Delhi, January 5, 2010—The biggest challenge and therefore opportunity faced by India is its demographic dividend: there are over 500 million youth under 25 years of age and 350 million under 15 years. Thirty percent of them are in cities. Only a small percentage of these youngsters will obtain university degrees. The majority will need vocational training.
The government has understood this challenge and has set up the National Skills Development Corporation, which is developing policy to educate 500 million people in the bottom of the pyramid in vocational skills. These people will become retail staff, telecom field workers, commercial vehicle drivers, rural consumer sales, mechanics, factory workers, et cetera.
While the scale of the opportunity is huge, the cost of training these workers has to be extremely low, as most of them don’t have any assets and will either have to be subsidized by the government or will have to take loans. Most come from families that are not in the organized sector—in other words, they do not have any concept of structured employment—so the dropout rate is high. Many entrepreneurs have entered the education market in India—the number of new universities and K-12 schools is staggering—but very few are willing to enter the vocational training market, as it is very difficult to make money.
That is why the national government has begun to take the lead in vocational training. For example, the government has taken 150 of 1,500 government-run Institute of Technology (ITI) and entered into public-private partnerships. Other government departments are paying private sector vocational training companies a fixed amount for every person they train successfully.
Most major US universities are engaged in discussions on establishing some presence in India. MIT has been given a five-year contract to establish a Global Health Institute in Delhi. Rumors are that MIT may establish a joint venture business school in India soon. Bob Brown, President of Boston University, will be in India in a couple of days. Boston University just established a new position, Vice President for Global Operations, to lead BU’s efforts in establishing a global presence. India is a key part of this vision.
The current generation in India is called the “why” generation. After generations of being told what to do and how to think by parents, teachers, and other elders, young people are questioning all aspects of Indian life. In the urban middle class they are driving a consumer culture, similar to America’s: coffee shops, bars, cars, clothes. They are also demanding equality for women and gays and in fact getting laws changed to reflect these new social mores. And they are globally savvy, plugged into Facebook, sometimes working for multinationals and traveling abroad frequently.
But the bottom of the pyramid, particularly in rural areas, is completely disenfranchised from this global reality, and how India deals with them in the next two decades will determine whether it remains a pluralistic democracy. A possible alternative is a populist, labor led, violent revolution.
