India: From rural subsistence to knowledge economy

Date: 2015-10-07; view: 359.

TEXT 1 (Unit 1)

India's rise as a leading source of software for the world is a curious aberration. Traditionally, agrarian economies first graduate to manufacturing before making the leap to become post-industrial service societies. One does not expect a country with a per capita GDP of $3,100 (measured in terms of purchasing-power parity (PPP), which adjusts incomes upward to account for low price levels in poor nations), a literacy rate of 65 percent and 65 percent of the population in the rural sector to be an IT superpower. Yet India's knowledge-based exports are expected to surpass $50 billion by 2010.

How did this happen? After independence in 1947, India was reeling from the effects of being part of the British Empire, and took self-reliance very seriously. The first post-colonial leader, Jawaharlal Nehru, saw that India required a cadre of people trained in the latest technology and skills. So just over 50 years ago, the Indian Institutes of Technology were set up to ensure that the best and the brightest Indians could get a quality education. During the decades of economic sluggishness that followed, the graduates of the IITs and other institutions of higher learning were often underemployed, and many migrated abroad.

Then came the liberalization of 1991. The then Finance Minister Manmohan Singh took the bold steps to remove the cobwebs of licensing and controls. This coincided with the advances in technology that made it possible to do remote work over satellite and fiber-optic cables. The capital markets bloomed with modern stock exchanges and foreign investors. The world's largest companies saw the potential of Indian human capital. And Bangalore happened.

Today India has more than 1,350 engineering colleges, producing several hundred thousand engineering graduates per year. Last year the IT services provider Infosys, we received 1.3 million applications for 20,000 jobs. When the government recently proposed to limit the number of times an aspirant could apply to the IITs, there were riots on die streets of Delhi.

While the software revolution ended up creating jobs for the technically educated, further advances in broadband and internet technology made it possible to perform a wide swath of functions from India. Today you have firms doing everything from processing sales orders to fixed-income research to patent searches. These jobs are not only for engineers, but also for accountants and people with a basic science or arts degree.

However, primary education remains the bane of India. For Indians older than 6, the national mean for years of schooling is three. In neighbouring Sri Lanka it is 7.5. There is now a huge drive to ensure that basic education is made accessible to every Indian child. India's youthful demographics should be a competitive advantage, but it will be wasted without broader access to primary education.

For India to continue on the road to economic success it is important to marry all its strengths, its highly educated and globally aware talent, its democratic traditions and the power of modern information technology. If this is done to ensure that the knowledge asymmetry between the ruler and the ruled is eliminated, then a society that both is free and can rapidly deal with the poverty issue will be achieved. India could even be a model for nations seeking to go from developing to developed status on the strength of its education and its knowledge economy.