Tuesday, 16 October 2007

Are we riding the bull or just going to the dogs !?

India has turned round a corner. The economy is brimming with good news. The bulls charged past 19k yesterday, taking just 4 days to cover the last 1000 points!! The dollar is losing its shine against the rupee. The rupee touched a nine and a half year high up against the formidable dollar. The inflation rates are also down after hovering over 6% about the same time last year. I'm no economist, but it doesn't take a maven to get the point.

To me, it all began on the day I picked up the TOI one fine morning 2 years back and read this article "Advantage India: forever young!" on the first page. There had been a transformation. The fact that we support 17% of the world population on just 2.4% of the land suddenly had a brighter side to it. The population boom was now a population boon! In the years to come, our population growth would lead to a surplus of 47 million working age people. Goldman Sachs projected that given the rate of growth of our population, we'd be the only country to sustain growth in excess of 5% till 2050. Thus making us the 3rd strongest economy by 2050, behind China and USA (note the order). Back then, it was hard to swallow. Not now. We are currently the fourth largest in terms of Purchasing Power Parity(PPP) and are poised to outdo Japan in just 10yrs!

But all is not well. When we see beyond all this, the ground realities are pretty grim. This article by the chairman, NIIT group will shake you back to reality. Having a surplus population in the working age bracket just won't do any good. Not unless they can be fruitfully employed. This reveals the darker side of the picture. For starters, institutions across the country churn out almost two million graduate every year and 3,00,000 are engineering graduates. And a meagre 10-15% of them are employable in BPOs and offshore IT companies. Developing countries like ourselves and China are able to tip the scales with high growth rates thanks to the competitive edge provided by the availability of cheap land and labour. But the dearth of skilled and competitive hands will definitely hit us hard as wage rate are bound to sky-rocket. So there is a simple paradox arising out of this.

By 2012, India could have an unemployed population of 19-37 million, the largest share of which will be educated youth. By 2020, India is estimated to have surplus working population of 45-50 million people. The explanation provided by Rajendra S Pawar in the article is simple... While urban India has witnessed a stupendous growth in jobs, in other parts children still drop out from school, girls are still not sent to school and youngsters are forced to take up jobs instead of completing their graduation.

NIIT is undertaking programs of generating skilled manpower. Their programme intends to equip graduated with technical and communication skills. The project appears to be puny going by the number of graduates that they intend to train (200 currently) but the intentions are definitely noble. This is yet another novel attempt by NIIT after the "Hole in the Wall" project. I wonder how many more such programmes these people have launched. Hats off to you NIIT !!


Surabhi said...

Very thought provoking post da! this is the kind of topic ppl usually tend to read in the newspaper and discuss over the coffee table and then...done! i would never have thought of writing a post on such a serious topic! yeah, though the future looks all bright and colorful, the ground reality is pretty grim. hope many more such initiatives (like the one by NIIT) are taken to reduce the number of educated, unemployed people in India.
Good job, VK! :)
Minor glitches though... it's 10-15% who are employable in the BPO and IT sector and not 10-15! :)
A couple of others too, though i dont remember where, but one thing is unpardonable! u've got the spelling of GS wrong!!!! it's Goldman Sachs and not Goldmann Sachs!!!! :-I Grrr...

vk said...

Thanks a lot Sur. For the compliments and pointing out the typos! Did find some myself too...

I set out to write on the power conservation project actually. But as i began to read stuff adn research, this realizatoin hit me! So, to my own surprise, I ended up writing this!

And I humbly beg your pardon for the GS goof up! ;-)

fragmented fragrance.. said...

u seem to b really uptodate with the game of bulls n bears....!!
i got interested in this game for i had chosen investment analysis as my applied component...n i was pushed in to the habit of readin eco-times everyday n analysin the market trends...isnt this intrinsic game intersting???....i wish i had the money to play with though.....
ur article made for a good reading!!