Peri Maheshwer speaks on ‘The Demographic Nightmare’

By April 20, 2018Manthan Blog

Date: April 20,2018

Topic: The Demographic Nightmare

Speaker: Peri Maheshwar

About The Speaker

A passionate entrepreneur, Mahesh is a qualified CA, CMA and ACS. He started his career as an investment banker with SBI Capital Markets. He was associated with the Outlook publishing group for 17 years and headed it for more than 10 years. Mahesh has been persistent with his views on education, jobs and demographic dividend. In the midst of all the confusion over GDP numbers, Mahesh has been insisting that for a populous country like India, the only measure to judge government’s performance is job creation. Since leaving Outlook, Mahesh feels unshackled and expresses himself freely on politics that affect the youth of the country. Mahesh believes that the demographic dividend India seeks can turn into a nightmare if youth are not shown the right path. CAREERS360 is the result of his deep understanding of student issues, and the information gaps that need to be filled to help students take an informed career decision.

“If you have a limited budget of Rs. 10 lacs how would you invest it to construct a house, extend your current premise or fund your children’s education?” Peri Maheshwar asked this question at the recent Manthan Talk on “The Demographic Nightmare” and almost the entire audience chose the third option. The reason looks logical for a middle class Indian family: education helps in securing jobs to become financially independent; the rest will follow. Extending the same logic to a developing nation aspiring to reap the demographic dividend, guess what our government invests on? It constructs skyscrapers.

Demographic dividend, as defined by United Nations Population Funds states, “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older).” In other words, it is “a boost in economic productivity that occurs when there are growing numbers of people in the workforce relative to the number of dependents. By this definition, India with 65% of its population in the age group of 15-64 years should be reaping the dividends right now. Mr Mahesh pointed out that currently about 40 crores of our population are in different stages of education. Within the next 10 years, they will want jobs. As a nation, are we ready to create jobs for all our people?

He pointed out that since independence, all our governments have abstained from looking at the strategic questions: Does it have systems in place to create a quality workforce? What kinds of investments are required to create enough jobs? And finally, what does it need to ensure that the very large number of persons contributes productively with minimal government assistance?

The choice between education and infrastructure projects would have been irrelevant if India had created a progressive and healthy education system. The institutes which are considered as beacons of excellence in education, like the IITs, IIMs, AIIMS, NITs, Navodaya Vidyalayas, and Kendriya Vidyalayas were envisioned by Nehru. After him, successive governments followed the blueprint and increased the numbers of these institutes but nothing innovative has been tried to cater to the education requirements of different sections of the society. Till 1985, India didn’t even have a Ministry of Human Resource Development and even thenafter, it was considered a lowly assignment and was given to the least competent minister. The education system is being managed either by bureaucrats or businessmen instead of academicians. Since independence, our budget allocation for the education sector has been dismal, ranging between 3 to 4% of GDP as opposed to 6% recommended by the Kothari Commission in 1966 (This year’s budget allocation is 2.7%). Mahesh presented the dichotomy of spending on higher education. The central government has budgeted Rs 33,000 crores for higher education. This amount is planned for 30 crore students. In contrast, 3.5 lac Indian students studying abroad spend Rs. 45,000 crores. Of the Rs. 1,05,000 crores of funds collected as Education Cess over the last ten years for higher education, only Rs. 15,000 crore is being used for increasing capacities; the rest is being used to fund their department’s budgetary grants. The victims of this kind of short changing are people dependent upon government colleges who cannot afford to attend private colleges or go abroad.

He elaborated that the Rs 6.92 lakh crores of windfall gains from oil prices could have been used for setting up more than 700 universities, 1000 IITs and IIMs and complete schooling for 2.36 crore students at KV schools. He quoted a study where it was proven that one rupee invested in an IIT has a multiplier effect of Rs. 15 in 15 years. He urged the audience to imagine if the amount of Rs. 6.92 lakh crores was spent on IITs, it would have generated an economy worth a whopping Rs. 106 lakh crores. However, the money was used for Bharatmala Project, in constructing roads for increased speed.

Mahesh also pointed out the lack of creativity and standardisation in the education philosophy we follow. Mahesh cited examples of successful education reforms in Finland and Singapore marked by cooperation, risk taking, creativity, professionalisation, and test-based responsibility. These countries accept that failing to achieve desired result is part of learning process. In comparison, the Indian education system forces students to follow decades-old standardised curriculums, learn by rote, and blindly compete in standardised tests. The focus is on memory/recall and not on practical application of knowledge. Performance in an exam on one day can make or mar one year’s worth of learning and labour. The lifelong-career decisions are taken by the age of 15, on the basis of one exam, with no way out if anyone even dares to contemplate a change. The contrasting results are that the first system creates entrepreneurs and innovators while the second creates a horde of consumers and glorified clerks.

In such a competitive environment, our education system should follow the “Need Blind” admission principle, where an education institution offers admission on the basis of merit and does not refuse on grounds of financial strength of students. The responsibility is on the state to create quality delivery of education at optimal rates to encourage the private players to follow uit. Mr Mahesh informed that except for Shiv Nadar University, none of the universities follows this principle. There has been increased investment in college education by private players. In 2010, there were 288 public universities and 148 private universities. In 2019, this number would be 500 and 400 respectively. In 2010, there were 9000 public colleges and 17,000 private colleges. In 2014, the number increased to 10,000 and 26,000 respectively.

While the increased number of institutes has improved access to higher education, it has not followed the need-blind principle. In 2004, IIM Ahemdabad charged Rs 1.5 lacs as fees; within a five-year period, it was increased to Rs. 4 lacs and subsequently to Rs. 21 lacs in 2017. The increase in fees by 527% exceeded the inflation rate of 98% in the same period. Similar trends have been observed in the fees of IITs, AIIMS and NITs. The professors, in order to gain autonomy from the government, increased the fees by 427%.  Taking advantage of this upward trend, private colleges also increased their fees. It has resulted in increasing reliance on education loans, which are getting difficult to obtain (the bank loans decreased from 17 % to 2% in last 10 years) due to rising NPAs.

On the employment front, there is an explosion in the mismatch between the aspiration level for a job and the number of job opportunities being created. The glaring example given by him was the case of railway recruitment. In 2015, 92 lac people applied for jobs in Railways; the number swelled to 2.18 crores in 2018. The number looks bleak even in case of engineering. In 2005-2009, the number of graduates was 4 lacs, of which 90% got placed thanks to the booming IT and service sector. In 2017-18, the number of graduates rose by 325% i.e. to 17 lacs, of which only 20.5% (350,000) got placed.

He quoted that even in the case of elite institutes like IIMs whose numbers have mushroomed with formation of new states, the false announcement of 100% placement is made but the bottom 25 percentile do not get placed. Even in the case of the top six IIMs, though the fee has increased by 427%, the increase in salary is only 85%, with bottom 25% getting a package of Rs. 7-8 lacs per annum and 10% not getting placed. Imagine the pressure faced by students whose package or employment status do not match the claims made by these elite institutes.

On an average, an Indian student appears for 156 tests from Class 1 till graduation. They are promised that on clearing numerous tests and exams they would get jobs. However, the fulfilment of that promise is being delayed and we are adding more exams for the same job.

In 2017, the manpower qualified for entering the organised sector was 1 crore while the job opportunities numbered a mere 4.4 lacs. If this was not enough, he quoted, McKinsey has come up with a report that says 60% of IT employees would lose their job of they are not reskilled. So, now we not only have to find jobs for the unemployed but also ensure that the employed don’t lose their jobs. He lamented that we haven’t yet started on the condition of the unorganised sector which employs 93% of our workforce (of which 60% do not have regular work).

Mahesh said in 1988-89, a high school degree was considered enough for a bank clerk job. Today, people holding PhDs are ready to work for the same job. He cited an example of a controversy in the recruitment process in Rajasthan, where 129 engineers, 1 chartered accountant, 23 lawyers, and 393 post-graduate in arts were among 12,453 people interviewed for 18 posts of peon in the Rajasthan Secretariat. Mr Mahesh commented that we commit the biggest crime when instead of creating job opportunities, we blame the youngsters for being unemployable.

Mr Mahesh concluded that by 2027, 1 billion people would be in the bracket of working age population and if we keep on postponing the creation of jobs for such large numbers by adding more obstacles in terms of education qualifications, we are looking at the creation of a demographic nightmare. If Prime Minister Modi actually believes in human resource as India’s biggest resource and in reaping the demographic dividend, as he has been proclaiming for last four years, he needs to invest in human resources instead of creating statues and physical infrastructure.

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