India needs to hone people with education, infra: Moody’s

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A large population merely provides the hands needed for jobs but in order to fully exploit the potential, India would need quality education to skill those hands and back them up with adequate modern infrastructure to extract the maximum economic benefit, a report by Moody’s Investors Service has stated.

Without modern skills, a large number of hands will merely remain a number ready to join the labour market but ill-equipped to perform their optimum role in the economy. However, the report appreciated the efforts of India and Philippines towards building infrastructure and ensuring governance. The report on Sovereigns in South and South East Asia is titled ‘Population growth alone will not drive credit benefits for emerging economies.’ The rating MNC said it expects that population growth in South and South East Asia can be a tool to boosting economic growth since the economic expansion would be in a position to supply working-age people. Moreover, the countries will have a large section of young people. It also stressed that better quality of education will help India avoid potential job losses from digitalisation and Artificial Intelligence boom. The AI boom could make a dent in services such as call centres and BPOs that have turned out to be drivers of employments in India. In Moody’s view, India’s current education levels is comparable with that in Bangladesh. “… the availability and scale of labour inputs alone will not drive materially stronger economic strength or better fiscal outcomes. Other conditions such as strong education and quality infrastructure are also key to reaping the benefits,” it noted. “There remains a considerable gap in the quality of education between Pakistan, Bangladesh and India compared with China and other peers in South East Asia, which contributes to labour force participation imbalances,” Moody’s note further stated. Countries such as India, Bangladesh, Indonesia, Pakistan, the Philippines and Vietnam would continue to gain dividends from their demographic dividends since these will account for one third of the global population increase over the next 20 years and 40% of the uptick in working age population. The agency also noted that the difference in the proportion of male and female students who have completed upper secondary education is most pronounced in India and Bangladesh. “The development of relevant engineering and programming expertise may actually provide employment opportunities, not only in technology-related fields, but also in higher-value-added manufacturing given the increasingly complex products being produced in some of these large countries, for example, smartphones in India and electric vehicles in Vietnam,” the report said.