PRESS RELEASE

Thursday, March 29, 2012

Mr. Neeraj Sumeet Shekhar a student of GITAM School of International Business, Visakhapatnam, has been awarded the First Prize in The 55th All India Essay Competition for College Students conducted by the Forum of Free Enterprise, during 2011-12. The Second Prize has been awarded to Ms. Vishakha M. Vartak of Brihan Maharashtra College of Commerce, Pune; the Third to Ms. Shilpa Sarvani Ravi of GITAM School of International Business, Visakhapatnam; and the Fourth to Ms. Tanvi Lehru of Thakur College of Science & Commerce, Mumbai. Consolation Prizes have been awarded to Ms. Nanda Chaudhari of St. Miras College for Girls, Pune; Ms. Mitali P. Naik of D.J. Sanghvi College of Engineering, Mumbai; Mr. Sangati Prudvi Rajareddy of GITAM School of International Business, Visakhapatnam; Mr. P. Sakthi Arunkumar of Virudhunagar Hindu Nadars Senthikumara Nadar College, Virudhunagar, Tamil Nadu; and Ms. Aditi Singh of Jesus and Mary College, New Delhi. The subject for the Competition was Capitalizing Indias Demographic Advantage. This Competition is being sponsored by Jyoti Limited, Vadodara, since 1957, with a view to encouraging college students to think and write on topical economic subjects. (The essay follows in next page) Entries had been received from colleges and management students around the country and were judged by a panel comprising: Mr. Raghavendra G. Katoti, Senior Economist, Tata Services Ltd; Mr. Raghav Narsalay, India Lead, Accenture Institute for High Performance; and Ms. Sampada S. Palkar, Human Resources Professional. Swati Kapadia

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ESSAY: CAPITALIZING INDIAS DEMOGRAPHIC ADVANTAGE

By: Sumeet Shekhar Neeraj neeraj.sumeet@gmail.com +91 78428 88751 Visakhapatnam GITAM School of International Business (Formerly GIFT) Accredited by NAAC with A Grade (2011)

Demographics are destiny of a nation and the globe at large. In 2020, the average age in India will be 29 years, i.e. a whopping 70 % of Indians will be of working age in 2025, up from 61 % now & the share of people older than 65 will remain around just 5 %. On the other darker side of the coin we find Mr. Kapil Sibal (Minister of HRD) sharing some dire statistics, in India today, 220 million children go to school, yet only 12% of them make it to college (compared to 63% in the US). Similarly, out of the roughly 509 million workers currently employed in India, only 12% are skilled. The so-called existing "skilled workers" lack the soft skills like communication skills that would make them more useful to employers. For instance, NASSCOM recently reported that a whopping 75% of the fresh engineering graduates hired by domestic IT providers are unemployable. Much has been written and talked about the subject globally & for quite a while these numbers have been fascinating a sundry of writers, speakers and economists. Questions namely: In what ways shall these developments impact to a huge economy such as India? What makes them so fascinated and talk about these numbers? Today we are chiefly concerned on capitalizing the upcoming dividend for India.

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While there is a sizeable literature on Indias demographic trends and their economic ramifications, the econometric evidence for the growth impact of the working age ratio is more limited. Mr. Nandan Nilekani writes, Dividend is not a pure equation or an unalloyed promise of growth. The real gains of a population boom depend on policies that allow the young to attain high levels of education, find jobs, and contribute to the economy. Even in developed economies that have deployed talent effectively in the past, bad policy can turn a talent advantage sour. I ponder, can growth sans development exist? Unless industry and government collaborate to build policies that make effective use of a countrys young workers, a demographic advantage can prove ineffective, and even counterproductive. Economist Mr. Malthus who had argued that vast increases in population would result in catastrophic conditions challenging the very existence of civil society again raises a concern about modalities of Indias stance. On the other hand Mr. Blooms Positive way (mentioned above) was vindicated clearly in his research reports on various retrospective cases. Young, unencumbered workers are expected to spur entrepreneurship and innovation, enabling significant gains in productivity, savings, and capital inflows. The World Health Organization (WHO) too estimates that the demographic dividend can upsurge a countrys GDP growth by as much as a third. The demographic dividend shall have a significant impact on a countrys capacity for

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experimentation and entrepreneurship if provided with requisite access to capital, support infrastructure and policy initiatives. Reading between what Harvards health demographer Mr. David Bloom (the one who coined the term Demographic Dividend), in his propositions about the term, When young working-age adults comprise a uneven percentage of a countrys population, the national economy is affected in positive ways, I ask myself if it were really so? Was it fortuitous for the economies which he might have studied? Did they consciously slog on the demographic dividend to capitalize their seeds? Indias demographic dividend can be capitalized in great measure if the public and private sector have the political will and foresight not only to create jobs but also to train the new workforce, boost global trade, improve a failing education system, provide better housing, pull capital to support innovation, and implement policies that beget confidence in the economy. Capitalizing on strengths is one of the keys to success, says Prof. K Ramkrishna Rao, former Dean & Professor of Strategic Marketing Management, IIM Indore Key concerns stand mainly to be in areas of employability, skills gap, quality education, status of women, schools to cater to the burgeoning student bunch, access to knowledge, vocational training, entrepreneurship opportunities amidst slowdowns and tough entrepreneurial environments, willingness to challenge the status quo, access to technology, crafting disruptive discontinuities, need of

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new cities for the growing populations, need for more industrial clusters, infrastructure development gaps, appalling quality healthcare & sanitation (reference to the Human Development Index report 2011), improvement of income levels by leveraging more skilled job opportunities over meager labor force additions etc. Employability is contingent on the knowledge, skills and attitude of the individuals, that defines a person's capability of gaining initial employment, maintaining employment, and obtaining new employment if required. Mr. Peter Hawkins says To be employed is to be at risk; to be employable is to be secure. fits best in this essay. A sustained and massive investment in education to improve the employability of the upcoming demographic addition, an increase from the current 3.8% of GDP to 5%, is necessary to improve basic literacy and skills. How you spend is far more important than how much you spend. Vocational education is imperative to move unproductive farm workers to productive industrial workers. The Indian education system needs to come out of spoon feeding the youth and invest in computer and internet at schools and colleges. Human brain is most developed during the years at school. Internet is the gateway to information and information in turn is the gateway to acquiring knowledge/innovation. Of course this access has to be controlled otherwise we risk billions of Rupees in unproductive hours. Therefore it is very important for Indian Government to support one laptop per child project; train

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the trainer is again an initiative to be largely taken up for the skills development of the teaching class. I am very optimistic about the strength of brilliant minds in India however they need to be enriched with a vision of long term achievements from education so that they do not go down the path of labor jobs only. Institutions like the National Knowledge Commission, National Skills Development Corporation, The Right of Children to Free and Compulsory Education Act of 2010 plus various others and handsome outlays of the GOI. Its expected that the gross enrolment rate in schools shall inflate from the current 12% now to 30% by 2020. The Dept. of Education (MHRD) has its need projections of 1,000 more universities and 50,000 more colleges to be built in the next decade to accommodate 50 million college-age students by 2020. Will just building colleges and universities help? There have been a number of sporadic entries of many universities but have proved to be adding inadequate or no value to their cause. Education just cant be successful if there are gaps in action, impetus and ambitions of the government. Problem is multifold. Deficiency is at every level of such institutions, be it school or college. Here teaching is not considered a rewarding profession and is last bet for job aspirants. Corporates think business first and anything else is welcome if it happens as fallout of their pursuance to further their own growth. A foreign multi-level investment policy in the education sector may find growth and is expected to provide certain degree of value addition to the existing structure but how far can we really rely on them? Asking foreign universities to invest in
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India is may not prove to be a strong an answer. There is enough talent within the country. The government must enter into a PPP arrangement to do that. There are enough billionaires & philanthropic institutions in India to invest in education. The two biggest spending for a typical Indian house hold is Food and Education, Educational Institutions needs to now start clapping with both

hands, and work together with Industries and vocational training Companies to produce the desired result. To get the speculations rolling on right path, there are a number of initiatives that the government can begin immediately Viz. in areas like: 1. Pledge to spending more on education: Contrary to the recommendations of Kothari Commission 1968 advising India to spend 6% of its GDP on education, in the past 43 years, Indias outlay on education has never exceeded 4.3%. Govt. needs to set aside more funds for education than now. 2. Fix primary education on the first place: Maximizing overall enrollment in urban and rural areas, minimizing drop-outs and motivating masses for taking up education. In addition, eliminating gender gaps at this early stage must be a priority. 3. Education infrastructure: Building more schools with better infrastructure & a strong intellectual capital teaching in them. Teacher training needs a great deal of work and effort.

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4. Prioritize both- schooling as well as higher education: In line with Jawaharlal Nehrus vision to build Indias higher education platform to be technologically competent, institutions such as the IITs were expanded and the country focused on producing more engineers and scientists. There was and still is a neglect of school education, with new engineering colleges mushrooming every day. Unquestionably we have been in a better situation to benefit from the Services & IT revolution; we even have sent plentiful graduates abroad, where their successes have enhanced Indias soft influence. However, with our attention on higher education, we still face severe shortages of skilled manpower in areas like health, aviation and engineering which are leading to pecuniary & developmental bottlenecks. Businesses cannot rely on the talent of their fresh intake and are forced to design expensive in-house trainings. What we need to realize is that it is difficult to produce high-quality graduates who are capable of competing globally, not just in the Indian economy, without sturdy foundations at school. We need a paradigm shift in how we view education in the first place, and focus on building it from the bottom up not the other way round. The most important piece of the Indian education enigma is a change in mindset. This, finally, will be the most important lever in reforming the system and creating sustainable change. How do we view education? What should we expect from it- at school and, later, at university? These are queries which are inevitably ambiguous but which will require stern
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thought and contemplation not just among ordinary populations, but among politicians and administrators as well. For those engaged in the sport of India-China comparisons, the demographic dividend offers the single biggest hope for India to catch up (Kelkar (2004). Democratic India has more rigid labor policies and a weaker investment climate than communist China, a big reason for productivity across the board being less than half of Chinas. Flexible labor laws are needed to improve the investment climate and increase worker productivity and promote the skilled to take up entrepreneurship ventures; its only then we can cash in, on what seems like an opportunity of a life time. With fairly lower number of children, more women will be able to join the workforce. The status of women in the workplace and in society is one of the key factors that will significantly inhibit women from contributing to the pool of productive workers in India. This would increase the demographic ratio and significantly diminish the demographic dividend. An Indian woman in the working age is about half as likely to be doing economically productive work as her Chinese counterpart. Thus, a huge chunk of the productive population is rendered ineffective with substantial negative implications for the broader economy (Sonalde Desai 2010). Encouraging job opportunities for women and ensuring income parity and safety seem to be essential or Indian men will be left holding up only half the sky.
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Its high time and a make no mistake situation: we are in the midst of a severe action ambition gap. And it is for this reason that we need to be talking about the subject more and encouraging debate. Because let us be sure that, without a significant change in mindset, education & other policy reform is a non-starter and the demographic dividend will just remain a fancy term confined to economics and political journals and be a sleazy topic of discussion for round tables on news channels.

-----------------------------------------------------------------------------------------Number of words in the essay: 1995 ------------------------------------------------------------------------------------------

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