The NEET exam question paper leak, and youth protests across India since June, speak volumes about the state of India’s education system. The New Education Policy (NEP), 2020 is itself caught in controversy—with four-year courses teaching students all kinds of superfluous material they hate, as it has actually reduced substantive course content. Students learn less in four years than in the erstwhile three-year undergraduate programme—not to mention mass faculty appointments driven by ideological inclinations. These crises, wrought upon the students, have fed on a rapidly privatising higher education system. The emergence of an unprecedented movement by the Cockroach Janta Party is the outcome.
However, these problems are merely the tip of a systemic crisis in education. India wants to compete with China in deep tech and become ‘viksit’. But far from being able to compete, India’s higher education system has only recently moved to massify enrolment, going from 11 percent gross enrolment ratio (GER) in 2006 to 27 percent by 2017, and 29 percent in 2024—only to achieve extremely low employability and rising graduate unemployment. The irony is that the NEP 2020 still targets 50 percent GER in higher education by 2035.
This massification so far was built upon very shaky foundations: literacy was barely 51 percent when India launched its economic reform programme in 1991, due to a 40-year neglect of school and vocational education—reflecting the blasé approach of policymaking elites to rising child labour. In response, finally, public expenditures on schools rose in the later nineties. First, elementary schooling was universalised by 2010 then secondary by 2015, with gender parity. Rapid school massification ensured learning levels were going to remain poor—as demonstrated for two decades by the annual state of education reports.
These rapid massifications of schools in the nineties and noughties and then of higher education enrolment have had three educational and, hence, labour market outcomes. First, the education/skill composition of India’s workforce remains appalling. Illiteracy remains frighteningly high at over one-fifth of the total population (over one-fourth for women) in 2024. Workers with eight years or below of schooling account for another 19 and 21 percent, respectively. Thus, nearly two-thirds of India’s current workforce barely has eight or fewer years of schooling. Also, merely 2.4 percent of the workforce has formal vocational training (VET) and another 4.7 percent any higher education technical training in 2024—though the NEP 2020 aspires to take VET enrolment to a colossal 50 percent.
Second, with such a poorly educated workforce, it is not surprising that 90 percent of India’s workforce toils in the informal sector, lacking the skills to secure a formal job in larger enterprises. This statistic has not changed for the last two recorded decades.
Third, as the quality of learning is poor at both school and higher education levels, open unemployment among youths has grown. It used to be only six percent among aged 15-29 years in 2011-12, but tripled to 18 percent by 2017-18.
Jobs growth collapsed in smaller businesses the year after the globally-unprecedented, “revolutionary” decision to demonetise 86 percent of India’s currency. Then a poorly-designed and ill-implemented GST regime caused further massive closure and downturn. This was followed by growth slowing each quarter till Covid. Finally, as job growth collapsed and 8 crore workers spiralled down to agriculture and related activities between 2020 and 2024, people finally began to ask: can India really take advantage of its demographic dividend?
A rising share of the working-age population, if they get quality formal-sector non-farm jobs, would actually contribute to the growth of India’s economy. When the share of such workforce rises while that of dependents falls, then the country truly realises its demographic dividend.
India has managed to grow slowly—and much less inclusively—partly because its workforce is poorly educated. As we show in our latest book India Out of Work: Rethinking India's Growth Story, only 2.4 percent of the 61-crore strong Indian workforce is formally trained in any vocation. A far more skilled and better educated Vietnam and China attracted more foreign investment into manufacturing. Meanwhile, with a shallow vocational education system, India’s youth with higher-secondary certificates stream into tertiary education of indifferent employability.
Digging deeper for reasons of poor employability, we find that massification of undergraduate education occurred through growth of private colleges. Affiliated colleges grew at a rate of 4 new colleges per day for 20 years. Without a weekend’s break! And most are private. Total affiliated college numbers grew from over 10,000 at the turn of the century to nearly 58,000 within 25 years.
The private share of rising higher education enrolment rose as governments did not increase public spending commensurate to rising demand. Trouble is, central or state universities have little ability to monitor these private colleges—hence both quality and employability collapse.
If we wish to prepare workers ready for the transition into the world of work, they need not continue into higher education. Surplus enrolment needs a diversion to VET—provided it takes place with employer and industry engagement. In-enterprise training, in the form of apprenticeships, after taking industry-designed VET courses, would ensure a seamless transition to work. But that means training should become demand-based, employer-driven and government-managed.
Another reason for employability issues is the composition of subjects higher education students studied. By way of contrast, Vietnam currently produces roughly 50-70 percent more tertiary science, technology, engineering and mathematics (STEM) students per young person in the population than India does, because it combines higher overall participation in higher education and a larger STEM share within it.
One can see a similar trend in Tamil Nadu, one of India’s most industrialised states. Not only does the state have a higher education enrolment ratio of 48 (more than Vietnam’s), but nearly 30 percent of its higher education students are in STEM subjects. The policy implications are clear.
Santosh Mehrotra | Professor of economics, Jawaharlal Nehru University
Jajati Parida | Professor of economics, University of Hyderabad
(Views are personal)
