A possibly critical event within India has gone largely
unnoticed elsewhere: The Indian federal legislature has approved a
bill mandating free public education for all citizens. Whether the
bill is properly or improperly implemented could play a notable
role in determining whether India becomes a global economic leader,
and a global economic partner for the U.S.
The education bill is an attempt to reconcile two fundamental
forces: (1) India's painfully low literacy rate and shortage of
skilled labor, and 2) a pronounced demographic shift toward a
larger, younger population.
If the tide of new workers can be adequately educated, their job
training can progress far more easily, and their employment will be
much more beneficial for the Indian economy. In this case, the
demographic trends will contribute powerfully to economic
expansion. The alternative, however, is dire: decades of massive
underemployment and slow growth due to low labor productivity.
The heart of the education bill is free and compulsory education
for all children aged six through 14, which requires students to
complete eighth grade. To this end, the bill decrees that, within
the next three years, a school must be built in every neighborhood
lacking one. The federal government has lofty ambitions, but it is
state governments that must fulfill them--building the schools,
providing the free education, and tracking every child.
The bill provisions include:
- Compulsory education ages 6-14;
- Universal free education ages 6-14;
- Schools must be built in all communities within three
- No discrimination against the disadvantaged;
- Private schools must reserve 25 percent of billets for the
- The federal government will standardize national
An unremarked section of the bill mandates a "Management
Committee" at each school, where three-fourths of the members are
parents or guardians. The committees will be responsible for
monitoring and preparing plans to serve as the basis for action by
state governments. This is intended to make schools more
accountable to parents. The bill also establishes a certificate of
recognition that must be obtained from the respective state
government, without which a school will face fines and closure.
The Demographic Challenge
The stakes for the education bill are high. One quarter of
India's 1.1 billion people are under age 15, over half under age
25, and over two-thirds under age 35. Almost 90 million people--the
combined labor forces of Britain, France, and Italy--are projected
to join the workforce by 2013. By 2028, the population is projected
to rise by 370 million. India will simultaneously have the youngest
age profile among large economies and the largest national
workforce. That development could make it an
exceptionally valuable partner for the U.S. and others.
This workforce explosion is typically presented as marvelously
good news, guaranteeing rapid growth for a generation. More workers mean more
production, consumption, and GDP. Demographic expansion does not,
however, automatically bring net benefits. Productive employment
for so many is a daunting prospect. One assessment is that a
successful year requires 7 percent real growth and no fewer than 15
million new positions. If job creation is impeded or workers are
ill-prepared, tens of millions will be left under- or
Agriculture, where three-fifths of the population is employed,
illustrates the potential and peril. There are already 60 million
redundant agricultural workers; finding real jobs just for them in
industry or services would boost GDP 25 percent in five years. Higher
farm productivity is certainly a worthy goal, as it raises income
and reduces poverty. But it would also cut the number of workers
needed, adding tens of millions more to those seeking jobs in
An Inadequate System
A huge, young, well-trained Indian workforce would play a
powerful role in the global economy. Such a workforce does not yet
exist, though. Much attention has been focused on highly skilled
labor in technology. High-tech companies, however, will not be able
to absorb the flood of new workers soon to enter the labor force.
India must therefore enhance basic skills by providing broad
Problems in the system extend beyond the quantity of resources
devoted. The budget for the Department of School Education and
Literacy, which oversees primary and secondary education and adult
literacy programs, was almost quintupled from fiscal year 2003-04
to 2007-08. Yet the national literacy rate is only 64 percent.
(China's is 90 percent.) Clearly, funding by itself is not a
Even if more schools are built, at present 25 percent of
teachers do not show up for work, and only 50 percent actually
teach when at school. Only one of every 3,000 administrators has
ever fired a teacher for absenteeism. It is hardly a surprise that
half of 10-year-olds in village schools are unable to read at a
six-year-old level. India ranked 102 out of 129 in UNESCO's 2009
Education for All Development Index, which grades on the quality,
spread, and gender balance of primary education and adult
Significant change is needed, and soon. By 2013, 58 million more
secondary school dropouts could join the labor force, with 60
percent of the new working-age population concentrated in five of
the poorer states. Their access to education may be severely
The Bill as Round 1
The education bill is a positive first step in meeting India's
demographic challenge. The potential benefits and costs are
gigantic, however, and far more needs to be done.
Decentralizing authority from federal to state governments is a
step in the right direction. Teachers must be made accountable and
the new bill addresses teacher performance, in principle. New
training standards, to which the bill obligates the federal
government, should improve quality in new hires. The local
management committees will give parents a greater voice. To the
extent possible, authority over teachers should be more fully
decentralized. As an illustration of possible gains, Bihar state
cut teacher absences in half by making teachers locally
States should decentralize other tasks to communities, such as
tracking students to ensure they remain in school. This is a
daunting task given the size of state populations. Unless it is
done well, though, the number of secondary school dropouts could
swell further, turning much of the labor force into a burden.
Private Sector Must Contribute
Federal and state governments clearly need a great deal of help.
Evidence suggests the very poor--at risk of being unskilled,
underemployed, and failing to contribute fully to economic
development--are well served by extremely low-cost private
education. Schools with very little funding, provided almost
entirely by poor parents unsatisfied with government options, have
fared well in comparison to much better financed public schools.
Yet opening a private institution requires years of battling the
provision in the new bill requiring every school to be certified
creates yet another layer of regulation. In addition to
implementing the new public commitment to education, federal and
state governments should recognize that, in light of demographic
change, a major private contribution is necessary for economic
development and India's emergence as a prosperous, democratic, and
global power. And the development of India--an increasingly
important American friend--is good for the U.S.
Michelle Kaffenberger is former
Production Coordinator and Administrative Assistant in the Kathryn
and Shelby Cullom Davis Institute for International Studies , and
Scissors, Ph.D., is Research Fellow in Asia Economic Policy in
the Asian Studies Center, at The Heritage Foundation.
policy recommendations on U.S.-India economic relations, including
Education, see Derek Scissors and Michelle Kaffenberger,
"U.S.-India Relations: Ensuring Indian Prosperity in the Coming
Demographic Boom," Heritage Foundation Backgrounder No.
2274, May 15, 2009, at http://www.heritage.org/Research/AsiaandthePacific/bg2274.cfm.
David Karl, "Three Events Tell a Tale of Two
Indias," Center for Strategic and International Studies December
23, 2008, at http://www.csis.org
/media/csis/pubs/pac0867.pdf (April 22, 2009); Central
Intelligence Agency, The World Factbook, at https://www.cia.gov/library/publications/the-world
-factbook (April 22, 2009); Population Reference
Bureau, "The World's 15 'Oldest' Countries and the U.S.," 2006, at
/gb-aging_all.ppt (April 22, 2009).
News, "Upbeat Mukesh Ambani Says 21st Century Will Be India's,"
March 8, 2009, at http://news.in.msn.com/business/article.aspx?cp-document
id=1917408 (April 22, 2009); Bibek Debroy, "India's
Vicious Downward Cycle," Far Eastern Economic Review, March
6, 2009, at http://www.feer.com/essays/
2009/march/indias-vicious-downward-cycle (April 22,
Government of India, Ministry of
Finance,Expenditure Budget, 2003-2004, Vol. 2, pp. 113-114,
(April 22, 2009), Expenditure Budget, 2007-2008, Vol. 2, pp.
132-134, at /static/reportimages/F5C0F9D7324586E381620AFB43D3F0F8.pdf(April
22, 2009); U.S. Department of State, "Background Notes: India,"
January 2009, at http://www.state.gov/r/pa/ei/bgn/3454.htm(April
22, 2009), "Background Notes: China," January 2009, at http://www.state.gov/r/pa/ei/bgn/18902.htm(April
22, 2009); TheEconomist, "Creaking,
Groaning,"December 11, 2008, at http://www.economist.com/specialreports/displaystory.cfm?story_id=12749
787(April 22, 2009).
James Tooley,The Beautiful Tree: A
Personal Journey into How the World's Poorest People Are Educating
Themselves(Washington, D.C.: Cato Institute, 2009).