Education is an investment in human capital formation and hence, plays a crucial role in the economic growth and development of a nation. According to the World Bank, increasing the average years of schooling by one year can increase a country's GDP growth by 0.37%. Similarly, increasing the literacy rate by 1% can increase a country's GDP growth by 0.3%. Additionally, a study conducted by the National Bureau of Economic Research (NBER) found that if the currently enrolled students in South Asia, including India, attain basic educational skills, the region could witness a significant economic gain of $97.8 Bn, resulting in an 81% increase in the GDP. The study further states that if all children in the region acquire basic skills, the gains could rise to $259.5 Bn, reflecting an increase of 2,176%. The NBER study emphasized that such educational reforms aligned with the UN's Sustainable Development Goals could play a vital role in driving economic growth in a country.
The Indian government has taken several steps to improve the education sector in the country. The first major policy reform was the implementation of the Right to Education Act (RTE) in 2010. This Act made education a fundamental right for all children aged 6-14 years and mandated that private schools reserve 25% of their seats for students from economically weaker sections. This led to a significant increase in the number of children attending school and an improvement in literacy rates across the country. GER in higher secondary has made significant improvement from 53.8% in 2020-21 to 57.6% in 2021-22, indicating an increase in access to education. Further, the Census of India found that the literacy rate in India increased from 74.04% in 2011 to 77.7% in 2020, indicating an increase in access to education. The government of India has also initiated several digital initiatives like- DIKSHA, SWAYAM, and PM e-Vidya aimed at transforming various sectors and enhancing accessibility and efficiency.
Another significant policy change was the launch of the Skill India initiative in 2015.The initiative aims to provide vocational training to youth in various industries and sectors, thereby making them more employable. This initiative has helped bridge the gap between education and employment and has led to the creation of a skilled workforce that can contribute to the country's economy. A report by the National Skill Development Corporation (NSDC) suggests that the Skill India initiative has helped to create over 1.36 Cr (13.6 Mn) jobs between 2015 and 2021. The Skill India initiative has also led to an increase in the number of women participating in the workforce. According to NSDC, women's participation in skill training programs increased from 38% in 2016 to 47% in 2019, indicating a positive trend towards gender equality in the workforce.
More recently, in 2020, the government introduced the National Education Policy (NEP) 2020 to overhaul the Indian education sector and improve education outcomes for students in the country. The NEP seeks to achieve a GER of 50% in higher education and 100% in preschool to secondary level education by 2030. The NEP aims to improve teaching standards, promote skill development, and provide universal access to education.
In addition to improving the quality of education, the NEP also emphasizes the promotion of skill development in children. By developing these skills, students will be able to take advantage of higher-paying jobs and better exit opportunities. This will not only benefit the individual but will also contribute to the country's overall economic growth, leading to India’s GDP growth rates.
Moreover, the NEP promotes universal access to education. With the establishment of foreign universities in India, students will have greater opportunities to pursue higher education without having to leave the country. This will save India's foreign exchange and decrease the number of students going abroad.
By focusing on holistic education, skill development, and the integration of technology, the NEP aims to nurture a skilled and innovative workforce. This, in turn, can attract investment, promote entrepreneurship, and drive economic growth. Additionally, the emphasis on vocational education can reduce the skills gap and enhance productivity in key sectors. By equipping students with relevant skills and knowledge, the NEP lays the foundation for a stronger and more prosperous economy in India.
Apart from the changes in the legal and policy framework, there has been a significant increase in budgetary support for the education sector. The education sector has traditionally been underfunded and lacked proper infrastructure, resulting in low literacy rates and poor quality of education. However, the Union Budget 2023 set aside INR 1.12 Lakh Cr for education – the highest ever and an increase of around 8.2% to what was allocated in 2022.
The government's efforts to improve the education sector in the country have resulted in significant improvements in literacy rates, enrolment rates, and the creation of a skilled workforce.
Indian institutions have shown significant improvement in international rankings like QS World University Rankings and Times Higher Education. The Indian Institute of Technology-Delhi has entered the list of the top 50 institutions for engineering. This achievement is a testament to the Indian government's continuous efforts to enhance the quality of education across the country and promote innovation and research. The improved rankings are a clear indication that the Indian education system is heading in the right direction and is poised to compete with some of the best institutions in the world.
These advancements have led to the growth of various industries such as IT, healthcare, and manufacturing, ultimately contributing to India's GDP growth rates and the country's overall economic development. With a continued focus on education policies and investments in the sector, India can continue to make significant strides toward achieving its economic development goals.
