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Making INDIA a Knowledge Economy - 2006

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Making INDIA a Knowledge Economy - 2006 - April 8th, 2006

Making INDIA a Knowledge Economy - 2006

Dear Indian Citizen,
It is necessary to first understand the entire "matrix" in education. Even after 59 years of Independence, the following situation remains as far as the Human Capital development of our country is concerned:-

Drop-out rate in schools from KG to 10+2 is (including those who never attended school) 90% to 94%.
China has about 1.80 million schools, while we have in India about 0.95 million schools!
The "Governance" in Govt run schools is very low. In many cases teachers are absent (15% to 40% absentism)from schools in rural and urban schools of India and are paid full wages and perks inspite of this! Studies have shown that even the poorest of the poor rather send their children to un-aided schools where fees have to be paid and not to government run free schools. The quality of schooling of such unaided schools are higher than Govt schools although the salary of Govt teachers is two to three times higher than the teachers of the un-aided schools.

The existing Indian definition of Literacy (if you can write your name you are literate) needs to be amended to International Standards.
As per the Ministry of HRD the present illiteracy is ONLY 37% or 430 million people, while as per UNICEF and UNDP it is nearly 60% or 650 million people. China has a Literacy rate of about 93%! Literacy,

The first step of making India a knowledge economy is literacy and needs to be given A1 priority.
The total amount spent on education is about Rs. 81,000 crores per year. 10% by the Central Govt. and 90% by the State Governments The education Cess will collect another Rs. 7000 crores per year. This is about 3.3% of GDP.The MHRD has calculated that another Rs. 40,000 crores per year would be required only for additional requirements for Primary Education!
We estimate that another Rs. 100,000 crores are required per year just to have reasonable quality of Primary and Secondary education, up to Class 10th., which is where the Central and State Governments should concentrate for the next 10 to 20 years, or till we have at least 95% Literacy and at least 80% of the population who are completing the High School stage or Class 10th.
As per our estimates the total expenditure for education is nearly 8% of GDP, about 3.3% from Govt and about 4.7% from private participation (This includes funding of unadided schools and colleges+ bribes and capitation fees+payment for students studing abroad+tution classes+coaching classes+private I.T. & Software training institutes.)

About 7% to 8% of the youth who finish the 10+2 stage (pre-university) enter the17,600 colleges of India. 70% of all graduates are B.A. or Arts graduates. Is this relevant today? Most of these so called gardutes are not-employable.
Of all new employment taking place nearly 60% are self employed. About New Employment - 1% is with government, 2% with the private 'organized sector' and 97% with the 'unorganized sector'.

Presently there is little connect between education and employment generation & quality of Life

The employers associations, chambers of commerce and other business organizations are fragmented. There is no "National Common Minimum Program" for "education and training of manpower" in India. In most developed and developing countries the Chambers of Commerce(who represent the employers and business) Lead from the front.
About 29 million people are added every year to the existing education system, which is like adding another Australia + Hong Kong + Singapore & UAE per year!
Presently both the Central Government as well as the State Governments are running in Financial Deficits, of about 9% to 11% of GDP, so the question of additional financing for education will strain not only the existing budgets but also put pressure on other sectors, where funds are being presently allocated.
“Licence Raj” runs all Higher & Technical Education in India. Let us Bench-Mark with USA, Germany and Japan, the three largest economies of the World account for nearly 50% of the world's GDP. Do their governments exert similar controls as we have in India? Can we learn from them? There is fierce competition between the institutions in these countries for excellence!
China has about 900 Universities, while we in India have 372 Universities. Japan has 4000!
In India, the fees of the courses, pay-scales to the teachers, appointment of the head of the Institution and the syllabus, are decided by the 58 or more Central and State-Government Boards of Education. Will this create innovation, excellence and world class students?
The Coaching Business is getting bigger than the Education Business, entrance examinations for the IIT’s, IIM’s and a few prestigious management schools attract about 600,000 applications (who spend nearly Rs.2.00 lac each for pre-coaching, amounting to Rs.12,000 crores per year, for 6000 seats. These institutions spend hardly Rs.800 to Rs.1,100 crores per year, as their teaching budgets!
While 75% to 85% the youth of the developed and developing world learn a skill or competence or trade between the ages of 14 to 35, by Vocational Education & training, in India it is hardly covers 3% to 5% of the population!
India has about 5000 ITI’s (Ministry of Labour) and about 7000 Vocational schools (Ministry of HRD), while China has about 500,000 senior secondary vocational schools!
India has 300 million able bodied between the ages of 18 to 50, but they have no skill sets and therefore not employable! Employers in India are facing a huge shortage of skilled manpower. Wages and salaries in India, of skilled manpower are going up too fast. India will not be able to take advantage of the demographic profile of its population, if the youth do not receive relevant and quality Education & Training.

We have Not seen any co-ordination between the Ministry of Labour and the Ministry of HRD as far as VET planning on a National level, is concerned
We in India have NOT still appreciated the fact that, world wide, Education is 5 times or 500% bigger than I.T. or software!
India can become an Educational Hub for the world and earn US$ 100 billion per year, after 10 to 20 years! We need to start now, but remove "Licence Raj" first, as was done for business in 1991! India has 7,700 foreign students while Australia has 513, 000 students!
Because of the “Licence Raj” in Higher and Technical Education, it is estimated that nearly 70,000 to 90,000 students leave India every year for studying abroad. At any given time these 320,000 students cost the country a foreign exchange out flow of nearly US$9 billion per year or nearly Rs. 40,000 crores per year, enough to build 40 IIM’s or 20 IIT’s per year.
If India has to become a Knowledge Economy we need to do the following:

Aim for 95% to 100% Literacy in the next 10 years
Decontrol/involve the management of all primary schools to the local bodies such as Panchayats, Municipalities and local Citizen Groups. Allow the community to manage.
Consider the use & issue of "Education Coupons" for school going children, so that they can choose the schools of their choice and partial funding from the government, which would have been dispursed for the funding of Govt run schools in rural and urban India

Scrap “Licence Raj” in Higher & Technical Education to allow innovation, creativity and excellence in Education.
Ensure that 80% to 90% of the population in the age group of 14 years to 50 years goes in for some sort of relevant Vocational Education & Training.
Have a dynamic interaction between all stake holders, Academia-Industry-Business-R&D-Chambers of Commerce-Student bodies-Parents organizations-Civil society and NGO's. Chambers of Commerce, who represent the employers and business must lead from the front.

Allow private finance and participation in all sectors of education, till we reach the goals as mentioned under item 8.
Allow tax breaks and incentives for private and NRI funding, for the next 20 years or till we achieve bench marks as mentioned under item 8, above.

From Krishan Khanna
Advisory Committee - EPSI
Educational Promotion Society of India, New Delhi
& Co-Chairman, PHDCC&I - Committee on Industry & Education
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Best Regards,
Nikhil Gadodia
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