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India’s Growth Story Needs a New Actor
Source: thediplomat.com
Source Date: Saturday, March 22, 2014
Focus: Public Institutions
Country: India
Created: Mar 25, 2014

India is facing the challenge of a new industrial age, a software-powered intelligent-machine world that needs highly skilled workers. The nature of work is being transformed because smart machines can do more than repetitive tasks. A dozen highly trained workers, for example, can run an entire garment factory in India, Bangladesh or China. Intelligent machines have very high productivity but they do need intelligent workers, albeit fewer and fewer, who can operate complex hi-tech devices.

A young country like India clearly has plenty of workers, but without high-quality education the so-called demographic dividend could become a demographic nightmare. Indian graduates without information technology skills will be competing with skilled labor in other countries for wages under constant downward pressure. India needs to raise its bar very high. As President Pranab Mukherjee said recently at a Himachal Pradesh university campus, “Our universities have to be the breeding ground for creative pursuits. They have to be the source of cutting edge technological developments.”  These ideas should be implemented not only at the university level; they should be pushed down to the lower rungs of school education.

A decade ago India announced the establishment of the National Knowledge Commission, “on matters relating to institutions of knowledge production, knowledge use and knowledge dissemination.” It was recognition of the fact that – like the United States, Germany, Japan, and other developed countries – India was moving towards an information technology and knowledge-based economy. Much has changed since then.

Today, knowledge means the ability to work with ever increasing computer intelligence and smart software systems that operate and control everything from hospital diagnostics to railroad systems. A knowledge worker today is a highly creative person who feels comfortable working with and manipulating intelligent software and smart machines. As economist Tyler Cowen says, average is over. If you cannot get to the top, there’s plenty of space at the bottom of the pyramid.

The technologically advanced economy of today is a triangulation of cutting-edge technical knowledge, a highly skilled labor force and venture capital. But the driving force is the knowledge software produced by information technology workers who develop innovations that make labor and capital more efficient – the kind of knowledge that is being generated in India’s technology parks. Unfortunately this very knowledge will reduce if not totally eliminate the need for low-skilled workers. The demographic dividend will become an illusion unless India undergoes an education revolution at the grassroots level.

On the bright side, a handful of technology-based knowledge producing cities, including Bangalore, Hyderabad, Kolkata, Mumbai, Pune and Gurgaon, could positively influence the whole country. Technology-based knowledge, unlike capital and labor, is inexhaustible and is “non-rivalrous,” as economists say, and should become the foundation of massively available mass education in India. Let every Indian high school student learn computer programming, a discipline that requires learning mathematics, logical analysis, problem formulation and building step-by-step solutions called algorithms. Programming is a highly creative art form as well as a problem-solving strategy. Catch them young, as they say. The greater the challenge to young people, the greater will be the response.

Teaching computer intelligence, programming languages, as well as the English language, to students from disadvantaged communities in India, to paraphrase Google executive chairman Eric Schmidt’s ideas, will turn them into knowledge workers and lift them out of poverty. It will also supply a steady stream of knowledge workers to the IT sector, without which it would be scrambling to retain workers by offering them stock options and other incentives, which may in the long run prove nonproductive and even disastrous, potentially also increasing inequality in India and adding to social tensions.

The low-hanging fruit of 8-9 percent annual growth is perhaps over. Economic growth in India will come not so much from the stock market but rather from those industries where the knowledge worker, someone who can work with sophisticated machines and complex software, would be as important as the financier or the venture capitalist; for example, the biotechnology and pharmaceutical industry where the gestation period is long and rewards for workers cannot be stock-market driven. Economic growth can be sustainable if workers keep learning how to manage manufacturing systems whose embedded intelligence can be constantly improved.

India should employ its knowledge advantage in the cutting-edge field of intelligent software and robotic machines to create an environment where entrepreneurs and venture capitalists grow and accept the challenge of the unexpected, the road less travelled.

India’s policymakers need to strategize on ways the marketplace, apart from universities and institutes of technology, could be harnessed to create knowledge that generates innovation that can sustainably boost India’s growth. The kind of growth that becomes what economists, such as New York University Stern School of Business Professor Paul Romer and others, call “a virtuous circle.” But at the center of this virtuous circle has to be the highly trained worker who can teach machines and learn from them.

Dr. Narain Batra, professor of communications and diplomacy at Norwich University (U.S), is the author of The First Freedoms and America’s Culture of Innovation. He is currently working on a book on India.

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