India Trip December 2009: Part 5

January 5, 2009 -- The biggest challenge and therefore opportunity faced by India is its demographic dividend: there are over 500 million youth under 25 years of age and 350 million under 15 years. 30% of them are in cities. A small percentage of these youngsters will obtain university degrees. The majority will need vocational training. The government has understood this challenge and has set up the National Skills Development Corporation that is developing policy to educate 500 million people in the bottom of the pyramid in vocational skills. These people are retail staff, telecom field workers, commercial vehicle drivers, rural consumer sales, mechanics, factory workers, etc.

While the scale of the opportunity is huge, the cost of training these workers has to be extremely low as most of them don’t have any assets and will either have to be subsidized by the government of will have to take loans. Most of these people come from families that are not in the organized sector, in other words do not have any concept of structured employment so the drop out rate is high. Many entrepreneurs have entered the education market in India, the number of new universities and K-12 schools is staggering. Very few entrepreneurs are willing to enter the vocational training market, as it is very difficult to make money.

Understanding this, the national government has begun to take the lead in vocational training. For example, the government has taken 150 of 1,500 government-run Institute of Technology (ITI) and entered into public-private partnerships (PPP). Other government departments are paying private sector vocational training companies a fixed amount for every person they train successfully.

Most major US universities are engaged in discussions on establishing some presence in India. MIT has been given a five-year contract to establish a Global Health Institute in Delhi. Rumors are that MIT may establish a joint venture business school in India soon. Bob Brown, President of Boston University will be in India in a couple of days. Boston University just established a new position Vice President for Global Operations to lead BU’s efforts in establishing global presence. India is a key part of this vision.

The current generation in India is called the “why” generation. They are questioning all aspects of Indian life. This after generations of children being told what to do and how to think by elders: parents, teachers, etc. In the urban, middle class they are driving a consumer culture, similar to America’s: coffee shops, bars, cars, clothes. They are also changing social mores, equality for women, homosexuals and in fact getting laws changed to reflect these new mores. They are also globally savvy, plugged into Facebook, sometimes working for multinationals and traveling abroad frequently. The bottom of the pyramid, particularly in rural areas, is completely disenfranchised from this global reality and how India deals with them in the next two decades will determine whether it remains a pluralistic, democracy. A possible alternative is a populist, labor led, violent revolution.