Asian economies have emerged from the global financial crisis with a powerful story to tell. While the developed world is struggling, the developing and emerging (D&E) economies, particularly in Asia, stand out with their strong performance. It is now an accepted position that the economic centre of gravity is shifting to the D&E world. There is an increasing level of self-confidence, higher levels of investments and plenty of new opportunities. This changing landscape presents an exciting future for building the economic capital in developing countries like India. But underlying the growth in economic capital has to be an equally strong foundation of building the human capital of the nation.
Put simply, it is the development of our people that has to be at the heart of sustainable economic development. We must invest, nurture and support an environment that can harness the energies and aspirations of a vast majority of our people so that they can contribute to and benefit from this new phase of growth, and be a part of the exciting future.
India has to grow at a GDP growth rate of around 10% if it has to make a transition from a developing economy to a developed economy and alleviate poverty. This means that we must have an all-round growth in agriculture, manufacturing and services. This requires a substantial uplift in the skills and capabilities of our workforce as well as building higher levels of productivity and employability. But where do we stand on this critical input?
According to a McKinsey & Company report, India will need to up-skill or re-skill 500 million people by 2020 to meet its growth requirements. However, at current capacities we can train barely 50 million—an astounding gap of 90%! Similarly, the XIth Five-Year Plan points out that only 2% of the existing workforce has skills training. Another report by Boston Consulting Group highlights that out of the 89 million people who are expected to join the workforce from 2009-13, over 47 million people will be school dropouts.
At higher levels, engineers graduating from India are far less than in the US, though we have a population