Limits to rapid growth - Higher Education Edition

A recent ASSOCHAM study found out that just 7% of the pass-outs from business schools in India, excluding the top 20 schools, are employable and are able to get a job immediately after completing their course, 

India has at least 5,500 B-schools in operation now, but including unapproved institutes could take that number much higher... Low education quality coupled with the economic slowdown, from 2014 to 2016, campus recruitments have gone down by a whopping 45 per cent. There are more seats than the takers in the B-schools... In the last five years, the number of B-school seats has tripled. In 2015-16, these schools offered a total of 5,20,000 seats in MBA courses, compared to 3,60,000 in 2011-12. Lack of quality control and infrastructure, low-paying jobs through campus placement and poor faculty are the major reasons for India’s unfolding B-school disaster...

While on an average each student spent nearly Rs 3 to Rs 5 lakh on a two-year MBA programme, their current monthly salary is a measly Rs 8,000 to Rs 10,000... Of the 15 lakh engineering graduates India produces every year, 20-30% of them do not find jobs and many other get jobs well below their technical qualification. There is clearly a rush towards engineering, that which is engineered largely by parents and the society... There is a large mismatch in the aspirations of graduating engineers and their job readiness. 97% engineers aspire for a job in IT and core engineering. However, only 18.43% employable in IT; 7.49% in core engineering, adds the paper.

This is a teachable moment. The tripling of business school seats, like with similar explosion in engineering colleges in the 2006-11 period, came with a prohibitive cost in terms of quality. The provision of good quality professional education requires competent faculty, adequate infrastructure, and good students. And finally, there should be enough jobs going around to absorb those passing out. These are not achieved easily at the speed and scale expected, given our antecedent human and physical capital quality deficiencies. And in any case, colleges take time to develop good quality and establish credibility. They cannot be manufactured on a production line in a routine manner.

This is equally true of the spurt in IITs, IIMs, AIIMS, and other institutions of national excellence. After failing to build on the success of these brands by gradually increasing their numbers over the years, there has been a swing to the other extreme in recent years in terms of sanctioning of a slew of such institutions. It is only to be expected that the supply-side in terms of quality of faculty and students fail to keep up with the growth in such institutions.

This is true not just of higher education, but any sector. There are limits to how quickly any sector can grow in a country with a very narrow base in industry, human resource, agriculture, financial capital, state capacity, and so on. India needs economy-wide human and physical capital accumulation for a long period of time to build up the platform necessary for sustainable growth. Without this foundation, high growth can only happen in short episodes of over-heating followed by cleaning up balance sheets, as is happening now.