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In this final part of this three-part series, let us consider my second proposition: India is unable to exploit available inflow of foreign capital not because our youth or entrepreneurs are incompetent by nature but because they are not getting proper nurture.

According to The E conomist (October 7, 2006):

The value of “intangible” assets — everything from skilled workers to patents to know-how — has ballooned from 20 per cent of the value of companies in S&P 500 to 70 per cent today. The proportion of American workers doing jobs that call for complex skills (has) thus grown three times as fast as employment in general.

Here is the recipe to absorb any flood of foreign exchange: No country can be afraid of excess of foreign exchange if it educates its workers in complex skills and also creates jobs for them. Both conditions – training and opportunities – are vital.

The importance of knowledgeable workers is brought out in a story by the science fiction writer Isaac Asimov set, as usual with him, in the far-off future. In that future era, youth were not educated painstakingly over years of schooling but instantaneously by the Knowledge Machine. After each individual reached the age of majority, the Knowledge Machine scanned the brain and imparted the most appropriate expertise to match individual capability.

In its essentials, the story is about an adventurous boy, a son of a lowly carpenter. His ambition was like that of any other bright youth on Earth in those days – to migrate to the most affluent planet in the universe next to the star our astrologers call maha nakshtram. The boy was mad about computers. He clandestinely studied all that he could catch hold of about computers even before the Knowledge Machine had been applied to him. Thus, when his turn came with the machine, it found his brain to be not pure but full of unauthorised knowledge. The boy was rejected and sent to a mental asylum.

Ultimately, after a series of disheartening episodes, an elderly professor rescues him and he is allowed to work his fill on computers if only he promises never to leave Earth. Having no choice the boy agrees.

Then, the matter was explained to him: He had an A+++ brain with motivation to match. His abilities were so valuable that the Earth authorities could not allow it to be lost to others. He was sent to the asylum and put through excruciating experiences only to induce him to be loyal to Earth. When his loyalty was assured he was made a highly privileged scientist.

In this imaginary story, three points are worth noting. One, the wise men of Earth would not allow its best brains to migrate. Two, Earth’s concern was for scientific/technological talent. Three, the brilliant talent came from humble background. In our country, we do the exact opposite. One, we are proud, rather than bothered, when our best brains migrate. Two, both in the public and in the private sector, innovative scientists are second class employees. Three, (as the current controversy about “creamy layer” indicates) chances are for few children from poor backgrounds to rise to the top. Should we be surprised if we find foreign capital is a threat and not an opportunity?

These days, the focus is on the less able (political correctness insists that such people should only be described as “challenged or differently-able”). Most of the time and the effort is invested in schemes devoted to the “challenged”. Practically, no corresponding investment is made on those who are not challenged and instead, are capable of taking up a challenge.

The HRD Minister, Mr Arjun Singh, has described that higher education in India is a sick child either by design or by default. His concern was not about capable youth who are poor but youth from backward castes who were not capable.

For some decades now, our politicians have been indifferent (at times even hostile) towards outstanding talents. That deliberate policy design is one reason why India’s higher education has become sick, why we are unable to benefit from the foreign exchange bonanza. Miserly investment our large businesses make in innovation is the second reason.

According to The Economist, in England, of the top 100 schools, only three are run by the government; the remaining 97 are expensive private schools which no poor child can afford.

According to a World Bank report, enrolment in private schools in India is growing four times faster than in state schools. Evidently, quality of education in state schools is deteriorating. Therefore, poor but capable children are no longer getting quality education.

Even the select few that are both talented and manage to get quality higher education do not opt for careers in technology innovation because neither the government nor private business values them and treats them instead as second rate employees.

Money or the absence of it is not the issue. Few people are aware that, these days, IITs, IIMs and other top institutions are flush with funds. Those institutions are unable to absorb what the Finance Ministry provides them in its generosity. Like the Indian economy, these higher education institutions too do not know how to use money productively. The same is true in government R&D establishments too.

Hence, fund crunch (particularly foreign exchange crunch) is no longer the problem it used to be 20 years ago. The problem they face is shortage of faculty, talented faculty.

As matters stand, neither at the Centre nor in the States is there any awareness of the importance of investing in talent. The Planning Commission has proposed investment of Rs 1,40,000 crore for higher education. If that appears huge, we may note that Saudi Arabia has just this week inaugurated one university with an endowment of $12.5 billion or Rs 50,000 crore (about the same as top American universities like Harvard and Stanford have). Hence, what is proposed for Indian higher education is not all that much generous.

Even then, money is not the critical issue; shortage of faculty and the Government’s insistence that faculty positions should be reserved for backward castes is the real obstacle. Compare that policy with the US (or Singapore) practice of welcoming talented faculty from all over the world. As teachers are the intellectual seed for the next generation, India is like a farmer who plants inferior seed; it cannot absorb foreign exchange bonanza as well as countries that are hospitable to talent can.

Unfortunately, our businesses too are not helping. With a few honourable exceptions, they rely on imported technology (which is bottled talent) than on indigenous innovation. As Mr Robert Reich (Secretary for Labour in the Clinton cabinet) has explained, only those businesses that promote and encourage indigenous talent are “ours”, not those that buy technology from abroad. On that score, most Indian businesses support foreign economies better than they do our own.

Likewise, so long as our universities select and promote teachers on caste basis they will not attract global quality faculty; they will not be globally competitive. No matter how cleverly the Finance Ministry handles excess foreign exchange and rising rupee, no matter how much foreign investment pours into the country, we will never be able to benefit from either without quality education and indigenous technology development.

(Concluded)

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