Naidu was addressing the inaugural session of a two-day international conference on 'The Journey of Indian Languages: Perspectives on Culture and Society', jointly organised by the Dr B R Ambedkar Open University and the Indira Gandhi National Open University.
"We must continuously strive to promote the use of all languages and encourage literary figures to produce new works. However, the current scenario in the country is a little disturbing.
He said surveys have found that children exhibit "poor, unsustainable literacy skills," and the situation has to be remedied.
"Many children are dropping out, especially in tribal areas, because they are taught in a different language from what they speak at home. Language can be a barrier as well. We should have a pragmatic policy to encourage mother tongue at the early stages of schooling and gradually move on to other languages," he said.
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"It will be much more challenging to build a knowledge based economy with such poor foundational literacy skills," he said.
He praised the journey behind the evolution of modern Indian languages. "I would like to say that modern Indian languages have had a rich journey starting primarily from its roots in classical languages.
"According to one study, India, with 780 languages, has the world's second highest number of languages, after Papua New Guinea where people use 839 languages," he further said.