Human Capital Revolution: Education, Innovation, and Economic Prosperity in 2047

India has one of the largest networks of higher education systems in the world with 45,000-degree colleges, over 1000 universities, and around 1500 top institutes spread across the country. There is no gainsaying that Indian institutes of technology (IITs) and Indian institutes of managements (IIMs), along with some public and private institutions from India, are recognised for their academic excellence globally, Including over 70 qualified for Times Higher Education World University Rankings 2022.

All these nuggets of information paint a rosy picture of the Indian higher education. So far, so good. However, when one digs deep to find the critical nature of human capital required for turning the 2047 dream of making India a ‘Developed Nation’ a reality, several challenges and shortcomings come to the fore.

Innovation

Research and development (R&D) and gaining intellectual property rights (IPR) has never been the focus of the governments in the past. India’s investment in R&D as a percentage of GDP steadily dropped - from 0.84% in 2008 to about 0.69% in 2018; whereas it was 2.1% in China, 4.3% in Israel, and 4.2% in South Africa.

This is starkly reflected in India’s performance in patents and publications global sweepstakes, though declared aspirations are far high. According to the World Intellectual Property Organisation (WIPO), China made as many as 1.538 million patent applications (with just 10% being made by non-resident Chinese), the US made 605,571 patent applications, while India made a meagre 45,057, of which over 70% were by non-resident Indians. In terms of publications, India has done somewhat better.

Though setting up of the National Research Foundation (NRF) was announced recently, its success depends on countering the existing ills, curtailing delays, and removing biases towards select subjects, and towards the existing research institutions. That way, it must pursue its objectives with a clean slate, to begin with, and should not carry any of its old baggage, and should be de-bureaucratised to a great extent.

New Education Policy (NEP2020) suggested increasing the gross enrolment Ratio (GER) for higher education to 50%, which is almost twice the current levels, and employability and availability of jobs for these graduates remain a key challenge.

The Economic Survey 2022 noted that impetus must be given to education and skilling to match the requirements of modern industry. One of the goals under NEP is to integrate vocational education with general education and making former more mainstream. Internships are being considered for graduates even in humanities as well to make them employable.

Data from the Annual Labour Force Participation Survey 2020-21 reveals that workforce participation rate for graduates, though improving in recent years, is still low, at 51.8% in 2020-21; People whose highest level of education is a diploma or certificate course below graduate-level, however, have the highest rate of 64.2%, while those who completed post-graduate study or above have 59.4% strike rate. These figures refer to the percentage of the population aged 15 and above that are employed.

Investment

In 2023-24, the Ministry of Education was allocated Rs 1,12,899 crore, up 13% over revised estimates (RE) for 2022-23. The Department of School Education and Literacy was allocated Rs 68,805 crore, up 16.5% over RE 2022-23. The Department of Higher Education was allocated Rs 44,095 crore, up 8% over RE 2022-23.

However, the overall investment in education falls short of the policy targets of 6% of GDP suggested by the Education Commission in 1964-66, and various other commissions and committees followed suit since then, including NEP2020. In 2022-23, states and the Centre together were estimated to spend about Rs 7.6 lakh crore on education, which is about 2.9% of India’s GDP, while the overall allocation towards education has been around 2.8% to 2.9% of the GDP since 2015, which is grossly low in comparison to countries such as Brazil (6.0% in 2019), South Africa, (6.6% in 2021), Indonesia (3.5% in 2020). This could be one of the threats to realization of India@100 dreams.

Another benchmark in education is, how quickly faculty vacancies are being filled, which enhances the quality of education. As of April 2022, there were 6,549 faculty positions vacant in central universities, including other institutions under the Centre such as IITs, IIMs, and NITs, vacancies amounted to 13,812 as per a study by PRS Legislative Research.

Though, the Multidisciplinary Education and Research Improvement in Technical Education (MERITE) programme focuses on improving research skills and marketability in technical education, the focus can be widened to include key IT sectors anticipated to drive and dominate start-up ecosystems like consumer internet, enterprise technology and deep technology etc.

Thus, encouraging interdisciplinary learning, promoting R&D, and fostering innovation ecosystems can help India become a global hub for technical education and employment opportunities.