Education and the Economy – India and China

“Knowledge is power. Information is liberating. Education is the premise of progress, in every society, in every family.” 

Kofi Annan

With 2020 only two months away, we enter a new decade and the 29th year after the economic reforms of 1991. Considering this, it is imperative to look back at the growth of our economy. 

Growth Economics

The pre-1991 era was characterized by high tariff walls, an economy closed to trade, and a dearth of significant economic growth. With the liberalization of the Indian economy in 1991, India became more market and service-oriented and private and foreign investment poured in – encouraging competition and growth. This decision seemed to pay-off in the 2000s with India stamping its mark on the world stage in three sectors – auto, software, and pharmaceuticals. 

Post-1991, the giants of the 80’s – Hindustan Motors and JK Synthetics, among others – crashed as they could not adapt to the new system. However, in the 2000s, growth was fueled by companies like TCS, Infosys, and Cognizant. Reliance Petroleum Limited, Sun Pharma, and Bajaj Auto also attracted the world’s attention to India and raked in subsequent foreign investment – encouraging innovation and R&D. 


Characterized by the crash of and controversies surrounding variegated bigwig companies – Videocon, Jet Airways, and Essar to name a few – the 2010s have paled in comparison. The 2010s had a boom of ‘unicorns’ like Flipkart, Ola Cabs, BYJU’s and Swiggy but their capability to make India a global force seems dismal. Most of these companies’ investors are foreign firms like Walmart, the Chaz-Zuckerberg Initiative, Naspers, and Microsoft. They turn over almost no profit and do not significantly contribute to the economic growth of India. 

Why is this relevant to us? 

Why have the 2010s and unicorns not turned out to be the stuff dreams are made of?


This trend is particularly relevant as all of us, knowingly or unknowingly, have actively partaken in the system that has caused it. An overlooked reason for India’s so-called fall from grace is its inability to modify its education system to suit the changing landscape of the global economy. The paradigm shifts in policy the world is currently undergoing are just not tackled in our system of education. We are still straddled with an arcane education system with a handful of world-class education institutions producing an even smaller handful of competent, employable graduates. A few stalwart institutes such as the IITs, IIMs, Indian School of Business, and Ashoka University are nowhere near enough to serve a population of 1.3 billion Indians. The resultant disparity in education and knowledge has led to a skill gap and a subsequent economic gap between two of the world’s top emerging markets – China and India. At the time of India’s steepest growth in the 2000s, China was still exporting low-wage goods like garments using slave labour. With the emergence of companies like BYD, Huawei, Tencent, Ali Baba and the rolling out of innovations in the realm of energy (solar panels), automobile efficiency (storage batteries) and tech (5G network), it has emerged as a market to respect and fear in the 2010s. Just 3.1% of China’s citizens live below the poverty line (as compared to the USA’s 12.3%). This fact and the increase in average household income by 400% are just a few of the clear indicators of the success of the Chinese Market.

An overlooked reason for India’s so-called fall from grace is its inability to modify its education system to suit the changing landscape of the global economy.

A major reason for the country’s growth is the importance the country gave and continues to give to educational excellence. China has undertaken numerous projects like the Thousand Talents program and has adopted several reforms to convert itself into a country with world-class institutes and research facilities. The Thousand Talents program incentivizes Chinese students to study in its universities and encourages foreign students to do the same through benefits like visa privileges and substantial government funding. Partly in thanks to this program, China has advanced to such a degree of academic prestige that it recently overtook the US as the largest producer of academic papers in journals. International students flock to Beijing and other cities in China to gain experience in academia that is par excellence. It goes to show that quality education can pave the path for the progress of a nation. 

The 2020s, looming as they are, will spell despair for the Indian economy if changes in the education system are not made an immediate priority. We must strive to reduce the skill and economic gap between us and nations like China and the USA. A comprehensive plan of action regarding education practices and investing in top-class national institutes will lead to better skilled and more knowledgeable graduates. Once this is established, the domino effect of better employment opportunities, a lower unemployment rate, an increase in household income and a boost to the economy and GDP does not seem far-fetched.


The idea behind the National Education Policy (NEP) is a step in the right direction but it must be expanded to be more inclusive and ensure the incorporation of syllabi followed in leading institutes. Additionally, the formation of and empowerment of student unions would greatly benefit the institutes and educational bodies that they are a part of. For it is only from within that change can be inspired. In my opinion, the prioritization of real-world application of topics learned in the classroom, the disempowerment of institutes that overwork and wreak havoc on the mental health of students (like Kota) and the encouragement of teachers to undertake special training courses so that they can impart knowledge actively and creatively is a must. A drastic change does not seem likely to take place in the coming few years but one can hope that India will retain its place on the world stage by the late 2020s or early 2030s. 

Change is undoubtedly necessary and the words of Kofi Annan have never rung louder – “Knowledge is power. Information is liberating. Education is the premise of progress, in every society, in every family”. 

-Shalin Desai (Editor, Declassified)



Further Reading

  • Sources of Growth in the Indian Economy – Barry Bosworth, Susan M. Collins, Arvind Virmani.
  • Slum Children: Barrier faced by Children in accessing Primary Education – Alpica Tripathi

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