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Analysis: Souring of the Indian dream

Shrinking opportunities cast a shadow over country's indentured-labour source to IT powerhouse turnaround story.

Last updated: 18 Nov 2013 11:20
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India will 'see substantial numbers reach working age for the coming decade or two', one study says [EPA]

Next year, when India will hold its 16th parliamentary elections, the international commentariat will once again go ga-ga reflexively over the world’s largest democracy while political pundits in New Delhi will debate endlessly the composition of the next central government.

But far from the glare of the media's election fixation, thousands of frustrated, mostly young Indians will be preparing to vote with their passports. They have seen the future, and it doesn't work, at least for them.

There is no statistical evidence to indicate that droves of educated Indians are suddenly trying to leave. Nor are there reports of rickety migrant-filled boats leaving Indian shores for Australia's Christmas Island or Italy's Lampedusa.

Instead, a fairly recent trend - of increasing numbers of Indian students going to the West in pursuit of higher studies that they see as a stepping stone to a stable career - is likely to continue, in tandem with the migration as usual of executives and labourers to the Gulf and Southeast Asia.

Even before the Indian economy went into its latest slump, the rise in the number of students going overseas to study in the nine-year period between 2000 and 2009 was a stunning 256 percent, according to a report published last year by the Indian Institute of Management (IIM), Bangalore.

Public dissatisfaction

Experts see this drain of talents and skills as a no-confidence vote against India's political and bureaucratic classes, as well as proof of public dissatisfaction with the general direction of the country.

Arun Maira, a former India chairman of Boston Consulting Group and a current member of India’s Planning Commission, put it this way in a recent op-ed in the Indian business newspaper Mint: "No doubt India has progressed in the last 20 years. ... But the pace of progress is too slow for its citizens’ aspirations."

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Curiously, until just a couple of years ago India's "growth story" was a catchword of leading analysts and investment banks, who thought the historically impoverished country had finally turned the corner.

Along with Brazil, Russia, China and South Africa, India suddenly found itself in a grouping of developing or newly industrialised countries called BRICS as well as in the principal forum of the world's 20 major economies, G20, for consultations on the international financial system.

The numbers coming out of India then appeared to validate the honours.

As the CIA World Factbook notes, the Indian economy recovered strongly in 2010 from the global financial crisis thanks to robust domestic demand, with GDP growth - the broadest measure of economic expansion - exceeding eight percent year-on-year in real terms.

For the first time in perhaps centuries, members of the Indian diaspora started to see their country of origin as a potential land of opportunities rather than as a place to escape from.

At the same time, the country's large young population began to be viewed as a "demographic dividend" by foreign companies hungry for new markets and cheap labour.

Faltering growth

India's economic growth began to lose steam, however, in 2011 amid reduced government spending and declining investment as companies lost faith in the Congress Party-led central government's commitment to continued economic liberalisation.

Since then, the government's fuel-subsidy bill has soared on account of high international oil prices, exacerbating the country's perennial problem of large fiscal and current account deficits.

Indian politicians have not helped matters by sharply increasing welfare spending since 2004, pumping more than $70bn into schemes aimed at lifting rural incomes without spelling out where the money will come from.

For an expanding middle class, the impact of the government’s spending sprees is being felt in a host of direct and indirect ways - higher inflation, job cutbacks, salary stagnation and costlier foreign education and vacation.

As for the "demographic dividend", Ashish Bose, who pioneered the study of population in India, believes that the number of the young, far from providing a dividend, will be a demographic nightmare.

"You cannot have a dividend without investment, either in cash or kind," the 82-year-old demographer told India's Down to Earth magazine in an interview last May.

"There is already so much unemployment. ... [The jobless young] will become more violent."

Two citizen categories

As in the past, the roots of the current population flow out of India are broadly economic in nature, but there can be no glossing over the popular perception that the chances for middle-class youth of getting a good college education and landing a well-paying job in their home country are dwindling fast.

Counting the Cost: India's Sliding Economy

If debates in the Indian media are any guide, there is a growing feeling, fairly or not, among Indian elites that there are really two categories of citizens now, one of which receives all manner of doles and favours while the other provides the revenue, yet has to compete in the face of overwhelming odds for every sliver of opportunity.

Among the disaffected segments of Indian society, those that belong literally in the general category - that is, who do not qualify for extensive caste-based quotas for entry to educational institutions and jobs in government organisations - have good reason to be the most embittered of all.

A much sought-after item - a seat in a heavily subsidised elite technology institute or university - is now practically beyond the reach of the general category thanks to fierce competition for the limited number of available seats in proportion to the national population.

To get around this problem, those Indians with the means to send their children to universities in the US, UK, Australia and Germany among other countries have begun to do so, with business, engineering and computer science as the subjects of choice.

But foreign degrees do not come cheap.

Huge cost differential

A study conducted by ASSOCHAM, an Indian business-lobby group, says there is a huge cost advantage for students studying in premier institutes in India compared with those who enroll, willingly or due to lack of choice, at foreign universities.

While an undergraduate student of an Indian Institute of Technology (IIT) has to pay an average fee of $150 per month, the fee paid by an Indian student studying abroad per month is roughly between $1,500 and $4,000.

Even before the recent sharp depreciation of the Indian rupee, going to a foreign university meant taking on heavy financial burdens and debts, the IIM report on outbound students found, while the ASSOCHAM study estimates the consequent yearly drain on India's already hard-pressed foreign-exchange reserves to be well over $10bn.

Not surprisingly, most of the students who go overseas for undergraduate and postgraduate education try to pay off their loans by staying back in the host country with its superior work opportunities and relatively attractive pay packages.

"Student migration is often the gateway for permanent stay in the country," according to a 2009 paper by Daniel Naujoks titled Emigration, Immigration and Diaspora Relations in India.

Anecdotal evidence shows that English-speaking, qualified Indians, once exposed to global professional standards and a better quality of life, begin to see the idea of returning home to take up a job only as a last resort.

Governance deficit

There are exceptions of course. Amit Agarwal, a Delhi-based executive, worked for a few years in industry before going in for a business degree and moving abroad.

"I have no regrets about returning to India some 10 years ago from Southeast Asia," he told Al Jazeera.

"I have enjoyed doing my part for the enhancement of India's exports and development of domestic trade infrastructure."

Young Indians face major challlenge finding jobs

However, even he says "India's political culture and governance leave a lot to be desired".

These days, for those not brilliant or lucky enough to get into India's top universities and engineering institutes, the only alternative to going abroad for higher studies is to obtain admission to second-tier government colleges or private universities.

But as Indians know only too well, middling government colleges are a conspicuous failure when it comes to imparting education or job placement.

The private universities charge much steeper fees and conduct ad campaigns touting well-equipped labs, comfortable accommodation and guaranteed recruitment.

But beneath the gloss and spin, things are more like gloom and doom.

An ASSOCHAM paper on business schools and engineering colleges reveals that between 2009 and 2012, campus recruitments plunged by 40 percent, making them unattractive to students.

The study says more than 180 business schools shut shop in 2012 in the major cities while another 160 were struggling for survival.

Aspiring for more

As things stand, even if a new government in New Delhi were to launch a bold administrative and budgetary overhaul, given India's diversity and population size its impact would probably be too and little too late for the largely young and mobile present generation.

As such, the country's migration imperatives were laid out starkly in a report prepared in 2008 for the Transatlantic Council on Migration.

"India will see substantial numbers reach working age for the coming decade or two," two Brown University scholars who wrote the report said.

"Therefore a larger pool of workers will be looking for jobs in India, and those workers could become international migrants depending on the state of both the Indian and world economies."

Indeed, demographers say the pressures of a growing middle class and persistent poverty will have to be absorbed to some extent by higher rates of internal migration and international migration, bearing in mind that India is projected to become the most populous country by the middle of this century.

None of these detracts from India's turnaround from a onetime source of indentured labour for sugar and rubber plantations in far-flung colonies, to an information-technology powerhouse in recent decades.

Still, as Maira, the Indian Planning Commission member, notes in his column: "Young Indians aspire for more. They want an even better life."

Follow Arnab Neil Sengupta on Twitter: @arnabnsg

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