricultural jobs must take the lead role, but are more skill intensive. The covid pandemic, however, could create an education crisis, given its various restrictions, and yield a generation that will lose out on learning. This would be a severe setback. Even before the pandemic, access to basic education was denied to the bulk of school-age children, and a university-level education was far beyond the reach of millions. The divide between those who have access to education and those who don’t has increased, as existing education and skill development programmes are limited in scope, and not accessible or affordable for everyone. These are focused on urban areas and on formal sectors. It is tilted against small towns and rural areas, and the informal sector that employs more than 70% of the labour force. Hub-and-spoke models, which link different states, ministries and the public sector with the private, are outdated and unable to promote collaboration among multiple stakeholders.

We are going through the greatest technology revolution of all time. To escape a low-skill equilibrium trap, current models need to be modernized to keep pace with technological advances and meet youth aspirations. India’s digitization process is the second fastest in the world, with the number of internet subscribers exceeding 500 million, second only to China. Indians, who spend nearly 20 hours per week on social media, use a lot more data than Americans. Policymakers need to tap information communication technology (ICT) to turbocharge the youth. ICT will help scale up programmes aimed at the youth bulge in small towns and rural areas, internalize the externalities prevalent in skill development initiatives, promote public private partnerships (PPPs), improve the links between training and industry needs, and upgrade outdated training systems. New technology will not only educate more people, but also lower education costs and make it more affordable.

A key challenge will be to promote PPPs in data collaboration that will promote online learning, networking and communication. India needs a database of local IT capabilities and must provide local IT training in small towns and rural areas. Data collaboration in India is still an early stage, and plans can be designed to ensure that data is used responsibly to maximize the potential of skill development. Data collaboration can overcome the asymmetry in information that has plagued skill development in the past. PPPs can also help private companies boost their brand reputation, channel their development spending, and identify new opportunities.

Online skill and education programmes have the potential to be a multi-billion dollar opportunity. India’s culturally and geographically diverse population stands to gain a lot from mobile learning, multi-lingual support, and virtual classrooms. Big data analytics could be deployed, and this could drive cloud market growth in the future.

The demise of the informal sector is unlikely. Staying small is a rational business response to high urban density. Also, technological changes have enabled entrepreneurs to operate at a smaller scale also gain from networking and agglomeration economies. The growth benefits of urbanization come from agglomeration economies, which are much stronger in India, compared to the US, and even stronger in informal sectors.

Meanwhile, empowering women with knowledge and skills to participate in the 21st century economy is not just the right thing to do, but the smart thing to do. Bringing women’s participation in the labour force up to the same level as that of men has the potential to boost India’s economy by as much as 30%. Eliminating the obstacles faced by women in economic participation could be done through various means. Fiscal, financial and skill development programmes can play a vital role to eliminate gender disparities. Gender budgeting improves gender equality through well-structured fiscal policies and adequate and properly monitored spending on gender-related goals. Gender budgeting can inspire fiscal policies in key areas of budgetary allocation, such as education and skill development, that contribute to the achievement of gender-related goals.

Preparing women for gender equality in skill development is an exercise that still has a long way to go in India, given that more than 225 million women are still not in the labour force. Surveys report their status as “attending domestic duties". Women face social and cultural barriers, too, that limit their access to education and work. However, the aspiration of women youth has changed, as they are increasingly enrolling for unconventional job roles, such as digital and financial literacy. Partnerships with industry to support women-centric skill projects in non-traditional trades need to be expanded. Gender parity, we should note, is both an economic and a moral imperative.

Silicon Valley, regional development banks, and multilateral financial institutions all have the potential to unlock global resources for online learning. The International Monetary Fund could issue special drawing rights (its global reserve asset) to unlock more resources to meet the fiscal needs of online learning in this global downturn. Digital technology is a force for the good, and it needs to be kept open and global, not chained in the face of efforts by governments to fragment it.

Ejaz Ghani worked at The World Bank, and has taught economics at Delhi and Oxford universities

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