Editorial 1 : The Credibility Challenge
Context: India’s economic credibility challenge.
The Investment Conundrum
- India is a dynamic and robust economy, the government is doing most things right, the headline growth number of seven per cent looks reassuring.
- Yet India seem to be struggling to get private domestic investment and FDI up to a level that is reassuring.
Economy as a Morality Play
- The sense of the economy as a morality play has infected hardcore economic analysis.
- Indian economic policy often emphasizes an ideological call to action, urging investment despite evident demand challenges.
- This approach, likened to “Open Mouth Operations,” mirrors RBI’s efforts to influence yield curves through public statements, yet here it targets investment sentiment directly.
Four Credibility Gaps
- Epistemic Credibility Gap
- There is an inconsistency in economic data interpretations, particularly in RBI reports and surveys.
- Conflicting statements on consumer confidence create confusion and leads to systematic overestimation of the size of the Indian middle class, undermining confidence in official economic assessments.
- Regulation Credibility Gap
- Despite government claims on improved ease of doing business, foreign investors often view India as highly challenging due to regulatory complexity.
- Contrary to expectations, GST and other tax reforms have made the law more uncertain and onerous, and corruption is back with a vengeance.
- KYC norms give a poor regulatory signal when thousands of its poorest citizens cannot access their own money because of such norms.
- Concentration of capital in India
- Almost all of India’s recent policies like GST were devastating for small enterprises.
- Concentration of power in the top-five firms, as measured by both assets and sales, has increased dramatically post-2015.
- This concentration of power in a few firms has put a question mark on the credibility of Indian regulation and state-capital relations as a whole.
- It sends an adverse signal to the investors.
- Governance Credibility Gap
- While India boasts visible infrastructure achievements like highways, inadequate urban planning (e.g., waterlogged cities) diminishes overall governance credibility.
- This disparity signals inconsistency in the quality of national capabilities, further discouraging investor confidence.
Conclusion: In the absence of credibility, all we get is Open Mouth Operations, thinking words can affect outcomes. But that only reinforces the sense that those in charge of India’s economy are in the grip of too many delusions to inspire confidence.
Editorial 2 : Engineering the Future
Context: Uptick in BTech seats: Engineering the future
Increase in Engineering Intake
- The All India Council for Technical Education’s (AICTE) approved intake for undergraduate engineering and technology courses for 2024-25 shows a nearly 19% increase from 2021-22, when the total number of seats touched the lowest in a decade.
- The uptick comes after a year-on-year decline in intake for most of the past decade.
- This was also a period when reduced demand forced several colleges to shut down.
Historical Challenges in Engineering Education
- Institutional Deficiencies and Regulatory Failures
- Many engineering colleges lacked essential infrastructure, trained faculty, and functional labs, impacting quality education.
- A 2017 investigation highlighted issues with corruption and insufficient oversight by AICTE, contributing to deteriorating standards.
- Employment Challenges for Graduates
- Reports indicate a high percentage of engineering graduates struggle to find employment, with estimates as high as 48%.
- A primary cause is the inadequate practical training in most institutions, which is essential in applied sciences like engineering.
- The lack of industry-ready skills has hindered government initiatives such as Make in India that aim to boost domestic manufacturing and entrepreneurship.
R&D Deficit
- India’s research and development (R&D) expenditure stands at 0.7% of GDP, far below the levels in developed nations like South Korea, which spends over 5%.
- Limited investment in R&D restricts the advancement of applied technical skills and innovation within the engineering sector.
Way Forward: National Education Policy 2020 (NEP)
- Strengthening Industry-Academia Linkages
- The NEP emphasizes building partnerships between academia and industry to mobilize funds and resources.
- The AICTE’s recent mandates encourage institutions to offer courses in emerging fields like AI, robotics, data sciences, and cybersecurity, aligning with NEP’s vision.
- Addressing Faculty Quality and Training Needs
- Recruiting and retaining quality faculty remains a critical challenge for many institutions.
- The NEP suggests drawing on expertise from top institutes, such as IITs, to provide training for faculty in smaller colleges.
- In the long run, the AICTE should find ways to give effect to the NEP’s recommendation of setting up training institutes to update teachers’ knowledge.