INDIA: Rapid growth but misalignment

Higher education enrolments in India reached 15 million this year. This is just four million short of US enrolments, but corresponds to a gross enrolment ratio of only 14% compared with 82% in the US.

Growth in enrolments has accelerated over the past five years, rising from 5% to 7.2% a year. During the same period 200 new universities and 8,000 new colleges were set up to total 525 universities and 25,951 colleges.

Last year about one million more students were enrolled than in the previous year. With this rapid growth India may well reach the target of 30% gross enrolment ratio that it aims to reach by 2020, and is likely to exceed US enrolment in the next few years. With its significantly bigger population of young people, India would eventually have the largest higher education enrolment in the world.

This growth looks good for India, but the worrying part is the nature of this growth. Large numbers of private management institutes and even more private engineering colleges constitute the bulk of the increase. Numbers of both have doubled over the past five years, from 1,000 and 1,350 to about 2,000 and 2,700 respectively.

Thus there is a quick transition from publicly funded general higher education to private professional education dominated by engineering and management. The private sector took up this expansion as public institutions were not in a position to expand; so even though quality is compromised, capacity has been created and demand met.

Apart from obvious concerns about quality, there are four consequences of this mushrooming growth.

First, tuition fees in all private professional institutes are high, making higher education increasingly expensive. As a result, more and more students and their families now borrow - a trend unknown just a few years ago. About 500,000 students took out educational loans last year compared with just a few thousand in 2001. From the early 2000s, the banking sector's education loan portfolio has been growing at a robust rate of 40% a year.

Second, Indian society and the economy have been riding high on hope. Higher education growth has been mainly aspiration-led and largely unrelated to changes in the labour market.

With rapid economic growth in recent years there has been demand for qualified workers in information technologies and IT enabled services, organised retail, financial services and a few other sectors.

But agriculture continues to account for about half the workforce, mainly farm workers. Many new non-farm jobs require intermediate skills that the country's small, low-prestige and poor quality vocational education and training sector is unable to provide.

Jobs requiring graduate degrees have also increased, but to a lesser extent, so graduate unemployment is high. Many engineering and management graduates unable to find jobs commensurate with their qualifications settle for lower-skilled jobs paying low wages.

So after an expensive education many graduates are landing up with poorly paid jobs. Those who have borrowed face repayment difficulties and debt problems.

Third, unlike in many parts of the world where education at the first degree level is broad-based and flexible, the curriculum and content of Indian professional institutes is rigid and focused on narrow technical skills.

With almost no liberal learning component in the curricula of management and engineering degrees, India could face a future where the workforce may be reasonably well trained but narrow in its outlook.

Fourth, aspiration-led demand and sharp capacity growth in engineering and management degree programmes have led to vocationalisation of formal higher education. So not only are the qualified engineers doing jobs that require lower-order skills, they are also graduating with a lower-order skill set making it increasingly difficult to clearly segregate the vocationally qualified from the higher education graduates.

With such 'educational inflation', the final utilisation of the skills and competences acquired during education have retained the same degree of complexity. But if before it was enough to have a BA to get a job, now an MBA or similar level is necessary simply because everyone else has one.

There could be serious consequences for the current nature of growth on long-term competitiveness, equity and social cohesion for the Indian economy and society. Much more is required than the current focus on increasing the numbers of high-end institutions with public funds or regulating the private sector by bringing in transparency.

India needs a California-style master plan creating distinct sectors of higher education to ensure both access and excellence, and to align higher education growth with people's aspirations and the changing economic structure. Frantic growth with continuing misalignment could result in unwanted consequences.

* Pawan Agarwal was formerly a financial advisor to the Indian University Grants Commission and Director of the Ministry of Human Resource Development. He is now a senior civil servant and author of Indian Higher Education: Envisioning the future. Sage (2009). The views expressed here are personal.