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Can wide demand-supply gap in education and healthcare spoil demographic dividend?


India is a consumption-driven economy and the world looks at us as an opportunity based on the vast population that we have, our demographics and a ready market. The proposals made in the Interim Budget to put more money in the pockets of farmers and the middle class are also expected to give a boost to consumption.

The number of people entering the job market and lack of opportunities for them is also an issue the country is grappling with.

Our GDP growth has been in the 7 per cent range for a reasonable period now. GDP growth ultimately boils down to value addition and productivity of the average worker and it’s no secret that a poorly educated or unskilled worker will have lower productivity compared with a person with higher levels of education and skills.

When you look at the contribution of education and healthcare to the inflation numbers, it is clear that while headline CPI has been about 6 per cent over last six years (since 2012), the education portion alone has contributed about 7 per cent. Healthcare and education contribute over 10 per cent weight to the CPI basket.

We have long wondered about the inadequate focus on education and healthcare in India despite those elements being critical to productivity and GDP as well as per capita income growth.

Education level of a bulk of India’s population will put a natural limit to productivity beyond a point.

Less than 20% of people becoming eligible to join the workforce annually either have diplomas or are graduates and postgraduates.

India faces a historical shortage of doctors and teachers given the historical underinvestment in these areas. India has a shortfall of about 8 million teachers and has a very high pupil-to-teacher ratio. For example, at the elementary schools, India has a pupil-to-teacher ratio of 38, whereas in most advanced and emerging economies, it is sub-20. India would need additional 1.2 million doctors over next four years. The number of doctors per 1,000 population in India is about 0.7, compared with over two in most countries.

For our country to get to a more sustainable development model, which is balanced between consumption and investment it may be imperative for us to focus on education and healthcare in a strategic way. The government as well as the private sector, including the rich households, may need to contribute to fill this void.

Source: Economic Times