India’s educational system is full of paradoxes. In terms of enrollment, India’s higher education system is the third-largest in the world (only China and the United States are larger).  Moreover,  India has the largest number of higher education institutions of any country: more than 18,000 institutions (348 universities and 17,625 colleges). The overall size of the country’s higher education system has increased substantially, driven primarily by the establishment of private institutions designed to meet the demand for more education.  The number of Indians participating in higher education more than doubled from 4.9 million in 1990 to nearly 10.5 million in 2006. This increase in size has not been matched, however, with an improvement in the quality of higher education.

Table 1: Typology and growth trends of higher education Institutions

Source: Pawan Agarwal, Higher Education in India: The Need for Change.       Icrier Working Paper 180, June 2006

      At the top level, the seven India Institutes of Technology (IITs) and six India Institutes of Management (IIMs) have produced a cadre of highly skilled graduates who are largely responsible for building India’s vibrant high-tech industry.  As The Economist has noted, “These elite institutions help to keep India plugged into the global knowledge economy.”⁷  The IITs can accommodate only 5,500 new students each year, however, and more than 300,000 individuals compete for these coveted slots each year. 

     Below the limited tier of top schools, the quality of Indian higher education falls off sharply. The 2006 “Report to the Nation” from the National Knowledge Commission provided a sobering assessment of the general state of technical education:

Except in a few elite institutes, engineering education in India is often outdated and irrelevant. Most graduates do not possess the skills needed to compete in the economy, and industries have been facing a consistent skills deficit. Also, most institutes, including premier institutes, fail to attract and retain quality faculty. These deficiencies in technical and engineering education mean that India runs the risk of missing out on significant opportunities.⁸

     Similar problems are evident in other areas of higher education.  Although millions of students eagerly seek the advantages of a college degree or diploma, in many cases the education they receive does not give them the skills they need to get good jobs. A recent article in the International Herald Tribune offered a bleak assessment of the state of higher education in India:

Most of the 11 million students in the 18,000 Indian colleges and universities receive starkly inferior training, heavy on obeisance and light on marketable skills.… All but a tiny handful of graduates are considered unemployable by top global and local companies.⁹

     In contrast to the United States and most developed countries, the unemployment rate among Indian college graduates – 17 percent in the 2001 census – is higher than the unemployment rate for high school graduates.  For many Indian graduates, the problem is not just that they lack specific technical skills that industry needs but that they lack the “soft skills” – the ability to listen and to communicate well (in English), to solve problems, and to work collaboratively and creatively – that are among the abilities that many companies are seeking in their new hires. 

     A global ranking of “top world universities” reflects the weaknesses of higher education in India.  Only two Indian universities appear in the 2006 list of 500 top universities prepared by the Institute of Higher Education at Shanghai Jiao Tong University, and neither of them appears in the top 300. By comparison, Israel, with 1/200th the population of India, has seven places on the list of top 500 universities, and China has 14.¹⁰

     India’s higher education system suffers from several handicaps. One problem is that the system is highly fragmented. The large number of institutions means that the average college in India has an enrollment of fewer than 600 students—considerably lower than in the United States, where the average is closer to 4,000 students, or China, where colleges average almost 9,000 students.

     In addition, whereas India’s business sector has benefited from regulatory reform, the country’s higher education system continues to be mired in a web of regulation—particularly on the university level, which remains essentially a government monopoly:

The Indian education system is one of the most tightly controlled in the world. The government regulates who you can teach, what you can teach them and what you can charge them. It also has huge regulatory bottlenecks. There are considerable entry barriers: Universities can be set up only through acts of legislation, approval procedures for starting new courses are cumbersome, syllabi revision is slow, and accreditation systems are extremely weak and arbitrary. The regulators permit relatively little autonomy for institutions and variation amongst them.¹¹

     Further complicating the regulatory picture, multiple government ministries are involved in setting educational policy. K. S. Vishvanathan of Wipro pointed out the ministries of education, labor, information technology, and human resource development all have stakes in education. Each has its own priorities and does not work effectively with other agencies.  Unless these ministries come together to forge a common policy approach, progress will continue to be slow.

     A final problem for India’s higher educational system is the relatively low wages that these institutions are able to pay their faculty.  As the report from the National Knowledge Commission noted, the country’s colleges and universities – even the elite institutions – are not able to compete effectively with the private sector in attracting and retaining high-quality faculty members.  Moreover, unlike schools in many Western countries, Indian colleges and universities do not provide a culture that supports and rewards faculty members for engaging in research.  Academic advancement is based strictly on seniority. 

     As a result, there is little incentive for faculty members to pursue the kinds of research interests that could provide a basis for collaboration with the private sector, as well as opportunities for additional compensation from consulting or the commercialization of faculty innovations. 

     In view of these problems, it is not surprising that there is a disconnect between the skills Indian industry needs and the skills many educational institutions provide to their students.  For example, only about 15 percent of graduate students in engineering are able to pursue degrees in computer science, and the entire country produces just 300 PhDs in computer science each year.  Although a much larger percentage of engineering students would like to study computer science – and good jobs would be available for many more computer science graduates than the country’s educational institutions now produce – the limiting factor is the number of slots in the field that are available in the country’s graduate schools. 

     The extent to which demand for quality education exceeds the available supply is evidenced by the fact that about 160,000 Indians choose to study overseas each year, at a cost estimated at approximately $4 billion annually. In fact, Indians constitute the largest group of foreign students in the United States. Although an increasing percentage of these students are now returning to India after receiving their degrees to pursue expanding opportunities at home, those students who choose to remain in the countries where they receive their higher education are resources that are largely lost to the Indian economy.

     As noted above, many IT companies are making substantial investments in providing on-the-job training for their employees. Some IT companies are also offering internships to students to introduce them to the opportunities and challenges provided by the private sector and give them a chance to begin acquiring the skills they will need to be successful in the business world.  According to Manoj Varghese, Director of Human Resources for Google India, however, the curriculum structure at many schools does not allow students to take time from their studies to accept an internship, nor is there much interest among faculty members in encouraging students to pursue these opportunities.

     In addition to the country’s colleges and universities, an entire industry of private “finishing schools” has sprung up to provide graduates with the practical training that they have failed to get in their college educations. Although the training offered by organizations such as the National Institute of Information Technology (NIIT) and Globysn Technologies is not formally accredited by the government, these enterprises have been successful because they provide the specific skills that many employers want in new hires.  NIIT, which was founded in 1981 by two IIT graduates, is now one of India’s largest educational institutions. Over the past 25 years, this publicly traded company has provided training in virtually every area of technology through its corporate training program.  The company currently has 500,000 students enrolled at more than 3,000 locations in India and claims to have provided training to “one out of three software professionals in India.”  Globsyn operates a “Software Finishing School” in West Bengal that provides a “globally benchmarked, industry relevant curriculum [that] reflects the continuous paradigm shifts in the IT industry.”  Both companies have divisions that provide outsourcing services that help keep them in close touch with the actual needs of industry.    

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