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India needs to drastically reform higher education in rapidly digitising world
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Amit Kapoor | 14 Aug, 2018
As India gets ready to celebrating its 71st Independence Day, concerns
over honing its human capital come to the fore. These mus be addressed
if the nation is to seize the opportunity offered by a demographic
dividend for sustainable and inclusive digital growth.
The
growing working population, which is expected to increase by 1.3 million
every month between now and 2025 (World Bank, 2018) demands a focus on
higher education and skilling to create a pool of human capital in the
ongoing digital revolution and take India on a higher growth trajectory.
While India already lags behind its peers in terms of employment
generation owing to various socio-economic reasons, growing
digitalisation can further accentuate the frictions in the job market if
the country doesn't align the skills of its rapidly growing workforce
to the demands of the new digital economy.
It is, thus, essential
to adapt to the new technology to tap the full potential of digital
disruption and reduce inequality in the society.
This could be
achieved in part by transforming the higher education system in India in
a way that it enables students to prepare for the challenges of future
jobs. This, however, requires an understanding of the way innovations
are going to impact the country's labour market. There seems to be a
likely increase in the demand for the high skilled workers who use
non-routine cognitive and ICT skills and the low skilled workers who use
non-routine manual skills, while the mid-level skilled workers who are
in their routine occupations are more likely to experience a decline in
demand for their skills because of the automation of the repetitive
tasks.
A 2017 OECD study, "Future of Works and Skills", points
out that employment in high skilled occupations in India experienced a
6.3 percentage point increase over 2002- 2014, while employment in
medium skilled routine occupations declined 5.3 percentage points over
this period.
Sectoral analysis of the Indian economy reveals that
the manufacturing sector has a high potential for automation, with an
estimate of 69 percent of the tasks that could be automated in organised
manufacturing in India (World Bank Group Foresight Report, 2016).
The
automobile sector is expected to buy 60 per cent of all industrial
robots sold in India (ET Auto, 2015), which could be used for doing a
large number of routine tasks such as welding, polishing and painting in
the manufacturing plants, leading to a consequent decline in such jobs.
Further,
looking at the services sector, e-commerce provides an example of
India's industry where technology-enabled innovations, such as digital
payments, hyper-local logistics, analytics driven customer engagements
and digital advertisements are expected to support the growth of the
sector. While the sector is set to grow from $38.5 billion in 2017 to
$200 billion by 2026 and, consequently, expected to generate employment
in e-commerce and the allied industries such as logistics, transport and
warehousing, there is a greater likelihood of displacement of small to
medium retail enterprises and shop floor salespersons they have, because
of the increasing demand for the automation skills in the industry.
The
IT sector has been undergoing a huge technology transformation and has
seen tremendous growth over the last 20 years. Its contribution to
India's GDP rose to approximately 9.5 percent in 2015 from 1.2 percent
in 1998. However, the sector is expected to experience a 14 percent
decline in its workforce by 2021 on account of application of machine
learning and Cloud computing technologies which will automate the
routine and backend tasks.
Thus, IT sector workers need to
upskill themselves on the SMAC (Social, Mobility, Analytics and Cloud)
technologies to overcome the labour market frictions arising out of the
digital transformation. The SMAC market is expected to grow to $225
billion by 2020 and create employment opportunities in related
capabilities.
The impact of automation technologies has also been
felt in the financial sector, where there is already an extensive use
of chatbots and internet banking at the customer services end. While
there will be some job displacements for the digital transactions which
are non-risky in nature, there will always be a requirement for human
intervention when it comes to risky transactions and investing money. In
fact, digital finance is expected to create 21 million new jobs by
2025.
A review of the future of work in India across various
sectors on account of the ongoing digital revolution necessitates the
need for transforming its system of higher learning to deliver a
workforce which is industry ready. This could be achieved by learning
from the success stories of countries such as Russia, Singapore and
Switzerland, which have developed special industry-specific programmes
to prepare their people for future jobs, and also analysed the in-demand
future skills to provide appropriate skill-based training to young
people.
Further, encouraging more private sector participation
in setting up higher education institutes catering to the needs of
industry can bridge the skill gap experienced by the Indian economy.
However,
the government needs to ease the regulatory requirements for setting up
universities to encourage greater private investments. In addition,
emphasis should be laid on outcome-based indicators, such as the number
of students who get employment after graduating from the university,
instead of input-based measures, such as the gross enrollment ratio for a
university. Moreover, online courses from platforms such as Coursera,
edX and Udacity, which have emerged as the online solution to the demand
supply skill gap, should be awarded credits in the
undergraduate/graduate studies, to encourage greater student
participation.
At this juncture in the global economic scenario,
India must make significant revisions to its higher education system to
make their future workforce industry ready. While change is difficult,
it is also inevitable.
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