Where are the skilled Indians?

Where are the skilled Indians?
The Economic Times, December 31, 2009, Page 12

The sooner we build quality educational institutions that can churn out professionals to help propel economic growth to 8-9%, the sooner we can eradicate illiteracy and poverty, says Neeraj Kaushal.

THERE are two prevalent perceptions about India in the west. On the one hand, people scoff at India’s failure to reduce poverty and illiteracy in a substantial manner even as many Asian countries have made successful strides into lowering both. On the other, there is widespread admiration, bordering on envy, about the nation’s immense pool of highly-skilled professionals who have become important players in the global economy. In the western view, there are two Indias: the Poor and Illiterate India, and India of its highly-skilled professionals.

It is the second India that is focus of this column. In the last two decades, the number of skilled Indian professionals working abroad has grown many times. Indians are the most educated ethnic group in the US and one of the richest too. A quarter of all H1B visas for professionals to work in the US are issued to Indians. Many industrialised countries like Canada, Germany, the UK, the US and Japan have been competing to attract skilled workers from India and other developing countries. India, along with other large emerging economies, has become a major source of skilled workforce for several industrialised countries.

Ironically, India does not have enough high-skilled professionals to fulfill its domestic needs. Years of brain drain may have played a tiny role in this. But the primary cause of skill shortage is the sudden surge in growth in the nation’s economy and increased investments in several sectors. Indeed, there is some evidence of the start of a reversal of brain drain in recent years as many professionals return to India after a stint abroad for better economic opportunities.

Yet, skill shortages remain acute in several areas. India may be a major source of talent for the global economy, it produces far less talent than what is required to meet the needs of its fast-expanding economy. Consider this: Indian engineering schools produce around 12,000 new civil engineers a year. The country needs at least 70,000 additional civil engineers to meet its massive infrastructure needs! Currently, Indian engineering schools produce civil engineers that meet just about a sixth of the industry’s additional needs. These shortages have become the biggest obstacle to investment in infrastructure.

Several factors explain this scarcity. During the 1990s, as the world economy was experiencing an internet boom, the demand for Indian IT engineers increased and salaries of IT professionals skyrocketed. Many were being hired by foreign companies even before they finished schooling. In response, students started opting for engineering courses in IT, communications and electronics, and the number opting for civil and mechanical engineering plummeted. Engineering colleges reacted to these changes in supply and demand by shutting down civil engineering departments and expanding or creating departments of communications, IT and electronics. Of the 1,700 engineering schools approved by the All India Council for Technical Education, only 200 offer civil engineering degrees today.

During most of the past two decades, a substantial proportion of the investment in the schools of engineering was to cater to the demand from the IT and communications industry, Indian as well as foreign. No one even considered that there would be demand resurgence in traditional fields of engineering such as mechanical or civil. Not many during the 1990s believed that the Indian economy would grow at 8-9% a year and the infrastructure sector would need to expand at 30% a year to sustain long-term growth. All this has changed with the government and the private sector investing billions in national highways, airports, railway stations, ports, commercial real estate and housing.

WITH growing prosperity, more people can now buy high-duty consumer durables including electronic goods, in turn, raising demand for mechanical and electrical engineers who can manufacture these goods. In 2007, Global Survey of Business Executives by McKinsey found that Indian executives were not very confident in finding suitable talent in India. The current year does not seem to be much different. There are shortages of doctors, nurses, scientists, pilots, and teachers in schools and colleges. And there are shortages of CEOs as well.

These shortages are a good sign. They indicate that the economy is growing. The shortages would encourage private and public sector investment in technical education; build schools and colleges across the country that will train professionals who will, in turn, modernise the Indian economy.

The Indian society has suffered a great deal from a criminal neglect of investment in human capital. The neglect has been at all levels: primary, secondary, tertiary and technical education. Currently, India’s colleges and universities enrol only 10% of the college-going population (aged 18-24 years) against 20% in China, over 15% among Asean countries and about 60% in the US. Raising college enrolment to 15%, the stated target of the 11th Five-Year Plan, would mean increasing the number of schools and colleges in the country by 50%.

The Indian higher education system suffers even more due to poor quality. As Prime Minister Manmohan Singh said two years ago, more than 60% of Indian universities and 90% of colleges are of belowaverage quality. More than three million students graduate every year from these universities, but only 10-15% are equipped with skills to start work. Among engineers who graduate, only a quarter have the skills to start work in a global standard industry. According to a World Bank report, India would suffer a shortfall of more than half in the skilled human resources needed to modernise its economy.

Education can be the next big area of economic growth in the country. Population dividend that everyone keeps talking about cannot be reaped unless we invest in people, train them to work in Indian companies that have global standards. Despite promises by the policy planners to raise investment in education to 6% of GDP, state and central governments together have spent less than 4% of GDP on education. The 11th Five-Year Plan has proposed a four-fold increase in investment in education. Anything less than that would mean further delays in eradicating illiteracy and poverty.