Youth Education and Skilling (YES): An Alternate Model


The Problem – 1

India is failing its youth. An education system that leaves them unprepared for the real world combined with limited job opportunities is limiting income opportunities and upward mobility for first-time job seekers. The problems in the education system start much earlier – with the way our schools work. None of these problems have been solved systematically by any government in Independent India. Along with lack of economic freedom, India’s pathetic education system (except for a few IITs and IIMs, and now a handful of private universities) is the most important reason for the lack of India’s prosperity. Government interventions and restrictions on education have hobbled generations of Indians. To transform India, we need economic freedom and education freedom. We need an alternate model to educate and skill Indians – one that relies on the innate desire in most individuals to learn, become better and productive. In this series, I will outline ideas for a possible solution – one that I call Youth Education and Skilling (YES).

Let’s begin by understanding the problem.

Mahesh Vyas (Aug 2022): “[The] transition from a world of education to a world of employment is a modern social norm in which education determines employment and employment determines our status in society. Unemployment can be a stigma, a source of social ostracisation, and even mental stress. In India, unemployment is still not recognised as a macroeconomic problem. As a result, it is mostly seen as a personal failure and therefore a source of various forms of social isolation. The transition from education to employment is critical in the life cycle of a modern citizen. It carries anxieties as much as it carries hope. Just as the 15-24 stage is crucial to the individual, the youngsters in this age group are also crucial to an economy. An economy needs to be prepared to offer jobs to the fresh annual cohorts of hopeful youngsters who are in this transition phase. A young, energetic and freshly educated population, if harnessed well, can deliver growth and savings and pave the path to prosperity. If not harnessed for long, they could become a source of social tensions…According to World Bank data, in North America over half of the population in the age group of 15-24 years is employed. The ratio of employed persons to the corresponding total working age population is called the employment rate. The average employment rate for North America was 50.6 per cent. For OECD countries it was almost 42 per cent and for the European Union it was 33 per cent. The same World Bank data places the employment rate for the 15-24 years age group for India at 23 per cent…India has the world’s largest youth population. This is the demographic dividend on offer. India also has among the lowest youth employment rates.”

Rishi Joshi (Dec 2022): “About 4,500 faculty positions are vacant at the IITs and about 500 at the IIMs (total sanctioned posts over 1,500). And over 6,000 vacancies in 45 central universities (total posts of about 19,000)…India produces almost 25,000 PhDs every year – the IITs themselves churn out hundreds of PhDs every year, if not more – along with over a million postgraduates. That’s probably more than what India needs and should be enough to meet the faculty needs of India’s best academic institutions, including the IITs and IIMs. And yet India’s universities and colleges struggle to find the right candidates for faculty positions. It’s the biggest vote of no confidence in India’s higher education system and by the insiders themselves.”

Shankar Acharya (Sep 2022): “According to [the] official data, the employment rate for youth [slumped] from 53.3 per cent in 2004-05 to the low 30s from 2017-18 onwards, barring a marginal uptick in Covid-hit 2020-21. The same data also show a disturbingly sharp rise in the rate of open unemployment among youth, tripling from 5-6 per cent in 2004-05 and 2011-12 to 17-18 per cent in 2017-18 and 2018-19.”

Akshi Chawla (Dec 2022): “Data from the Centre for Monitoring Indian Economy’s household surveys shows [that] compared to January 2020, almost 14 million fewer individuals were employed in October 2022 – 4.5 million fewer men and 9.6 million fewer women.”


The Problem – 2

Vivek Kaul (Dec 2022): “Jobs are created in any country as small businesses become bigger, something that hasn’t happened enough in India. That’s the main problem area that government policies need to attack with vigour. In the end, it is worth remembering that while a youth bulge might theoretically be needed to drive economic growth in a country, practically if there aren’t enough jobs to go around, the bulge doesn’t really pay off.”

Jyoti Yadav (Feb 2022): “Afternoons are for charging phone batteries up to 100 per cent, evenings are for playing digital games in sportsgrounds, and nights are for climbing rooftops to catch the network signal. This is when mobile data is the cheapest and fastest, and so it’s the perfect time to plunge into the three Ps: political propaganda, pornography, and potboilers like the action-drama Pushpa, which is currently all the rage. This is how many among Uttar Pradesh’s “generation nowhere”, a term that scholar Craig Jeffrey has used to describe educated, unemployed youth in India, spend their days. There are few job prospects, college degrees gather more dust every year, and there is usually no family money to bank on, but these youth do have something to keep the abyss at bay: their standard daily quota of 2GB of data. A generation ago, masses of educated but jobless 20-somethings might have produced a wave of social anger, but while there are sporadic protests about unemployment, these tend to be siloised.”

Manaswini Panigrahi (Dec 2022): “Unemployment is a major social issue of our country amidst all other issues. it not only deteriorate the financial status of an individual but also make them socially exclusive by lowering their self esteem. This issue specially affect the young mass a lot. As per the World Economic Forum, of the 13 million people who join India’s workforce each year, only one in four management professionals, one in five engineers, and one in 10 graduates are employable. According to [another] report, almost 2 million graduates and half a million postgraduates are unemployed in India. Around 47% graduates in India are not suitable for any kind of industry role. Above all, the level of educated unemployment in India increases with higher education.”

Craig Jeffrey and Jane Dyson (Aug 2022): “High levels of unemployment and underemployment reflect two related trends: the very large numbers of young Indians drawn into education over the past 40 years, increasing demand for salaried jobs; and the Indian economy’s failure to respond with large numbers of new jobs. Development theory suggests that agriculturally based countries will make a transition into manufacturing and services, opening up jobs for young aspirants. But this transformation isn’t occurring in India. The number of people working in services in India rose only marginally from about 35 million in 2005 to 39 million in 2018-19. The number of manufacturing jobs in India declined over this period. Conversely, the proportion of young people in agriculture has been increasing in recent years. These trends have stopped India from experiencing the “demographic dividend” predicted by economists, whereby the productivity of a large youth population promotes economic growth. Not surprisingly, this dividend effect only operates if young people actually are in jobs.”


The Problem – 3

Vivek Kaul: “In the years to come, the one major factor holding back Indian economic growth will be the falling labour force participation rate. The rate has been falling for nearly a decade and a half now and isn’t a recent phenomenon. The labour force participation rate is defined as the ratio of the labour force to the population greater than 15 years of age. The labour force comprises individuals 15 years or older who are employed or are unemployed and willing to work and actively looking for a job. So, what does this mean? It means that every year the proportion of individuals over the age of fifteen who are a part of the Indian labour force is shrinking. One reason for this could possibly be individuals spending more time in school and college.  The other major reason for this is that many individuals simply stop looking for a job when they cannot find one and drop out of the labour force in the process. Even to be counted as unemployed, individuals must actively look for a job… India’s female labour participation rate in 2021 stood at 19%. It was lower than that of Bangladesh at 35%. It was also lower than that of Saudi Arabia at 31% (not in the chart). What this tells us is that less than one in five Indian women aged over 15 are a part of the labour force. And that is very worrying.”

Economist: “much of the education given in much of the world is strikingly bad. Across the developing world many schoolchildren learn very little, even when they spend years in class. Less than half of kids in low- and middle-income countries are able to read a short passage by the time they finish primary school, according to the World Bank. Across sub-Saharan Africa, as few as 10% can.”

Sukanta Chaudhuri: “In 2021-22, government-run primary schools had 2.8 teachers on average for 5, sometimes 6, classes. Over 1.1 lakh, or 7%, had only one teacher; an indeterminate number, none at all… At this rate, we are unlikely to have a fully literate nation in the 100th year of Independence. That may or may not cause shame; it should certainly cause profound economic concern. We are squandering the demographic dividend at our disposal till mid-century. We are also dissipating the human resources to ‘make in India’, and the advanced resources for a true knowledge economy…India cannot prosper until we develop human resources with the same urgency as physical infrastructure, as reflected in budgetary increases. We dream of India making economic history. But it will not happen while so many undernourished children miss out on proper schooling.”

FT: “The need for software will only grow. The pandemic drove demand from consumers needing to work, shop, educate and entertain themselves at home — and from businesses struggling to control supply chains. Now organisations are looking to IT to blunt the impact of inflation. Robotics, automation, and the digitisation of even everyday products will require a lot more code. And a lot of legacy systems will need replacing… If automation makes the best IT brains more productive, this is a good thing. Scaling the capabilities of talented people is likely to lead to more breakthroughs. Computers taking over more technical work as humans move up to a higher level of abstraction has been happening since the dawn of computing. For the graduates of today, that means coding is still a good place to start.”


The Problem – 4

From the 2022 ASER (Aunnaul Status of Education Report) : “Nationally, children’s basic reading ability has dropped to pre-2012 levels, reversing the slow improvement achieved in the intervening years. Drops are visible in both government and private schools in most states, and for both boys and girls…Nationally, children’s basic arithmetic levels have declined over 2018 levels for most grades. But the declines are less steep and the picture is more varied than in the case of basic reading…Nationally, children’s ability to read simple English sentences has stayed more or less at the 2016 level for children in Std V (from 24.7% in 2016 to 24.5% in 2022). Slight improvements are visible for children in Std VIII (from 45.3% in 2016 to 46.7% in 2022).”

CNN writes: “For India, what economists and analysts call the “demographic dividend” could continue to support rapid growth as the number of healthy workers increases. There are fears the country might miss out, however. That’s because India is simply not creating employment opportunities for the millions of young job seekers already entering the workforce every year. The South Asian nation’s working-age population stands at over 900 million, according to 2021 data from the Organization for Economic Cooperation and Development (OECD). This number is expected to hit more than 1 billion over the next decade, according to the Indian government. But these numbers could become a liability if policymakers do not create enough jobs, experts warned. Already, data show a growing number of Indians are not even looking for work, given the lack of opportunities and low wages…Lack of high quality education is one of the biggest reasons behind India’s unemployment crisis.”

New York Times writes: “India has one of the world’s largest populations of young people, roughly 600 million people are under age 25 — a demographic shift that was expected to deliver once-in-a-lifetime economic growth. But prosperity for these young adults has proved elusive. The latest report from the Center for Monitoring Indian Economy, an independent agency, shows that even as the working-age population increased by 121 million since 2016, the labor force shrank by 10 million jobs; the unemployment rate among college graduates and postgraduates stands at a dismal 33 percent. As a result, graduates are forced to accept work for which they are overqualified. “That is a very bad signal for an economy,” said Indrajit Bairagya, a professor at the Institute of Social and Economic Change in the southern Indian city Bengaluru, “because it leads to a crisis of diploma disease. Your education is becoming less valuable every day.””

Ashoka Mody: “My understanding of economic history going back to the Industrial Revolution is that there are two ingredients of economic development and no country in the last 300 years has done without them: education and increased participation of women in the workforce. I can only reassert a million times that the notion that India can somehow achieve this super-economic power status without these two but with the magic of IT and payments systems – which seems to be the solution for everything – is misplaced.” He adds: “No country has achieved success without two fundamental achievements: good education and an increase in the participation of women in the workforce. These work as a combination. As women come into the workforce, they have fewer children, they adopt better child-rearing practices, and they devote greater resources to educating the children. The children therefore grow up to be more productive. That cycle perpetuates itself over generations. Today, India does not have well educated kids and it has an abysmally low labour force participation rate for women.”

An education system that doesn’t work from schools to colleges. A lack of adequate job opportunities. Not enough women in the workforce. Governments for whom neither education nor employment is a priority. A youth unorganised as a collective to make jobs an election issue. A world that is changing with four trends that haven’t been seen in 40 years: high inflation, increasing interest rates, geopolitical uncertainty, and deglobalisation. A future where technological innovation is accelerating. What can India do to create better futures for its young?

Football’s global success can be a good starting point for thinking about a possible solution.


The Beautiful Game

I am not into football. So, it was a pleasant surprise that I found myself in Qatar’s Lusail stadium one December evening watching the FIFA World Cup pre-quarter final match between Portugal and Switzerland. As I read about football, I slowly began to understand its global popularity. (India remains an outlier thanks to the craze for cricket.) A question intrigued me: could the ‘system’ of football hold answers to how India could rethink youth education and skilling? Let’s first begin by understanding the passion and organisation of football.

El Arte Del Futbol writes: “According to FIFA estimates, over 265 million people play football. And the sport has 3.5 billion fans worldwide…Football is among the easiest sports you can ever play or watch. You can easily understand the basics of the game in a few minutes. This isn’t the case with some other sports like basketball or baseball. You won’t easily understand how the points are given especially if you have never played or watched the game. But with football, even if you are new to the game you master the first basics and later learn the complex rules. You just need to know that whichever team scores the most goals – wins!… There are way more football tournaments than in any other sport. It has competitions throughout the year from January to December. This keeps football fans entertained daily and this has attracted more people to the sport. In fact, as some tournaments close in some seasons, others are open. And more are preparing to kick off. This keeps the sport active all the time.”

Niladri Chakraborty writes: The fact that football is so inexpensive to play is one of the main factors contributing to its popularity…[It] can be played anywhere wherever there is a space…There are no physical requirements for playing football…Football is known as “The Beautiful Game” for a reason. Football is a visually appealing sport. It is thrilling to watch a football match because of the crowd’s fever, the clamor of the spectators, the emotions, the green grass, and everything else. A flawless slide tackle, a beautiful freekick, and a screaming golazo to the top angle are all simply beautiful to see. This game has a certain quality that makes it enjoyable to watch…Every continent has top-tier football leagues. Major football leagues are indeed in Europe, but some leagues receive even more support from the public from other continents, like South and Central America, Asia, and the Middle East. Clubs support teams that represent a country’s region and help fans maintain their passion for football throughout the year. Multiple leagues in numerous nations create the possibility for international club competitions like the Champions League, which pits football clubs from various nations against one another.”

The Fox Magazine adds: “Football is a relatively accessible sport to engage in. That said, for more seasoned players, it’s all about mobilizing those skills for precision and artistry to make for a captivating, fast-paced game. In many ways, football can be deemed a very tactical and coordinated sport; without the right pass or the perfectly angled shot, the player risks making his team lose an opportunity to score. Whether it’s playing or watching a game, the appeal of football lies in its sheer unpredictability. A team might dominate for the first half only to be overpowered by their opponents in the second half of the match.”

Joe Tansey writes about the passion for the sport. “No matter where you watch a football match, one thing never changes. That one thing is the passion that everyone around the game contains for football. Regardless of what part of the world you are in, the passion for the sport remains the same. The same passion that is seen in homes across the world is seen at the stadium and on the pitch during each matchday. Every major stadium in world football is packed each weekend with fans that would do anything for their club and players that would do the same. No other sport in the world can rival the passion during matches and in the week leading up to each match every week in world football.”

Simon Kuper writes: “Fandom is often dismissed as a leisure-time pursuit, opium of the masses or stupid distraction. However, for many people, it’s more than that: a primary source of identity, or a crutch to get through life. And the English variety of fandom is so powerful that it has spread around the globe.”


Football Leagues

One of the interesting aspects of football is the league system. Wikipedia explains: “The governing bodies in each country operate league systems in a domestic season, normally comprising several divisions, in which the teams gain points throughout the season depending on results. Teams are placed into tables, placing them in order according to points accrued. Most commonly, each team plays every other team in its league at home and away in each season, in a round-robin tournament. At the end of a season, the top team is declared the champion. The top few teams may be promoted to a higher division, and one or more of the teams finishing at the bottom are relegated to a lower division.”

The European leagues are the most popular. Bundesliga writes: “All Union of European Football Associations (UEFA) members run their own domestic league system. This is sometimes referred to as the ‘pyramid’, with a nationwide first division at the top. Below that, as the pyramid widens, is where things differ. Depending on population size and the number of clubs, divisions will either remain nationwide or eventually split to become regional. That creates the pyramid shape in a diagram. Focusing on the top tier, the most common format consists of each team playing the other twice – once at home and once away – from fall to spring…It’s three points for a win, one for a draw, and the team with the most points after all the games is the champion…Teams move between levels of the pyramid at the end of each season. That means a set number of clubs at the bottom end of a division (except in the bottom-most league) will drop into the one below. Sides finishing at the top end of all leagues – bar the top tier – will move up a level.”

The English Premier League is one of the most popular. “The Premier League is the top tier of England’s football pyramid, with 20 teams battling it out for the honour of being crowned English champions. The league takes place between August and May and involves the teams playing each other home and away across the season, a total of 380 matches. The teams who finish in the bottom three of the league table at the end of the campaign are relegated to the Championship, the second tier of English football. Those teams are replaced by three clubs promoted from the Championship; the sides that finish in first and second place and the third via the end-of-season playoffs.”

The primary source of revenue is the sale of broadcasting rights. Wikipedia: “The Premier League sells its television rights on a collective basis…The money is divided into three parts: half is divided equally between the clubs; one quarter is awarded on a merit basis based on final league position, the top club getting twenty times as much as the bottom club, and equal steps all the way down the table; the final quarter is paid out as facilities fees for games that are shown on television, with the top clubs generally receiving the largest shares of this. The income from overseas rights is divided equally between the twenty clubs.”

Argentina won the 2022 World Cup. New York Times had a story on its potrero system: “The essence of Argentine soccer can be found late at night, in the circuit of games in barrios outside Buenos Aires. There, young players for generations have cut their teeth, maybe dreaming of suiting up for the country’s national team, but primarily entertaining late-night and early-morning crowds with an intense, wild talent for the game, playing on whatever patch of ground. “Potrero” is the term that sums up this system and style, rooted in the informal and improvised games born in the earthy, amateur fields of the 19th century, long before soccer became a profession with billion-dollar clubs and multimillion-dollar salaries. Every Argentine legend has had it in his blood: Alfredo Di Stéfano, Diego Maradona, Lionel Messi. They all kicked around in potreros, and when someone dribbles impressively or scores an amazing goal, it’s common for people to say, “That’s potrero.”…“The potrero system works like this: Teams arrange a five-on-five match, compete for a pot, typically around $1,000 put up by the players or sponsors, and the winner takes all. In general, a team organizes a potrero night, which features four or five games starting at 11 p.m. and finishing around 4 a.m. or 5 a.m. Over time, the players have gotten to know each other and many of them might play for a different team every week, depending on which club is short a player.”

Could football, its league system, and ideas from the potrero system enable the creation of an alternate model to educate and skill India’s youth?


Test Matches

I remember watching a TV program in the 1970s called Telematch. (It was one of the more entertaining programmes on Doordarshan at that time.) From Wikipedia: “Telematch was the name given to a syndicated series of 43 programmes from the West German television series Spiel ohne Grenzen originally broadcast on the WDR (Westdeutscher Rundfunk Köln) channel from 1967 until 1980. It was based on its French counterpart Intervilles and originally consisted of a match between teams from two West German towns, except for the last three years’ matches (1978-1980), which were contested between five towns. The match consisted of several games in which the participants would typically dress up in costumes. Often the costumes were elaborate and designed to increase the challenge of the game by making movement awkward. Games were played against the clock, or as a race.”

Could a similar idea lead to Indian villages creating teams of youth to compete in digital matches? The teams could be organised into leagues. The focus would be on skills which would need to be learnt and which would help employability for the participants. Since mobile access is available everywhere in India, a digital challenge would be the way to go.

Let’s take an example building on the leagues system. Take 32 teams – every village could be allowed one team of 10 youth (age 15-21 years) for every 1,000 population. These teams would be split into 4 groups of 8 teams. Each team would then play seven matches. The group toppers would then have a knockout system of seven additional matches – quarter-final, semi-final, and final – to decide the final winner. If a match can be played every two days, then a winner could be decided in a month. While this is linked with geo-location (the village), an alternate format could just have a team of 10 irrespective of physical location.

The winner from the 32 teams would get to move up a level and compete in another league with 31 other teams. A similar approach would create a winner to move up a level. Two levels could handle 1,024 teams (32 x 32), while four levels could handle over a million teams (1,024 x 1,024) and thus 10 million youth. India has about 175 million youth in the ages of 15-21 given that 25 million births happen each year.

The match-ups would encourage learning individually and in groups. They would test skills like English, coding, general knowledge, puzzles, and more. The goal would be to complete the matches in 30 minutes or so, with the playing happening on the mobile phones. Players could huddle together physically or combine digitally. Some games could test individual skills and others could focus on group skills – similar to how many inter-school tournaments work. Each of the matches would be digitally streamed so others could watch and also learn.

The matches would be played round-the-year, with each month of matches creating winners – thus ensuring there is continuous testing (and hopefully improvement).



A few years ago, my colleague, Atanu Dey, had come up with an idea termed FIVE (Freedom, Independence & Values Education). Here are some of the ideas he had proposed in a private note to me. 


To teach a generation basic literacy, numeracy, and those values that underlie freedom and independence.


In the modern world, the inability to comprehend and communicate in English is a severe handicap. So also, innumeracy and the inability to reason effectively prevent a person from achieving their full potential for productively participating in society. Individuals so handicapped are not free and independent in any meaningful sense. They become dependent on handouts from the more productive not because of any intrinsic disability but merely because they have not had the opportunity to gain these essential, although simple, skills.

These barriers not only hurt the individual but also impose enormous social costs. The divide between those who get the required training and those who are left out creates an underclass that impoverishes society and prevents it from operating at its production possibilities frontier.

The “Modern Basic Skills” Divide

Literacy (in some language or the other), numeracy and the ability to reason have always been a basic part of any traditional education. These we can call the “traditional basic skills.” But now we have an additional bit which can be termed the “modern basic skills”:

  • Literacy in English
  • Facility in the use of computing/communications devices and the internet/world-wide-web

The urban, educated, middle-class-and-above are a minority segment of the Indian population. This segment has the motivation and the means to acquire at least to some extent the modern basic skills in the normal course of daily living and learning. This is not so for the vast majority of Indians.

The underclass constitute the large majority of Indians. They are the poor, the illiterate, the uneducated. They are found in urban India but are mostly residents of rural India. This underclass does not have the means to get the modern basic skills. Indeed, most don’t even have the traditional basic skills. It goes without saying that learning the traditional basic skills is a prerequisite to learning modern basic skills. But — and this is verifiably true — while they lack the means and the opportunity to learn, they do not lack the ability and motivation. They not only want to be educated, they aspire to learn English and “learn computers.”

Bridging the MBS Divide

Since the underclass is unable to get the modern basic skills both due to their inability to pay and the lack of suitable opportunities, the “Freedom, Independence & Value Educational Foundation” (FIVE Foundation) would create the “Modern Basic Skills Program” — MBSP — to bridge the MBS Divide.

These are the features of MBSP:

  • It will be free to anyone who wishes to learn the modern basic skills
  • It will not have any prerequisites
  • Instructions will be delivered using modern information and communications platform and tools
  • The program will be run in the local area and will be administered by local community volunteers
  • The learning will be self-paced and progress will depend on the student’s specific circumstances and abilities

The Educational Content

Since the MBS Program will not have any prerequisites, the content will start from the very basics — the English alphabet and the counting numbers. The instruction of English will be in English, not in any other language. This means the same content will be used regardless of what the native language of the student is.

The learning will not be categorised into subject areas; instead, the learning of the language (English) will proceed simultaneously with the learning of all other subject matters — arithmetic, logic, history, geography, physical sciences, social sciences, etc.

All the content will be “learner centric,” meaning that the learning will be a result of the interaction of the student with the content and there will be no teacher. There will be a facilitator present to handle any exceptions but the norm will be that the student interacts with the content at his or her own pace.

The content will be interactive and rich — meaning it will be text, video, audio and graphics. Moreover, the content will be fun. We learn best when we are fascinated, not when we are bored.



I asked ChatGPT “What are the skills youth need to excel in today’s world?” Here is the response:

  1. Communication skills: The ability to effectively communicate with others is essential in any field or industry.

  2. Problem-solving skills: Being able to analyze a problem and come up with creative solutions is a valuable skill in any situation.

  3. Collaboration skills: The ability to work well with others and contribute to a team is increasingly important in today’s workplace.

  4. Adaptability: The ability to adapt to new situations and learn new things quickly can be a major advantage in today’s rapidly changing world.

  5. Digital literacy: Proficiency with technology and the ability to navigate and use various digital tools is essential in many fields.

  6. Leadership skills: The ability to inspire and guide others can be valuable in any setting, whether it’s in a professional context or in a community organization.

  7. Creativity: The ability to think outside the box and come up with new and innovative ideas can be a major asset.

  8. Emotional intelligence: The ability to understand and manage your own emotions, as well as the emotions of others, can be crucial in building and maintaining relationships and working effectively with others.

A starting point to equip youth would be a program which included the following:

  • English language – reading and writing. This would also include development of vocabulary.
  • A core curriculum consisting of key concepts from multiple disciplines (maths, physics, chemistry, history, geography)
  • Computing, Internet and coding skills – being able to use search engines and new utilities like ChatGPT, and also write simple code in one or more of the languages like Python or Java

FIVE would have YouTube videos for teaching. An expert team would curate the videos for each topic. Platforms like Khan Academy have already created a huge amount of content. Here are the courses available from Khan Academy:

Coding is another useful skill. Hannah Meinke writes about the benefits of coding: “Learning to code has the inadvertent effect of teaching you how to think,” says Adrian Degus, CEO of Nuvro. He goes on to explain that he used to be more prone to solving problems emotionally. But his coding experience has taught him to approach problems logically. “Understanding logic, at a deep level, has improved my problem-solving proficiency tenfold,” he adds. Coding, in its most basic terms, is really just assigning a computer a task to do based on the logical guidelines you’ve outlined. Highly complex tasks are essentially a collection of smaller operations once you break them down. This methodical and logic-heavy approach to problem solving can be a boon for figuring out problems beyond a coding challenge.”

To this would be added other appropriate material. Students would be able to decide which sections they want to learn. The regular test challenges (along the lines of SAT and TOEFL) would provide directional inputs to the youth on what to learn.

While much of this is individual, there would also be team games. Solving challenging math problems is one such example. Coding too could be done in a group. While no individual is likely to excel in every subject, the hope is that they have enough exposure for the skills needed in job opportunities that come their way later.

What a purely digital platform misses out on is testing for skills like public speaking, debating, and presenting. These could be brought in at a later date when audiences (or smart bots) could act as judges.

Both the processes (teaching and testing) would need to be automated and not dependent on any human intervention; this is the only way to scale to millions. AI engines could work as judges where needed.  The idea of teams and leagues brings in the necessary competitive spirit – just like football. The matches would be played at the same time nationally via an app with results available in real-time.


The Way Ahead

We know India’s education system is failing our youth. India cannot afford to lose the demographic dividend. A nation of unemployed or underemployed youth who do not see a path to a better life could even result in social unrest. The need is for disruptive thinking that builds on the digital infrastructure that exists and new technologies like Generative AI to craft solutions which can educate and skill with speed and scale. What I have outlined in this series with YES is such a possibility. It is doable without any government intervention. It puts the onus on individuals and peers to learn and improve themselves; my belief is that most people want to become better. It also creates a competitive fun process, which can identify the superstars – like Brazil’s league system did with Pele.

My father was born in a village in Rajasthan. Some of his teachers identified his potential at an early age and encouraged his learning. He got into a premier engineering college in Jodhpur and then earned a Tata scholarship to go to the US for higher education. It was his talent and education that pulled his entire family from a suboptimal life in a village in Rajasthan.

Even today, there are millions who are denied an opportunity to rise and excel because their education in government institutions in their villages is below par. Their potential is wasted – which is a loss to the world, for inventions and innovations are done by people. India’s 1.4 billion people can become the accelerator for a future era of superabundance – if we can ensure education and identify the best among our youth.

ChatGPT provided an answer in response to my question on what is wrong with India’s education system:

  1. Lack of access: Many children in India, particularly in rural areas, do not have access to education due to a lack of schools or other infrastructure.

  2. Quality of education: The quality of education in India can vary significantly, with some schools providing a good education and others falling short. There is often a lack of qualified teachers and inadequate resources, which can impact the quality of education students receive.

  3. Inequalities: There are significant inequalities in the education system in India, with students from disadvantaged backgrounds or certain communities often facing additional barriers to accessing education.

  4. Exam-based system: The education system in India places a heavy emphasis on exams, which can create a high-pressure environment for students and may not adequately reflect a student’s true abilities or potential.

  5. Limited focus on practical skills: The education system in India tends to focus on theoretical knowledge, rather than practical skills that can be applied in the real world. This can make it difficult for students to transition from school to the workforce.

Many of these problems are interconnected. Conventional solutions are not helping India’s youth. We need thinking that can address the education and skilling challenges rapidly and at a scale of hundreds of millions. Technology is the only solution – we will not be able to train enough teachers fast enough to ensure we don’t lose a generation of youth to mediocrity.

The action needed from India’s government is to free up India’s economy so entrepreneurs can flourish. They will hire the newly educated and skilled – and provide the necessary feedback to improve the YES programme.

A combination of geopolitical events has given India a unique opportunity to rise faster. The world is very different from the one which facilitated China’s rise from the 1980s. But the basics for future prosperity do not change – education and good health for the youth, and economic freedom for entrepreneurs. YES can address the education and skills challenge – a prerequisite on the path to social mobility and wealth creation.

Solving India’s Income Problem (Part 15)

A Leader’s Legacy

Many countries have been transformed because of wise leaders. India has not been so fortunate. History has given India yet another opportunity. In a world where the liberal order is threatened and the twin totalitarian threats of Russia and China are creating schisms, India can be the beacon of hope. With Dhan Vapasi ensuring economic justice, with a government promising liberty by not interfering in voluntary trade and exchange, and rule of law ensuring equality, non-discrimination (generality) and “politics by principle” rather than “politics by interest”, India can create the conditions for a long period of sustained growth. This is the best legacy a leader can leave – a free and rich India which does not need generations but just the period between two elections.

In Tolkien’s “Lord of the Rings”, Elrond says, “Yet such is oft the course of deeds that move the wheels of the world: small hands do them because they must, while the eyes of the great are elsewhere.” India is small by global standards – in per capita income (a sixth of the global average) and its share of world trade (just 2%). But India can punch much above its weight in the years to come if it chooses to step away from the mistakes of the past, dismantle its anti-prosperity machine, and set course on a new direction. The Great Powers are all distracted and have their own battles to fight. India is perhaps alone among the large economies to have many things going for it – most important among them, a young population and entrepreneurs that compare with the best in the world. What is needed is that they be set free.

I imagined an India of the future – free and rich, transformed by its leader. Maybe a leader can one day look back at a legacy that generations unborn will remember:

For the first time in history, Indians controlled the destiny of their nation, not emperors, kings or kakistocrats. Freed from the chains of successive governments that had made doing business harder and harder with each passing year, the people had taken it upon themselves to use their newly found economic freedom to create better lives for themselves and their families. The Dhan Vapasi initiative had unlocked trillions of dollars from under government control and put wealth into the hands of the rightful owners – the people themselves. As sector after sector was freed up from government interventions, a virtuous cycle led to the creation of well-paying jobs and rapid economic growth. Technology accelerated the transformation as Indians built on the latest advances in computing and energy. What the West did over a century, what China took a generation, India had achieved in a decade.

If India kept its growth momentum, in less than a generation, the annual income of the average Indian would have gone up by a factor of 10. Their wealth would have increased even more. India by 2040 could become the world’s largest economy – ahead of the US and China. No other country would be producing more than India by 2040. This was something which was last true a thousand years ago.

What the…Indian Revolution did was to make Indians richer and put the nation on a path to greatness it had last seen a millennium ago – before the invasions by foreign powers began. With the advantage of its younger population, cheaper energy and piggybacking on technological innovations, India was powering ahead to become the production and innovation engine of the world.

Revolutions can go either way. While India needs one (and I have argued for a bottom-up people’s movement), the revolution with the best chance of success is one which can be led by a leader who knows the limitations of what governments can do and has faith in the ability of markets and individuals – and in India’s case, 1.3 billion individuals pursuing their self-interest. Good jobs and upward mobility will be an outcome of the spontaneous order that such a leader’s decisions will unleash. No government official has the knowledge to anticipate or predict the future. All they can do is to create the simple rules that enable mass flourishing. The next-level of decisions – manufacturing or services, domestic consumption or exports-led – will emerge from enterprises and consumers making decisions in a free market. So will creative destruction which will help direct capital to the right opportunities. This is what will solve India’s income problem and put the people on an irreversible path of prosperity.

Solving India’s Income Problem (Part 14)


In the context of equality, the Preamble spoke of status and of opportunity. India’s leaders have misinterpreted that (for their benefit) to mean redistribution. Instead of focusing on improving the lives of the poorest by giving them economic freedom, the Indian state has made redistribution of wealth a priority via taxation and hundreds of government schemes. The moment the interfering hand of government comes into an otherwise voluntary trade or exchange between two consenting individuals – that is when corruption is created. Instead of a liberal democracy, we then have a kakistocracy — a system in which the governments are run by the least qualified and the most corrupt.

The equality we need in India is that every Indian should be treated the same – especially by government and law. It means non-discrimination and non-interference. It means not taking from one and giving to another. Equality of opportunity will arise from Dhan Vapasi (economic justice) and economic liberty (freedom to trade and exchange). Equality will come when taxes are low and budgets are balanced so that government is limited to only its most important tasks (protecting property rights, maintaining law and order, and safeguarding the borders). Equality of status will come with growth which follows; no one asks surnames and caste in urban India.

This is from Parth Shah of CCS: “The governing principle of the Indian Constitution seems to be the group-differentiated rights and privileges based on religion, caste, tribe or backward status and even geography …    Two liberal or libertarian principles are most relevant … One, equality before the law—all are equal in the application of the law. The second principle … is that there should be no laws about capitalist acts among consenting adults. The state shall not intervene in any voluntary exchange between adults.”

What India needs is the generality principle in politics and governance which treats all citizens the same. Atanu Dey writes: “Generality principle is well-recognized in a court of law. All citizens are treated as equals and everyone is guaranteed equal treatment before the law. But in politics, the generality principle is not applied. It leads to what the late James Buchanan, Nobel laureate economist and public-choice theorist, called the “politics by interest.””

Atanu quotes Buchanan: ““Politics by principle” is that which modern politics is not. What we observe is “politics by interest,” whether in the form of explicitly discriminatory treatment (rewarding or punishing) of particular groupings of citizens or some elitist-dirigiste classification of citizens into the deserving and non-deserving on the basis of presumed superior wisdom about what is really “good” for us all. The proper principle for politics is that of generalisation or generality. This standard is met when political actions apply to all persons independent of membership in a dominant coalition or an effective interest group. The generality principle is violated to the extent that political action is overtly discriminatory in the sense that the effects, positive or negative, depend on personalised identification.”

Atanu adds: “Personalized identification has become something of a norm in India. Handouts are made on the basis of which religion a person professes, or caste that the person belongs to. This leads to political rent-seeking, the attempt by groups to seek differential benefits for themselves at the expense of other groups. This is not the worst of it, though. The worst part is that it fractures the polity and pits groups against each other. Politics thus becomes a zero-sum (or even a negative-sum) game in which certain groups benefit at the expense of others. What is lost in the ensuing conflict is the shared vision for the nation and a loss of communitarian values that are critical for social cohesiveness and peace. Its logical conclusion is a war of each against all or what I call a “cold civil war.””

The Constitutional Amendment India needs is what the US did with its First Amendment: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

This is the Equality needed for a prosperous India.

Solving India’s Income Problem (Part 13)


The Preamble speaks of liberty in the context of thought, expression, belief, faith and worship. But there is one liberty which stands above all. It is the freedom to trade and exchange. From Investopedia: “[Adam] Smith argued that by giving everyone the freedom to produce and exchange goods as they pleased (free trade) and opening the markets up to domestic and foreign competition, people’s natural self-interest would promote greater prosperity than could stringent government regulations.”

Here is a quote from Smith’s “The Wealth of Nations” written in 1776: “He generally, indeed, neither intends to promote the public interest nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”

Voluntary trade is a positive-sum game; it only happens if both sides come out ahead. Trades and exchanges happen in markets. The freedom to trade and exchange – without constraints and interventions in free markets – is not an easy ask. Governments interfere in markets and use the threat of force to coerce, and in doing so start a downward slide to serfdom.

It probably sounds very counter-intuitive in a world which is erecting barriers to trade but the path India should choose is that of openness. This is the time to recreate the initial conditions of the 1800s and early 1900s that helped the US prosper and create the greatest wealth creating machine the world has ever known. The foundational ideas are simple and centred on liberty, especially economic liberty (which did not find a mention in the Indian Preamble).

There is a direct correlation between economic freedom and prosperity. Just look at this map of the world from Fraser Institute’s Economic Freedom of the World report – the more free a country, the more likely it is to be prosperous.

India is in the 3rd quartile, ranked at 89th. (This is based on 2020 data.)

Here is a summary of what the index measures:

Economic freedom is what our Constitution writers missed – and many generations of Indians are paying the price. This is the real liberty Indians need to let the ‘invisible hand’ and spontaneous order work their magic.

Solving India’s Income Problem (Part 12)


While the Preamble talks about social, economic and political justice, I believe the most important of the three is economic justice; without it, the poor will not have access to the other two. A recent article in Times of India based on a report from PRICE (People Research on India’s Consumer Economy) had this table:

The key takeaway: 67% of Indian households (comprising the Aspirers and Destitutes) have (on average) expenditure greater than income, and therefore almost no savings (and probably some debt). Given that 800 million people in India (60% of population) are still dependent on free food from the government, this is perhaps not that surprising.

This table below from PRICE is even more shocking. The bottom 60% of Indian households saw their household income decrease in the 5-year period from 2016 to 2021. (This includes the impact of the pandemic.)

Above anything else, Indians need economic justice – and filled stomachs. The solution is Dhan Vapasi – a return of their wealth that has been captured and is controlled by India’s central and state governments. As I have written previously, Dhan Vapasi is that program which can achieve the following:

  • Put money in the hands of people without enlarging the fiscal deficit
  • Get India to sustained 10% GDP growth rate
  • Not entail any government borrowing which will impact future growth
  • Attract global investors and their trillions of dollars
  • Not cause inflation
  • Be politically popular and financially wise
  • Solve the credit constraint problem that many Indians face
  • Give families the freedom to make their own choices
  • Not a violation of the fundamental rights of the people

Dhan Vapasi combines two ideas – the monetisation of surplus public assets combined with universal wealth return. India’s public wealth of $20 trillion which is locked up in land, PSUs and minerals needs to be returned to the rightful owners – the people of India, who can then decide what to do with it. Dhan Vapasi is the only fair solution which delivers economic justice to every Indian and offers them the freedom to choose. It is the first building block for a prosperous India.

Solving India’s Income Problem (Part 11)

Three Words

This is what the Preamble to the Indian Constitution says:

WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN, SOCIALIST, SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens:

JUSTICE, social, economic and political;

LIBERTY of thought, expression, belief, faith and worship;

EQUALITY of status and of opportunity

While much of the debate in the past few decades has focused on the addition of the words “socialist” and “secular”, what has been missed out is the importance of three words which can guide us on the journey ahead. These are justice, liberty and equality. In the rest of this series, I will discuss how a reinterpretation of these objectives can lay the foundation for India’s future prosperity.

I have been a strident critic of the Indian Constitution. While its length and legalese render it almost unreadable for the ordinary Indian, what is more appalling is its origin. Here is what I have written:

India’s pre-1947 poverty was crafted by the British and their invading predecessors. India’s post-1947 poverty was handcrafted by the composers of the 1950 Constitution. A Constituent Assembly of elitist Leftists led by their patron saint Jawaharlal Nehru concentrated powers in a Central government – exactly as the 1935 Government of India Act passed by the UK Parliament did. 242 of 395 Articles in the 1950 Constitution were copied verbatim from the 1935 Act which was designed to subjugate the people and deny them freedom. The fate of Indians – and those unborn – was decided in those crucial years between 1947 and 1950.

The continuing Colonial Constitution (with its 100+ amendments which chipped away the few remaining freedoms that Indians enjoyed) has concentrated ever-increasing power in the hands of a few at the top of government – just the way the British ruled and controlled Indians. If we did not have freedom before 1947, it is impossible to argue that we have freedom now – because the rules have not changed.

I am not the only person critical of the Constitution. Its primary author, Dr. Babasaheb Ambedkar, was under no illusions about the document drafted. The Quint quotes Dr. Ambedkar (speaking in the Rajya Sabha on two separate occasions):

… Sir, my friends tell me that I have made the Constitution. But I am quite prepared to say that I shall be the first person to burn it out. I do not want it. It does not suit anybody.

… The reason is this: We built a temple for god to come in and reside, but before the god could be installed, if the devil had taken possession of it, what else could we do except destroy the temple? We did not intend that it should be occupied by the Asuras. We intended it to be occupied by the Devas. That’s the reason why I said I would rather like to burn it.

Indians revere the Constitution – even though none bar a few have actually read it. (At 145,000 words, it is not for the faint-hearted.) Let us use the three objectives set in the Preamble as the guiding principles for India’s new direction in a fragile, uncertain world.

Solving India’s Income Problem (Part 10)

Past Writings

I have written in the past about India’s need for a new direction (what I have called, ‘Nayi Disha’). “Freedom is the bedrock of prosperity. With every new leader in power, liberty has been diminishing and government control over the economy has been increasing. Since the leaders in power are unlikely to increase freedom and reverse the anti-prosperity measures that are still widespread, it is up to the people to lead a political and economic revolution if we are to make Indians rich.”

I wrote in a recent essay: “In India, we know all too well how to destroy wealth. Suppression of freedom, high taxes on economic activity by individuals and businesses, putting hurdles on education, taxing imports (which inevitably taxes exports), delayed justice, public sector units, not decentralising governance, random government interventions, discrimination based on caste, religion and group affiliations, and control of public wealth – these are just some of the facets of the anti-prosperity machine run by those in power. India’s politicians and bureaucrats have learnt nothing in the past 75 years from the successes of the nations that created wealth for their people; they have focused on wealth capture for themselves and their cronies.”

In another essay, I wrote: “India, colonised first by the British and then subjugated by its own leaders after Independence, remained poor. 75 years after the British left, the per capita income of Indians is only $2,000, a sixth of the world average. Indians have created wealth for themselves outside India (the household income of Indians in America is the highest among all ethnicities) but have not been allowed to do so in India…Even as the liberal world order faces challenges, India has this moment in time when it can rise…A free and rich India can be the real Vishwaguru. With the West caught in the aftermath of its own financial excesses, with Russia and China being led astray by authoritarian leaders, India has a unique opportunity in its 75th year to transform itself. India’s Amrit Kal can become true if Indians embrace the ideas of freedom – not just political independence, but real economic freedom for every Indian and in every action. This is the Nayi Disha India needs.”

More: “What India is missing is quality jobs paying Rs 40-50,000 a month with a promise of upward mobility as a reward for hard work. Today’s India seems stuck between the sub-Rs 20,000 job and the high-end job in IT and specialist functions paying upwards of Rs 100,000 a month. The chasm in the middle needs bridging… India needs to prioritise economic growth. It needs policies which free businesses, people and trade – and get the government out of business. With many countries and continents under economic duress, this is a unique moment in time for India to shed the baggage of the past and reverse policies that have kept people poor.”

I had written this about two-and-a-half years ago: “Swatantrata (independence) without Samriddhi (prosperity) is a battle not even half-won. We must not rest till every child, worker, entrepreneur has been truly liberated in our country. The good news is that it is possible – because India is rich, even as Indians have been kept poor. If enough of us come together, a peaceful political and economic transformation is possible – not in a generation, but before the next election. This Indian Revolution must begin in our minds. We must begin by replacing the dated romantic ideas of what creates prosperity with the evidence-backed reality of what actually does. Each of us must be a node in this networked spread of new ideas. We must set aside differences of caste, class and community that have been used to divide us. We must unite to set India in a new direction, to choose a different future. The only questions we must ask are – If not us, who? If not now, when?”

Solving India’s Income Problem (Part 9)

Global Backdrop

India needs many doublings on its path to prosperity. But the favourable global conditions of the past four decades which helped the rise of China (and many others) are not likely to be there going forward. The post-World War peace in Europe has been broken by the Russia-Ukraine war; an energy crisis looms for much of Western Europe; free trade is being replaced by trade wars, onshoring, friendshoring and protectionism; leaders talk of decoupling and deglobalisation; inflation is at multi-decadal highs and interest rates are rising in Western nations leading to possible recession; fertility rates are falling in much of the developed world; polarisation is increasing and tolerance is decreasing; autocracy, authoritarianism and totalitarianism is on the rise; Western liberal democracies face simultaneous challenges from the far-right and far-left. As Russell Napier put it: “We’re in for a long social and political journey. What you have learned in market economics in the past forty years will be useless in the new world. For the next twenty years, you need to get familiar with the concepts of political economy.”

Here are two charts from Wall Street Journal on the new order (or disorder) in world trade and inflation. As the introduction to the article states: “The post-Cold War order promised a globe stitched together by markets and cooperation between nations. That system has fallen into disorder, and left the world with rising inflation, trade conflict, military confrontation and gnarled supply chains.”

From a recent special report in The Economist: “A great policy reversal is under way in the rich world. The tight fiscal, loose monetary policy mix that defined much of the 2010s is being upended into a loose fiscal, tight monetary policy one. The likely result is a tug-of-war between hawkish central banks and spendthrift governments that will make inflation harder to fight. It will lead to a reckoning about just how much short-term pain societies are willing to bear in the name of long-term economic stability. But it could, ultimately, help economic policy into a beneficial reboot.”

It writes: “The immediate difficulty is that big spending by governments will make it harder (and perhaps impossible) for central banks to hit their 2% inflation targets. Governments are unlikely to stand idly by as central bankers inflict pain on their economies in the name of getting inflation down. They could instead unleash fiscal stimulus before the disinflationary task is complete. The danger is even greater when economies are already buffeted by supply-side shocks, notably the energy crisis. Without fixing the underlying shortages, it is not within the gift of governments to stop the economic pain they cause—they can only redistribute to protect the poor. If politicians try to protect everyone’s living standards, they will cause prices to rise further. The long-term challenge is to avoid fiscal crises. Ageing societies are a challenge spanning the whole of the 21st century. If governments do not control their spending on the old, eventually they will run up against fiscal limits, whatever their cost of borrowing. It would be a mistake to accumulate debts simply in order to put off hard choices, using up fiscal space that may be needed in future crises.”

Bloomberg Businessweek writes: “A world where the US and its allies are in retreat is a world where illiberal states are empowered and destabilizing shocks follow…The current weakness in the global economy provides another way of thinking about the short-term effect of geopolitical shocks. Russia is already in recession. Europe is about to follow, largely because of the cutoff in gas supply. In the US, inflation—also in part a consequence of the Ukraine war—has pushed the Federal Reserve onto its most aggressive tightening trajectory since the 1980s. A Bloomberg Economics model suggests that’s very likely to tip the economy into a downturn in 2023,throwing millions out of work…The lesson of the past few years, though, is that anyone waiting for a return to geopolitical stability may be waiting a long time. History is back, and that’s bad news for prosperity.” It has the chart below.

Niall Fergusson writes: “The world today is dominated by two empires: the US, which originated in the British colonization of North America, and the ethnic-Han-dominated Middle Kingdom we call the People’s Republic of China. But a number of former empires continue to play disproportionate roles in world politics: The Russian empire limps on in the guise of the Russian Federation; the Persian empire is now the Islamic Republic of Iran; one might say the Holy Roman Empire has been reincarnated in the form of the European Union, at once extensive, German-centered and weak. It is not civilizations that clash, but empires.” He adds, in the context of the US-China tensions: “If we pursue Cold War II to the extent of stumbling into World War III.”

Against this backdrop, what should India do? What is India’s path to wealth creation and prosperity?

Solving India’s Income Problem (Part 8)


Three charts from Mint in August 2022 highlight the challenge of India’s income growth:

A chart in a column by Niranjan Rajadhyaksha in Mint (June 2022) puts forth the first per capita GDP doubling challenge:

He adds: “In its new Report on Currency and Finance…, the Reserve Bank of India has estimated that India can maintain an economic growth rate of between 6.5% and 8.5% over the medium term. Rapid growth is needed not just to boost our position in international rankings, but also provide economic opportunities to a young population, especially given our failure to create quality jobs in productive enterprises. There are also shocks to consider. Indian output is still below where it would have been if the pandemic had not struck, and is expected to remain below trend for perhaps another decade. (Note: this is about the level of output rather than its growth rate.) A climate shock is on the horizon. This decade may see India narrow its income gap with countries such as the Philippines and Sri Lanka, especially the latter because of its ongoing economic tragedy. India will need more time to reduce the income gap with most of the other countries considered here. A lot will depend on whether we move ahead near the lower or higher end of the potential growth estimate made by our central bank.”

So, how does India transform? Where will India’s jobs come from – government or private, manufacturing or services, domestic consumption or export-led? How does India rise and lift incomes for its people? My take will be very different from the excellent suggestions others have made.

First, let’s take a look at the global backdrop in which India needs to grow.

Solving India’s Income Problem (Part 7)

Commentary – 4

Devashish Mitra writes on Ideas for India (October 2022):

With India’s overall per capita income 2.5 to 3 times the average income in its agricultural sector, we can expect the expansion of this sector to create only low-productivity and low-wage jobs in the absence of significant technological breakthroughs. Turning to the service sector: with only 12% of India’s population holding bachelors’ degrees or higher, and with 59% in the primary-school, middle-school and illiterate categories combined, only a small proportion of the population has any chance of qualifying for good service-sector jobs.

Thus, India must focus on manufacturing to make any significant dent in the jobs problem. As documented by NITI Aayog (2017), small firms (those with less than 20 workers) employ 75% of all manufacturing workers, but produce slightly over 10% of all manufacturing output. This implies several-fold higher labour productivity in larger firms. Besides, the average wage of a formal-sector manufacturing worker is six times the average wage in informal-sector enterprises, which are generally small, low-productivity,  unregistered, and exempt from most labour regulations (NITI Aayog, 2017). Thus, good jobs will mainly have to be created in relatively large firms, and mainly those in labour-intensive industries, since that is where output growth is bound to be accompanied by employment growth. The large scale of production is expected to reap economies of scale, leading to higher productivity and wages.

… Agriculture and services cannot be engines of job creation and growth. Therefore, giving up on manufactures and their exports is equivalent to giving up on growth and forsaking the creation of good jobs.

As the introduction to the essay states: “He posits that four factors can help the export-oriented manufacturing model succeed – further labour reforms; the signing and implementation of free trade agreements and establishing special economic zones; and participation in global supply chains. This will allow India to leverage its labour, along with advanced-country technology, to create productive jobs.”

Pankaj Chandra writes on Ideas for India: “Most small firms remain small all their life. In emerging markets, they face three key challenges: capital, relationships, and reach. Small firms compete on variety and small volumes, while a large firm competes on volumes and cost. The former has to innovate at a lower cost, while the latter owns channels of distribution and hence has a better reach in the market. The big question of our times is then: how should small firms compete and especially against large ones? Is there a model of technological development that would allow a small firm to have all its natural advantages as well as those of a large firm (that is, produce variety in small volumes and still be competitive on costs)? I argue that the challenge in India has been our inability to organise small firms as part of a network…This thereby deprives them of the ability to invest scarce capital in building distinctive capabilities; find a mechanism to form ties with competitors on shared services; and of course, be able to become part of large and distributed supply chains. Those that have managed to do so have grown out of their ‘tininess’, provided valuable products and services to their customers and have grown their endowment.”

A New York Times article in June 2022 wrote:

Even as India is projected to have the fastest growth of any major economy this year, the rosy headline figures do not reflect reality for hundreds of millions of Indians. The growth is still not translating into enough jobs for the waves of educated young people who enter the labor force each year. A far larger number of Indians eke out a living in the informal sector, and they have been battered in recent months by high inflation, especially in food prices.

The disconnect is a result of India’s uneven growth, which is powered by the voracious consumption of the country’s upper strata but whose benefits often do not extend beyond the urban middle class.

…“There is a historical disconnect in the Indian growth story, where growth essentially happens without a corresponding increase in employment,” said Mahesh Vyas, the chief executive of the Center for Monitoring Indian Economy, a data research firm.

…For Indian politicians, a high unemployment rate “is not a showstopper,” said Mr. Vyas, the economist, adding that they were far more concerned with inflation, which affects all voters.

…Analysts say [that] greater efforts [are needed] to build up India’s underdeveloped manufacturing sector. They also say that India should ease regulations that often make it difficult to do business, as well as reducing tariffs so manufacturers have an easier time securing components not made in India.

There have been many books in the past few years which discuss India’s past and future roadmap. Here is a sampling:

  • The Struggle and the Promise by Naushad Forbes
  • Unshackling India by Ajay Chhibber and Salman Anees Soz
  • Countdown by Anshuman Tiwari and Anindya Sengupta
  • India 2030 edited by Gautam Chikermane
  • Jobs Crisis in India by R. Jagannathan
  • Reviving Jobs edited by Santosh Mehrotra

So, what does tomorrow hold for India?