'Shortage of labour could thwart India's rapid economic expansion'

FE Team | Published: October 19, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

WASHINGTON, Oct 18 (AFP): A shortage of quality skilled labour could thwart India's rapid economic expansion, its central bank chief Y V Reddy warned yesterday, calling for urgent education reforms to solve the problem.
"The sustained acceleration in the services and the manufacturing activities is leading to incipient pressures on the supply of good quality skilled labour," the governor of the Reserve Bank of India told a Washington economic forum.
While the demographic profile of India, the world's most populous nation, placed it favourably in terms of manpower availability, "emerging talent supply shortages" have become a critical problem, he said.
Reddy listed the shortage of skilled manpower and absence of modern infrastructure as "the most critical barriers" to the India economy, which expanded by 9.4 per cent last year, the fastest in 18 years.
Noting that the impressive performance of India's star services sector stemmed from the availability of skilled and cheap labour, the central bank chief said India could not afford to lag behind in education reforms to build its talent pool and remain competitive in the global economy.
"Only 10 per cent of the relevant age group is getting enrolled into institutions of higher learning in the country as compared with 40 to 50 per cent in most developed countries," he said at the conference hosted by the Peterson Institute for International Economics.
In addition, only less than half of the Indian secondary school students pursued college education, he said.
Moreover, the quality of education imparted in several colleges and universities in India "remains less than adequate to meet the emerging demands for skilled professionals.
"In order to reap the benefits of the demography dividend, substantial expansion and reforms in the education sector would be needed on an urgent basis," he said.
Reddy, the central player in India's monetary and exchange rate policy and financial reform, also lamented the "less than adequate progress" in key infrastructure sectors, including power and roads.
"Urban infrastructure is a vital element in the growth process," he said, calling for "strengthening the management of cities" in India.