Look beyond the short term

A few hours from now, Finance Minister Nirmala Sitharaman will present the Union Budget. She has a particularly tough task this year. She needs to see that the growth momentum is sustained. At the same time, she needs to ensure that the deficit doesn’t go out of control. She has to factor in high oil prices and the possibility of a fresh wave of the pandemic while making revenue and expenditure calculations for the coming year. She has to balance social sector spending with the imperative of cutting subsidies.

After two years of the pandemic, she has her hands full with pressing problems that require immediate attention. But even before the pandemic, the government’s attention has been largely focused on the short-term goal of combating the slowdown in growth that started in 2018. It has had little time to focus on the long term, though, from time to time, it has announced ambitious goals such as doubling farmer incomes in five years, a $5-trillion economy by 2025, and Rs 100 trillion in infrastructure spending. Details on how these goals are to be achieved, however, have been scanty.

The big issue that the National Democratic Alliance government — now midway through its second term — faces today is the persistent twin employment problem. India’s working age population is increasing steadily while the same level of economic growth is now creating fewer jobs. At the same time, far too many sectors are grappling with a growing shortage of candidates with proper skills and education while vacancies are piling up.

India’s job problem was bad even before the pandemic struck — unemployment was at a 45-year high. It has worsened. The Centre for Monitoring Indian Economy has pointed out that a large number of jobs lost during the pandemic have not come back despite economic activity resuming and gross domestic product (GDP) reaching the pre-pandemic level. Companies are now producing the same output with fewer employees.

Successive governments have often boasted of India’s demographic dividend. A higher number of working age population vis-a-vis the dependent population was supposed to increase economic output, boost consumption and drive the GDP to new heights. What most failed to appreciate was that the demographic dividend doesn’t work unless a large part of the population is well educated to take advantage of the economic opportunities that come up. And no economy can grow if its people lack employable skills.

In the not so distant past, countries could still depend on cheap labour as a competitive advantage. Unfortunately, the technological revolution that is automating low-end jobs has made it less relevant. And while new technology is throwing up new business opportunities and creating new jobs, it also requires better education and higher technology skills to take advantage of them. This is where India has been faltering.

To be fair, it is not a problem that the Narendra Modi government alone has failed to appreciate. Its predecessors paid little attention to something that should have been obvious to policy-makers decades ago. Equally, it is not a task for the Union government alone. State governments have an equal responsibility for these. But it is the Union government that needs to take the lead, and pull the states together.
 

The Annual State of Education Report has consistently pointed out the problems at the school level, including the lack of reading and writing skills after many years of schooling. It has also flagged off the enrolment issues in government schools. The pandemic and the digital divide has also hit the poorer students who have lost two years of schooling — and this will show up in future surveys.

Meanwhile, other reports have pointed to the problems of Indian college education. This has been one reason why hordes of graduating engineers are unemployable even as jobs go abegging.

There have been few efforts to reform India’s education sector seriously over the decades. Sporadically, announcements have been made. Initiatives such as the Right to Education Act and the New Education Policy, while good, have failed to provide a detailed road map with clear annual targets and regulatory and monitoring mechanisms. The problem has been compounded by low spending on education, both by the Union government and the states.

Increasing the public spending on education alone will not solve the issue, though it will help in augmenting both physical infrastructure and teaching staff. But that is only one end of the problem — the present curriculum and systems of teaching need a drastic overhaul. And the entire college and university teaching structure needs to be revamped to focus on research and problem solving as is the case in developed countries.

It is not a simple task. It requires both the Union government and the states to work together. What is needed is a multi-year plan, with budgets, targets, output and outcomes being measured.

Above all, it requires long-term thinking — something that has fallen out of favour.

The writer is former editor of Business Today, Businessworld, and founder of Prosaicview, an editorial consultancy