The Wall Street Journal recently published an essay about India that asks why the country isn’t growing faster. The author is Raghuram Rajan of the University of Chicago, and he blames the political system. These connect to the two obvious issues, corruption and low literacy.
India should be an economic giant. It has diverse national resources, and it is coming off such a low base that even small modifications can pay off big. That’s attracted investors. But then they run into the petty corruption, the constant requests for a few extra bucks here and there to get things done, the long lines at government offices. Yes, you can pay someone to “facilitiate” or “expedite” these matters, and it won’t cost a lot of money, either. But it’s just another hoop to get through.
The educational problem is serious, though. Americans don’t see it because we see doctors, professors, and engineers from India in our daily lives. But that’s the thing: they are here. In some cases, they have given up a far more luxurious life; friends who have immigrated here tell me that they are constantly explaining to their families back home that they are not rich by American standards and that they do not have servants, so please pick up after yourself when you come to visit. We have all had experiences with Indian call centers, talking to people who are multi-lingual and who sometimes manage to get our problems fixed.
But in India itself, about 40 percent of the population is illiterate, and one of the worst sectors for corruption is education. People get teaching jobs based on who they know, and they don’t actually have to teach. I’ve heard of bribes being demanded to enroll students, which makes private schools the cheaper option for even really poor people. And you know what? Most of these private schools aren’t very good.
Ask the next Indian person you meet where they went to school. Chances are excellent they want to some sort of private school – probably a Catholic school or a British school – and then they went to college either here or in England. They came here to get education that they could not there.
A handful of Indian universities are among the best in the world, and the country’s growth has been led by its educated elite. That’s not sustainable, though. India needs to address corruption in education as a step toward expanding growth for everyone.
But the possibilities! They are incredible for the long-term investor. Just incredible.