India's under-funded universities are among the biggest obstacles to its prosperity

In a recent column, I highlighted the Indian government’s ambition to increase individual incomes and quality of life of its citizens to levels seen in the “developed” world by 2047, the 100th anniversary of independence from the UK.

As I also noted, this is much harder to accomplish than the parallel mission to grow the overall size of the economy, as success in one does not automatically translate into success in the other. Many countries in Latin America and several former communist states of Eastern Europe have remained in the middle-income trap, with few prospects of escape.

There is, however, one crucial component that enables both growing the economy and individual income: the development of India’s human capital and, in particular, its higher education system.

Two recent publications highlight the enormity of both the challenges and the payoffs from addressing them. The first is a report from the UN’s International Labour Organisation on India’s youth employment, education and skills; the second is the annual QS World University Rankings.

The ILO report, co-authored with the Delhi-based Institute for Human Development, paints a grim picture. In brief, although the number of young people entering the labour market every year has steadily grown (now seven to eight million a year), employment has barely increased over the past two decades, leaving young people, especially those in northern and eastern India, unable to find quality jobs. In fact, young people make up an estimated 83 per cent of the country’s unemployed.

The result is that many, even with technically focused university degrees, are forced into the informal sector and the gig-based economy, with its irregular income, lack of benefits and protections. The severity of the economic disruption from the Covid-19 pandemic meant that for the first time in decades, agriculture has grown faster than industry or services, as young people with rural backgrounds returned to their home villages and took up farming.

In this light, does further investment in India’s universities even make sense? The short answer is yes, more than ever. However, the type and purpose of investment matter enormously.

As the ILO-IHD report indicates, young people, even college graduates, often lack basic skills such as reading comprehension and division, as well as basic competence with information and communication technology beyond navigating a mobile phone. This not only reduces their employability, but sharply limits their options for entrepreneurship and self-employment, given the accelerating digitalisation of the Indian economy.

But a high-quality education system would do much more than bringing skill levels up to a 20th-century baseline, or even 21st-century digital literacy. Although India must expand employment-intensive fields such as manufacturing to reach the high-income level group by 2047, it must also help large segments of its population transition to a knowledge-based, service-led economy. In these environments, the premium is on value-added innovation, rather than the ability to repeat what is already known and done.

Many of the East Asian success stories, such as Japan, Singapore, Hong Kong, Taiwan and South Korea, made enormous investments in both the quality and accessibility of their university systems that allowed these countries to not only punch above their weight in development terms but paved the way for escape from the middle-income trap, while mainland China and Malaysia look like they will be following suit. In fact, China, which began to pursue international standards in a determined fashion from the 1980s onwards, now dominates Asian university rankings, having overtaken all others, and in certain metrics is beginning to challenge the US and UK.

So where does India stand in all of this? On the bright side, India is punching above its weight. It is by far the most innovative lower-middle-income country (followed by Vietnam), even outperforming some upper-middle-income countries such as Brazil and South Africa, according to the latest Global Innovation Index rankings.

On the other hand, in many ways this appears to be despite its university system rather than because of it. Both the QS and Times Higher Education rankings have no Indian universities within the global top 100, or even within the top 40 in Asia. And yet this is entirely in keeping with the country’s development level; India (followed by Iran) leads all other lower-middle-income countries in university rankings.

These rankings are probably an unpleasant surprise to many from the region, given the enormous success that graduates from the Indian Institutes of Technology and Indian Institutes of Management have had internationally. There’s no doubt that the rigorous selection process for these universities ensures that their students are highly talented and motivated, which ensures a talent-rich environment. But by global standards, the ratio of students to teachers is too high, and research outputs are too low.

These conditions sharply limit the opportunities for advanced learning and original work both at the individual and systemic levels.

One 2021 multi-year study used testing to compare the skill levels of Stem university students from the US, China, Russia and India. It found that Indian students, even from elite universities, lagged significantly behind their peers from the other three countries in critical thinking skills. Most concerning of all, they showed little to no growth in those skills over the course of their university education.

While investments in improving faculty-student ratios and facilities are important, what is most required is a shift in emphases.

Moving away from rote learning towards critical thinking when teaching and evaluating students at every level, and from teaching towards research at the postgraduate and faculty level, is particularly critical. Incentivising faculty to focus on these elements requires significant administrative changes, and the availability of at least moderately competitive pools of funding for research activities.

Fortunately, the government recognises these realities, and unveiled its ambitious and well-regarded New Educational Policy in 2020 to tackle the issues described here. Much like China in the 1980s, the Indian government recognises that internationalisation is useful as an accountability tool to force universities to raise their standards in ways that support its ambitions to accelerate modernisation and development.

In fact, Times Higher Education, one of the two major ranking services, notes that its “Young University ranking” (that is, those under 50 years old) features two Indian universities in its top 100 – Anna University and Mahatma Gandhi University – and another 43 lower down the ranking list, but rapidly rising. This, in turn, suggests that newer universities with more to prove and a more flexible administrative culture are quicker to respond to the aims of the new policy framework.

But unlike China, where all higher education is publicly owned and not-for-profit, India relies very heavily on the private sector.

In 2022, the majority (55.5 per cent) of Indian university students were, in fact, enrolled at privately owned institutions, one of the highest ratios in the world. The government has designated just as many private as public universities as “institutions of eminence”, signalling that this reliance will continue. But many private colleges are small and with limited resources; getting all these private institutions to respond to expensive government guidance is likely to be challenging, and this will require great political will.

In particular, the need to orient both public and private institutions towards research will require both an increase and a reorientation in such spending. Much of India’s research spending goes to standalone government institutes, many of them engaged in classified national security-related work, rather than faculty and students at universities. But without access to research funding from the state above all, as well as philanthropists and corporations, Indian universities will find it difficult to truly shine.

It wouldn’t be for the first time.

In 1930, CV Raman became the very first person from the Global South to receive a Nobel Prize in the sciences. Most notably, his entire higher education, as well as his award-winning research career, was at Indian universities. He went on to build more institutions of excellence during his long life.

India, unlike most colonised nations, achieved independence with a strong, arguably world-class (if small) university system largely managed by Indians, for Indians. The pressures of the post-colonial era – where expanding access and job creation took precedence – weakened some of these strengths, but India appears to have the will and the means to reclaim this legacy.