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October 29, 2008

"Freeing Up Education Key to Avoiding Demographic Disaster"

In an article for The Economic Times, Janmejaya Sinha, MD at The Boston Consulting Group India, makes a passionate and stats-filled case for an urgent freeing up of the Education sector in order to prevent India's "demographic dividend" from turning into a curse.
India's workforce today has 484 million people. Of these 273 million are working in rural areas primarily in agriculture (many of them clearly underemployed), there are another 61 million working in manufacturing and about 150 million in services. Shockingly, 40% of the current workforce is illiterate and another 40% is below 12 class pass. That means 200 million of our workers cannot even sign their name! Given that 60% of our workforce is in rural areas, which provides only about 18% of our GDP and the growth engine for our economy is the services sector, these simple statistics condemn our rural workforce to penury and destitution.

What is worse, given their skill levels it is very difficult for them to escape their fate by migrating to the services sector. It is true that much of our services sector is correctly characterised by the woman carrying bricks on a construction site or the family run neighbourhood kirana store - both services reasonably tolerant of illiteracy. However the openings arising in modern India, even in modern retail and more mechanised construction, will seek a basic education. It is hard to use uneducated people in the productive parts of our economy. At the higher end in IT, financial services and healthcare the problem is different - we need high quality graduates. In fact, we will not be able to accelerate our GDP growth rate to over 10% or have any meaningful impact on inequality in incomes unless we can address this.

Let me ply you with some unfortunate statistics. Currently about 23 million children are eligible for entry into the school system yet only six million finish the 12 standard and only about 2.3 million graduate. Thus 17 million do not even finish school. It gets worse than that - the quality of education on offer is abysmal. On any day 25% of the teachers are absent and 50% of children in class V cannot read a story and 21% of them cannot recognise numbers. Little wonder that parents dependent on government schools do not see the relevance of sending their children to school.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.