The Jantar Mantar agitation that we experienced recently reflected the fact that the government had not paid sufficient attention to the concerns of the people below the age of 30 who constitute half the population of the country.  The agitation involved the Gen Z youngsters who were higher or tertiary education students and many who were hunting for jobs. They are 367 million in number and are a major part of the generations relevant for our long-term growth.  In essence the core of the issue is the state of support from the government for higher education and for employment prospects for young adults.

When it comes to their access on education there has been a substantial advance not just in school education but also in tertiary education in universities and similar institutions.  In the forty years between 1983 and 2023 the percentage of persons in the 20-29 years age group who were graduates has risen from 4 percent to 28 percent which in absolute terms is from 5 million to 63 million. We have also seen a significant reduction in caste and gender-based discrepancies in tertiary education and graduate employment.  A truly valuable change is the fact that STs with education can move away traditional occupations in leather, waste, etc.

The substantial availability of graduated individuals has actually been a major part of the boom that we have seen in the global impact of our infotech companies whose exports are about $250 billion at present and the substantial rise of global capability centres (GCC) to about 2100 now employing over 2 million persons.  In fact, one can go a step further and accept that the inward remittance of around $140 billion we receive from Indians abroad is substantially attributable to the growth in the number of tertiary and high school educated Indians.

However, unemployment among the 15- to 29-year-olds remains high – nearly 40% among the 15- to 25-year-olds, and 20% among the 25- to 29-year-olds and only a few secure stable salaried jobs within a year of graduation. The major challenge is the quality of education and the shortage of adequately qualified graduates who can work without substantial post recruitment training by companies and the surplus of poorly qualified graduates. 

This is where government spending on education matters. The 2020 National Education Policy endorsed the goal of 6 percent of GDP spending on education by Central and State governments which has been part of policy since it was proposed by the Kothari Commission way back in the mid-sixties. However, in practice the share of government spending on education has remained more or less stagnant at around 4 percent of GDP for a long period of time. About 80-85 percent of  the spending is by State governments as they are the ones who establish and finance the government owned schools and colleges. However, the Central Government is particularly important for the quality improvement of education.

Using the data available in the budget documents what one finds is a significant reduction in the share of spending on education by the Central Government from 3.7 percent of its total spending in 2016-17 to 2.4 percent in 2024-25.  Expressing this as a percentage of GDP it was 0.47 percent in 2016-17 and down to 0.33 percent in 2024-25 well short of what the Central Governments education spending should be which is 1 percent of GDP . This failure to increase spending on education to improve its content is reflected in the fact that nearly half of urban XI and XII class students spend about Rs. 10 thousand a year for private tuition. In rural areas about one-third of the students rely on private tuition and spend about Rs.4.5 thousand per year. Yet another indicator of this lack of spending by the government is the decline in the enrolment to government schools and the rise in enrolment to private schools.

The youngsters are a major part of what we call a demographic dividend.  Ignoring their concerns will convert this into a demographic disaster.  There is a need for stronger action by governments to improve quality of education and a more determined effort to meet the 6 percent of GDP target that has been a part of policy for sixty years.

Education and employment generation for youngsters does not seem to be a priority for the Government of India. It has focussed its policy mainly on reaching out to conglomerates and entrepreneurs for promoting manufacturing growth and spending attention focuses mainly on developing the infrastructure. That is why we have a substantial increase in the share of government spending on transport which shot up from 5.2 percent in 2016-17 to 12.0 percent in 2024-25.  This development of infrastructure has not yet boosted manufacturing growth and some of it was plainly wasteful like the airports set up many of which are hardly used by air travel services and new highways that are often not near the industrial areas.  

Promoting manufacturing industry is of course desirable and perhaps even more necessary as the rise in internet sector services is now slowing down and, this year even declining, because of the major changes in infotech technology created by AI. A crucial part of action for promoting manufacturing is to improve the quality of knowledge and skills of graduates.  This is why higher spending on education at all levels from primary to tertiary is as necessary for accelerating the growth of industry as heavy investments in infrastructure which is the current focus of government strategy. Focusing on employment prospects for graduates also requires a manufacturing policy that promotes labour intensive manufacturing activities, much of which will be from medium and small enterprises.

The Northern States account for the bulk of the additions to the work force and will have to work vigorously in the improvement in the quality of education and in the promotion of industry and other activities that offer decent jobs for high school and tertiary graduates. But the other States also need to increase their commitment to raising the quality of education. Government action on education will require close cooperation between the States which account for 80-85 percent of public spending on education and the Centre which has a key role in setting standards and even goals for education reform. This will not work well as dictation by the Centre. We may do well with decentralisation of standards and management of entry programmes by individual states, which vary greatly in the quality of education, the availability of high school and tertiary graduates and availability of decent employment.

What we need is an organised set-up, combining the States and the Centre, comparable to what we have for GST, that will set a coherent policy and spending framework for the States and the Centre.  In our country, with a rising number of educated youngsters who can be the basis of accelerated growth, the government's development policy must focus much more attention on improving the quality of education and better prospects for employment for tertiary and high school graduates. In a democracy the primary goal of the Centre and State Governments should be their impact on the lives and hopes of all citizens.