Q. We have seen that nearly half of youngsters do not complete school education in India, and the majority of those who are in school may not be learning adequately. How does this impact India’s economic and human development? 

A: Let us consider human development first. It is clear that education is important for human development. The average (and expected) years of school education of the population is an input into the calculation of human development indicators. In that sense, underachievement in education is an important reason for the relatively lower Human Development Index (HDI) of India in the league of other countries. India’s position in the HDI ranking is around 130 in the list of 193 countries. Those ranking higher in the list include not only developed countries, but also all other Brazil, Russia, India, China, and South Africa (BRICS) nations. In addition, many less developed countries including Indonesia, Venezuela, Colombia, Ecuador, Philippines have a better HDI than India. And so do South Asia, Sri Lanka, Bhutan, Bangladesh and Maldives. 

The HDI of Indian states like Kerala, Goa, and Himachal Pradesh is higher than that of India as a whole. All 11 states with high HDI are doing much better than others in terms of education. While those states which are at the bottom, such as Madhya Pradesh, Uttar Pradesh, Bihar, Jharkhand, and Odisha face severe challenges in terms of the completion of school education by their youth. 

Q. What about economic growth? The opening up of the Indian economy created many jobs in information technology (IT) and related domains, and here the education of the population may have had a positive impact. — Higher Education of a section of society created a section of who can work in IT and such sectors and that helps these sectors. 

A: Yes, that is true. Even before the opening up of the economy, one section of Indians was completing schooling and some of them were getting higher education. The majority of them belonged to upper caste groups. Boys from social groups, like Brahmins, were not engaged in physical labour traditionally, and therefore, they did not face a trade-off between education and (child) labour; they did not have to sacrifice earnings from work to get an education. Hence, they have been using modern education for many decades, even during the colonial period. This number increased with the investments made in higher education by post-independent governments. However, there was unemployment and underemployment among these educated people. They started getting more employment opportunities in the service sector after the opening up of the Indian economy in the 1980s. This has increased the demand for higher education and led to the mushrooming of higher education institutes (including self-financing engineering colleges) after the 1980s. In that sense, the past investments in higher education, the incentives of upper castes to use education, the availability of job opportunities in the service sector, etc. were a reflection of the education-development linkage in India. 

Q. What may be the connection between education and agriculture in India? 

A: Though there is an increase in the share of non-agricultural activities in the Indian economy, the share of agriculture and that of the population which depends on agriculture remains higher. More than 40 percent of the working-age population receives their income from agriculture. There could be a two-way relationship between agriculture as an economic activity and the use of education by the population in India. 

The average size of farms in India continues to be very small. This has a negative impact on incomes from agriculture. Moreover, small farms are not conducive to technological change to enhance productivity. 

Pursuing agriculture may reduce the need for formal education (including scientific/​professional knowledge). Most farmers do not have agriculture-related skills which are acquired through formal education. They generally follow what their parents have practised or what the other farmers are practising. This reduces their demand for education.

Why do we see a large section of Indians dependent on agriculture, much higher than not only the developed countries but also countries, such as China, Indonesia and Vietnam, which along with India are considered emerging economies? This is also true for Kerala which has a much smaller share of the population depending on agriculture. 

The major reason for the persistence of higher dependence on small-scale agriculture as the main source of income for India’s population is the relative stagnation of manufacturing and the lack of generation of enough jobs in the sector. Since there are not enough jobs in manufacturing, the majority of those who only have some level of school education end up taking up work in agriculture. 

The fact that work in agriculture does not require much education and the non-availability of enough non-agricultural salaried jobs even after completing school education can dampen the demand for education for some sections of society. If many youngsters do not get salaried jobs after completing 10 or 12 years of schooling and become peasants or agricultural workers, a section of parents (and their children) may be discouraged from pursuing education. 

Q. There is migration for work in India. People move for work from villages to cities or other places. Would this not be enough motivation for them to complete schooling and a certain level of higher education? 

A: There are two types of migration. People with some level of higher education migrate to cities and take up jobs, mostly in the service sector. The other type of migration is to take up work in construction and other activities. If we take the number of people who migrate within India, the latter is huge compared to the former. Completing school education is not important for the latter. In fact, less skilled jobs in construction and related activities are an important part of non-agricultural employment that has grown after economic reforms, but formal education is not a requirement for these. For example, those who become masons may start as unskilled helpers and through informal apprenticeships, acquire the skills of masonry. Hence, the availability of these jobs may not be an adequate incentive for migrants to complete school education successfully. 

Q. How would you connect the status of the manufacturing sector and the educational development in the country? 

A: To begin with, one can see that there is a stagnation or sluggish growth of the manufacturing sector in the country. Due to this, employment generation in this sector is limited. This is the reason for what is called the ​‘jobless growth’ of the Indian economy during the last few decades. People who are getting only a school education (they may be first-generation learners) usually get jobs in the manufacturing sector (as factory workers). Moreover, a major part of manufacturing in India happens in the informal sector where jobs do not have social security. Hence, the share of job opportunities in formal organisations in the manufacturing sector is very small if we compare it with the working-age population in the country. This can be a major disincentive for completing school education. 

There are a few areas where India is performing well in manufacturing, like pharmaceuticals. However, jobs in these domains go to those with higher education. That is true for the jobs in formal organisations in the service sector too. For a teenager, who is about to complete school education, there are two possible futures. They can get a job in a services organisation or high-end manufacturing, but this requires higher education. Hence, the majority of those who complete schooling successfully go for higher education. For those who do not want or cannot go for higher education, it is difficult to get a salaried job after completing school education successfully. The option available to them is to be in agriculture or construction and related activities. This can be a disincentive to complete school education for those who cannot go for higher education. Hence, the argument is that the stagnant development of India’s manufacturing works against the completion of school education. 

However, this causal relationship need not be unidirectional. The non-completion of 12 years of schooling by the majority (or the non-completion of 10 years of schooling by the majority until recently) might have had some impact on the development of India’s manufacturing sector too, and this relationship has not been analysed entirely. 

Q. How do you see the non-completion of school education by the majority affecting India’s manufacturing capacity? 

A: If we take countries like China, Vietnam, etc., which have done exceptionally well in manufacturing, their success depends on the internal migration of boys and girls who have had some level of school education to cities or special economic zones where manufacturing units are located. In the case of China, it opened up its economy (facilitating exports and the inflow of foreign capital) in the late 1970s. The share of children who had some level of school education in China then was higher than that in India. For example, 95.5 percent of children enrolled in schools in 1978 (when it started opening up its economy) and 87.7 transitioned to junior high school.¹ Around 40 percent transitioned to senior high school. These indicate that almost all children could get primary education, and the majority could receive secondary education (junior high school). It is this workforce that started to propel the manufacturing development in China. 

Let us compare this situation with that of India. India started opening up its economy in the second half of the 1980s. The Gross Enrolment Ratio (GER) at the primary level was only 80 percent, and it was only about 25 percent at the upper primary level in 1981 in India.² Only about 15 percent of girls enrolled in secondary schools then. Hence, there was a significant difference between India and China in terms of the share of workers with some level of school education who could be employed as factory workers. This might have provided a competitive advantage to China. The situation in Vietnam was similar to that of China. We noted in another Q&A that even capitalist countries, like South Korea, Taiwan, Malaysia, Thailand, and Indonesia, had focused on the expansion of school education with the objective of creating enough industrial workers and hence, these countries also could do better than India in terms of manufacturing development. Another enabling factor for these countries is the higher participation of females in paid work. It could be two to three times higher than that of India based on the current situation. It may be noted that manufacturing has a scale economy. If a country has started early and if it could produce at a large scale (the cost of production may come down), then it would capture a higher share of the international market for these products. The late movers in this regard may have disadvantages in making a notable presence in the international market. 

The fact that India did not do well in ensuring that all its children could get even primary education until the 1990s, might have had certain negative impacts on building up its manufacturing capacity. When manufacturing was not developing well due to this reason (and probably other reasons), it cut down the availability of jobs for those who would complete school education, which in turn, affected the interest in completing school education for a section of society. Hence, the possible connection between educational underachievement and manufacturing stagnation in India could be a mutually reinforcing one or part of a vicious equilibrium. 

Q. Has the role of India’s underachievement in education as a possible cause of the underdevelopment of manufacturing been recognised widely? 

A: Not widely. One set of people — mainly leftists — think that the opening up of the Indian economy or the lack of protectionist industrial policies is the cause of manufacturing stagnation in India. This argument will become untenable if we look at the situation of Vietnam or China. Those who support an open economy argue that the reforms which are already implemented in India are not enough to usher in manufacturing growth. They may argue for the liberalisation of labour regulations or the provision of better-quality infrastructure or the improvement of governance. By and large, the role of education is neglected. However, Amartya Sen and some others have been stressing the importance of education for human development (and not merely for economic growth). They seem to have realised the importance of the spread of skills in the population for the creation of more employment opportunities in mass manufacturing. Jagdish Bhagawati, a proponent of economic reforms, admitted towards the end of his career that he and many others neglected the role of education. Hence, the potential role of education in shaping the growth of manufacturing in India needs to be understood deeply. This requires a dynamic/​historical understanding in comparison with China and other countries which have done, and continue to do well in manufacturing development. 

Q. What could be the reason for the inadequate attention to education as a driver of economic development in India? 

A: One can compare the situation in India with that of other countries. India was not industrialised to create a demand for mass education when it became independent. The parties in power or governments after independence were not in a position to have top-down policies or to impose education through mandatory policies (especially when the majority of Indians were poor and could not comprehend the benefits of education). The development policies before the opening up of the economy focussed on the public sector and a kind of industrialisation which would produce intermediate goods, and this required people with higher education. Hence, the focus was on the development of higher education facilities. This policy was helpful to a small section of society which was completing school education then, and whose members were also shaping policies of the government. The fact that a substantial share of the Indian population was not completing school education in India was not recognised as a major problem by policymakers for a long time. One argument was that those who did not go to school and instead worked (as child labourers) came from socially underprivileged groups (lower castes), and this was not a major concern for the upper castes who controlled governments. The opening up of the Indian economy after the 1980s created more job opportunities for people with higher education, and the initial slow pace of manufacturing development may have been overlooked. In summary, there could be various reasons for not focussing on the completion of school education as a driver of economic growth in India. 

Q. What could be the future scenario? Will almost all youngsters acquire an education? Will it contribute to the country’s economic development? 

A: The demand for education will increase and enrolment at all levels may go up. However, there may be a set of youngsters who may drop out in higher grades in schools, and the share of this population could be higher in India than in countries which have similar levels of economic development. 

Regarding the contribution of education to manufacturing development, my sense is that the laggardness of India may continue in the foreseeable future. This can be due to the difficulty in competing with East and Southeast Asian countries which have already cornered a major market share of manufactured goods in international markets. Indian manufacturing may develop in those areas where it has been doing reasonably well (like pharmaceuticals) mainly due to the growth of domestic demand (and a part of this is also likely to be met by countries like China). Hence, the demand for a large number of factory workers who have a school education, may not be a major incentive for the completion of school education in India in the foreseeable future. This may continue to be a dampener for the completion of school education in India. 

However, the service sector may continue to grow in India. This is not only due to the export of services (say, IT and IT-enabled services). The growing domestic demand can also be a driving force for the growth of services within the country. If we take services such as healthcare, childcare, old-age care, etc. there is an under-provision of these services currently in India, and the demand for and supply of these may go up, especially as part of the income growth and demographic transition in India. It may be noted that the country cannot depend on imports for the provision of these services (and hence, these are called non-tradable.) The increasing need for and provision of such services may enhance the need for educated/​skilled people within the country. This can be a motivation for acquiring education. 

The expectation that one can get a job in the service sector or higher-end manufacturing may encourage many people to pursue higher education, and that may motivate them to complete school education. Some of them may also migrate to provide similar services in other countries. However, the lack of enough jobs in manufacturing within the country may sustain unemployment among sections of the people. Those who cannot get jobs in services/​manufacturing may continue in agriculture or less-skilled jobs. Hence, educated unemployment or underemployment (by considering the level of education) may continue to be higher in India.

Currently, female work participation is substantially lower in India not just compared to countries such as China, and Vietnam but also Bangladesh, Thailand, etc. This may go up gradually. The care services which we have mentioned previously may increase the job opportunities for women. This would mean higher competition for jobs in the country. One implication of this could be a certain level of gendered outcome in terms of the completion of school education. It may encourage a percentage share of boys (than girls) to drop out without completing school education. 

Santhakumar V is a former professor, Azim Premji University, Bengaluru

Primary reading material

Santhakumar, V., Gupta, N., & Sripada, R. 2016. What may dampen the demand for schooling; and Chapter 6: Experiences from India and Abroad. Schooling for All in India: Can We Neglect the Demand? Oxford University Press.

Santhakumar (2016) An Intervention into the Debates on Work-in-Education and Skill Development in India, Azim Premji University Working Paper No.3

Santhakumar, V. And Tajik, M. A. Education and Development: A Comparison Between South and Central Asia, https://​prac​tice​con​nect​.azim​premji​u​ni​ver​si​ty​.edu​.in/​e​d​u​c​a​t​i​o​n​-​a​n​d​-​d​e​v​e​l​o​p​m​e​n​t​-​a​-​c​o​m​p​a​r​i​s​o​n​-​b​e​t​w​e​e​n​-​s​o​u​t​h​-​a​n​d​-​c​e​n​t​r​a​l​-​asia/

Santhakumar V. India and Nepal. Education and Development Linkages in South Asia (Part II)

Santhakumar V. Introduction. Education and Development Linkages in South Asia (Part I)

Featured photo credit: Purusottam Singh Thakur, Azim Premji Foundation