Eclipsed opportunity?

India stands at a pivotal moment, with its young population poised to shape the nation’s destiny. With 65 per cent of the population under the age of 35, the country enjoys a demographic dividend that can propel economic growth, foster innovation, and drive societal progress. However, for this potential to translate into tangible results, robust systems of education and employment are essential. Higher education, in particular, plays a crucial role in equipping youth with the skills, knowledge, and mindset needed to contribute meaningfully to the economy and society.

As of 2023, India’s higher education market was valued at Rs 5.3 trillion, with projections to reach Rs 11.1 trillion by 2032, indicating a compound annual growth rate (CAGR) of 8.46 per cent. Despite this growth, the Gross Enrolment Ratio (GER) in higher education remains below the global average. In 2022, fewer than 40 million young Indians were enrolled in higher education, reflecting a GER significantly lower than countries like China, where over 70 per cent of young adults pursue tertiary education. Youth unemployment in India remains alarmingly high. In 2023, the youth unemployment rate was estimated at 15.79 per cent, a slight improvement from previous years but still indicative of systemic issues. Notably, Indian youth account for nearly 83 per cent of the country’s unemployed population, with every third young Indian neither pursuing education nor employment.

The National Education Policy (NEP) 2020 aspires to build a “New India,” promising sweeping reforms in education. While the vision is commendable, the execution reveals deep-rooted challenges that need urgent attention. India’s youth face a paradox: a growing number of degree holders on one side and a persistent skills mismatch with job market demands on the other. This article examines the intersection of higher education, youth power, and employment highlighting both opportunities and challenges. It emphasises the importance of leveraging India’s demographic advantage and ensuring that education and employment systems align with the nation’s developmental goals.

Education is the bedrock of progress. However, in India, higher education is increasingly becoming a commercialised venture rather than a public good. Over 75 per cent of higher education institutions in India are privately owned, many prioritising profits over quality. Degrees are being churned out in bulk, yet the employability of graduates remains alarmingly low. Reports indicate that 80-90 per cent of engineering graduates are unemployable due to insufficient practical training and outdated curricula. This skills gap underscores the need for a robust regulatory framework to ensure educational institutions maintain high standards and align curricula with market demands. (India Skills Report 2022).

While bodies like the University Grants Commission (UGC) and All India Council for Technical Education (AICTE) exist, their enforcement capabilities are limited. The absence of stringent quality checks has allowed substandard institutions to flourish. An independent and efficient regulatory system can safeguard students from exploitation and hold institutions accountable for their outcomes. For instance, institutions that fail to equip students with employable skills despite charging exorbitant fees should be subject to penalties, including partial fee refunds to students.

Education and employment are deeply interconnected. In general, higher education is expected to prepare youth for the workforce. However, the current system often falls short. The lack of quality employment opportunities for educated youth is another pressing concern. Contractual and outsourced employment, increasingly favoured by both the private and public sectors, has further complicated the landscape. In the outsourcing model, contractors often exploit employees, paying them significantly less than the amount billed to employers. Delays in salary payments and the absence of job security are rampant. Such practices not only demotivate workers but also harm institutional productivity. The government must ensure greater transparency and fairness in employment practices, particularly in public sector outsourcing.

Technology presents opportunities for innovation and productivity. It also poses challenges, particularly in the form of job displacement. Automation and artificial intelligence are reshaping the labour market, rendering several traditional roles obsolete. To navigate this transition, India’s education system must emphasise adaptability and lifelong learning. Youth must be equipped with skills that cannot be easily automated, such as critical thinking, creativity, and emotional intelligence. Our low spending on Research & Development is worrisome. India spends less than 0.7 per cent of its GDP on R&D, even lagging behind smaller countries like South Korea (4.8 per cent) and Israel (4.5 per cent). This stifles innovation and limits the global competitiveness of Indian higher education. Policymakers must also focus on industries with high employment potential, such as green energy, healthcare, and digital services. Strategic investments in these sectors can create jobs while addressing pressing global challenges like climate change and public health.

China’s economic transformation, driven by effective use of its demographic dividend, serves as a lesson. By focusing on large-scale vocational training and integrating its workforce into global supply chains, China reduced unemployment and fostered economic growth. Between 1990 and 2010, China’s GDP grew by over 10 per cent annually, driven largely by youth productivity. While India lags behind, the window of opportunity is closing; experts predict the demographic dividend will wane by 2045. To avoid squandering this potential, India must prioritise creating quality jobs, investing in skill development, and reforming education to align with industry demands.

To truly harness the potential of its youth, India must adopt a multi-pronged approach-

• Strengthening education: Focus on improving the quality of higher education through robust regulatory mechanisms, faculty development, and curriculum reform.

• Promote public investment: Increase public expenditure on education to 6 per cent of GDP, as recommended by the NEP 2020. Focus on expanding access to higher education in rural and underserved areas

• Promoting skill development: Establish comprehensive skill development programs aligned with industry needs. Scale up initiatives like Skill India to include emerging technologies such as AI, robotics, and block chain. Introduce apprenticeship programs where students can gain hands-on experience.

• Creating quality jobs: Invest in high-growth sectors and ensure fair employment practices, particularly in outsourced and contractual roles. Offer tax benefits and subsidies to companies that create jobs for youth.

• Fostering innovation: Encourage research and development by increasing public and private investment in innovation-driven sectors.

• Strengthen regulatory mechanisms: Establish an autonomous, well-funded regulator to oversee higher education institutions. This body should conduct regular audits, ensure compliance with quality standards, and penalise institutions that fail to deliver outcomes.

India’s youth are its greatest strength, but their potential remains underutilised due to systemic inefficiencies in education and employment. Policymakers must act swiftly to address these challenges, with a dual focus on quality education and sustainable job creation. By prioritising investments in human capital and ensuring transparency and accountability, India can transform its demographic dividend into a powerful driver of inclusive growth.

As the economist Ragnar Nurkse observed, “Poverty anywhere is a threat to prosperity everywhere.” For India to achieve sustained development, it must empower its youth—not only as participants in the economy but as architects of the nation’s future.

Atvir Singh is Professor, Department of Economics, Chaudhary Charan Singh University, and Himani Aggarwal is PhD Scholar & Policy Expert at Ministry of Women & Child Development. Views expressed are personal