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Re-designing Higher Education For The Digital Economy

The vision of India becoming a global talent hub can be actualized only if India can make corresponding changes to its education system

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RBI Governor Raghuram Rajan in an interview post the latest monetary policy review said, “…India could be on the verge of a revolution, a major leap in manufacturing and services… we should allow our enterprises to find their way…” India’s favourable demographics could undoubtedly lift the economy from a low income economy to the mid to high income countries with stupendous increase in living standards and raising millions of people out of poverty in the process. This would however require a great effort in building a knowledge intensive human capital for powering the new age economy. Let’s understand the evolving trends carefully to fully appreciate the opportunities and challenges.

The world is today driven by high tech industries such as information technology, the internet of things and specialized high skill manufacturing. There is hardly any business which is not getting radically transformed through technology advancement. Businesses and society at large are closely connected through ever faster communication channels and means of travel. The interplay of advanced communication technology, energy systems and automation is driving change in all spheres including the job market. It is therefore imperative that a country’s education system is in sync with the emerging economic realities to prepare it for the coming opportunities and challenges.

The vision of India becoming a global talent hub can be actualized only if India can make corresponding changes to its education system. It has to overcome the key challenges of low levels of employability, research and entrepreneurship and take up a structured education vision and academic leadership to align to the emerging economic paradigm.

While we are focusing a lot on skills to cater to the huge potential for intermediate skilled jobs and shifting a significant chunk of population dependent on subsistence farming, the challenge on the higher education area is equally daunting and critical for the economy. We have negligible presence in the World’s top 200 Universities rankings; employability of graduates’ remains below 25 per cent across all job functions and education streams; and we have a grave inadequacy in teaching resources in the system. There is therefore a need for an innovative approach to bring qualitative reforms in governance, teaching, financing and outlook to reach world class standards:

First, the higher education system has to gear up to generate multi-disciplinary and multi-skilled graduates. Latest trends indicate the emergence and recognition of multi-disciplinary and multi-skilling learning all over the world. From a pure economics point of view, pure engineering or business skills are no longer delivering outstanding value in generation of new products and solutions.

An integration of the humane touch, design, aesthetics and simplicity has become as important to business as is cutting edge technology. Moreover, with climate change, progressive urbanization, nuclear families and proliferation of social media, there is increased consciousness of the socio-environ-cultural environment where we live and the material race post World War II is giving way to preference for more sustainable, balanced and inclusive growth.

Second, we need to build an efficient and enabling ecosystem for teachers to enhance the profile of teaching as a preferred career option. This mechanism should have the aspects of performance linked pay, built in accountability metrics and extensive faculty development and exchange programs for making a significant change. The internet can also be leveraged to partly address the issue of shortage of quality faculty through outreach, building economies of scale, massive open Online Courses (MOOCs) and targeting complex topics through visualization methods.

Third, we need to revisit higher education financing. The current fund flow to higher education remains at ~1.2 per cent of GDP and the ways and means of financing higher education has seen a contentious debate in the country over the years. Owing to several factors including fiscal constraint, state funding to education in general and higher education in particular has been declining in real terms. On a purchasing parity basis, India’s per student spend on higher education (2626.9 PPP US $) recorded in 2012 is one fifth of the UK, one-fourth that of USA and two- thirds of that spent by Brazil. According to the estimates of the Ministry of Human Resource Development of 2012, to attain a GER of ~30 per cent, India's education sector needs investment worth $150 billion over the next 10 years.

Clearly, the massive expansion in enrolment and the incapacity of the government to fund such an expansion requires new and innovative ways to finance higher education in the country
. Policy makers should look at ways to attract incremental financial resources to the sector. The new approach should take into account the massive financing needs to sustain the increase in enrollment; not-for-profit structure failing to curb commercialization of education; and continuous increase in the number of students moving abroad for higher education.

There is an urgent need to derive a new equilibrium of demand and supply side financing interventions in higher education in India. The under lying principles of cost sharing should be the basis of reaching this new balance which should entail allowing flow of fungible capital into quality higher education institutes.

Fourth, global benchmarking of Indian higher education is essential for achieving excellence and the country emerging as global talent hub. Demographic trends suggest that India would be in a sweet spot to cater to the emerging opportunities in the job market over the next two decades. India should therefore actively facilitate partnerships with the best institutions in the world to enrich itself with world class practices in research and human capital development. In parallel, it should facilitate Indian institutions to increasingly look outwards to set up campuses in foreign countries to establish the credibility of Indian higher education.

A good start could be opening representative offshore offices, equivalent to British Council, Education New Zealand, Education USA, etc to facilitate education exchanges. Efforts to ‘glocalize’ Indian higher education are the need of hour and would have benefits for all stakeholders- students, universities, governments and society at large.

Finally, we have to make strong and durable linkages between higher education and skill based vocational education. A McKinsey Global Institute report expects that India and other younger nations are expected to account for 61.7 per cent of total surplus low skilled labour by 2020. This implies that the new age vocational system India aspires for should be dynamic in nature so that it can be responsive to the ever changing socio-economic landscape.

Manpower planning and skills development at the national level have to be seen as strategic tools in attracting foreign investments. Moreover, the public perception about skill based education has to be changed for the better and movement in and out of vocational to higher education be made seamless. All the three variables of education- the skill sets, pedagogy and the job market are constantly evolving and policies have to be pre-emptive rather than reactive to maintain and grow the competitive edge of the economy.

Given the demographics, the strategic choices we make would shape our future. It would require the collective efforts of the Government, Academia, Industry and Students to lay out a vision and follow it up over the next decade to make the changes happen. Regulatory facilitation of the private sector, fostering industry-academia linkages and creation of a conducive research ecosystem could be the starting points in this direction.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Rana Kapoor

The author is MD & CEO of YES Bank & Chairman and YES Institute

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