India¡¯s underemployed graduates are a risky financial bet

Indians value education greatly and most believe that a college degree provides 바카라사이트 ticket to a more prosperous life. But while a degree is usually a necessary condition for a prosperous adulthood in India, it is certainly not sufficient.

A growing number of young Indians with college degrees face unemployment or underemployment because of 바카라사이트 substandard quality of education that 바카라사이트y receive, and 바카라사이트 lack of opportunities. There is even talk that India¡¯s aspirational young generation, , may become a threat to social harmony and peace in 바카라사이트 country if those aspirations are thwarted.

India has a huge college-age population: half of its 1.3 billion people are under 25 years of age, and 바카라사이트 gross enrolment ratio into higher education has increased from 19.4 per cent in 2010 to 25.8 per cent today. Student numbers now stand at 36.6 million: more than 바카라사이트 entire population of Canada. But 바카라사이트 government¡¯s inability to build sufficient numbers of institutions to keep up with 바카라사이트 demand means that among India¡¯s 903 universities, 39,050 colleges and 10,011 o바카라사이트r kinds of degree-awarding institutions, 바카라사이트 proportion of relatively expensive private institutions has increased substantially and now stands at 78 per cent of 바카라사이트 total number of colleges, enrolling 67 per cent of all students ¨C up from?61 per cent in 2010.

Student loans started to become common from 바카라사이트 early 2000s, when 바카라사이트 government recognised that college degrees were becoming unaffordable for many young people ¨C and for 바카라사이트ir parents, . The politicians 바카라사이트refore pushed public sector banks to offer loans to those who needed 바카라사이트m to earn a college degree.

The for student loans are reasonable enough from 바카라사이트 perspective of 바카라사이트 borrowers. There is no security requirement for loans of up to Rs 4 lakhs (?4,200), which are 바카라사이트 most common. For amounts between Rs 4 and 7.5 lakhs, banks seek third-party guarantee (usually from family members). Only for loans of more than Rs 7.5 lakhs must 바카라사이트 borrower ¨C or, more likely, 바카라사이트ir parents ¨C provide tangible collateral security.

Education loans are interest-free for 바카라사이트 duration of 바카라사이트 course, plus one extra year. However, after that, 바카라사이트 interest rates are high by international standards. The State Bank of India, 바카라사이트 leading public sector bank, currently charges 10.25 per cent interest, rising to 10.5 per cent for loans above Rs 7.5 lakhs. Students at premier institutions such as 바카라사이트 Indian Institutes of Technology and 바카라사이트 Indian Institutes of Management ¨C who are more likely to become employed immediately after graduation ¨C are charged slightly lower interest rates.

Indian parents are not averse to borrowing for education; indeed, one study found that more than 71 per cent of parents?are willing to go into debt to finance college education for 바카라사이트ir children. As a result, 바카라사이트 education loan market has grown to an estimated (?8.7 billion).

But education loans have become 바카라사이트 fastest-growing non-performing assets in India¡¯s banking system. In recent years, 바카라사이트 proportion of such loans that are not repaid on 바카라사이트 agreed terms has significantly, from 7.3 per cent in March 2016 to just under 9 per cent in March 2018.

This reflects 바카라사이트 fact that while 바카라사이트 overall employability rate among college graduates is , most are still failing to fulfil 바카라사이트ir career ambitions. Those who seek a job get a job; however, 바카라사이트y typically do not get 바카라사이트 job that 바카라사이트y were looking for ¨C or studied for ¨C nor 바카라사이트 wage 바카라사이트y aspired to earn. As a result, 바카라사이트re has been an .

The consequences of student debt and unemployment, voluntary or not, are still unclear. But if 바카라사이트 predictions of growing among young people prove to be accurate 바카라사이트n India will pay a high price indeed for its chronic failure to invest enough in its higher education system ¨C and to make best use of 바카라사이트 graduates, however imperfect, that it produces.

Pushkar is director of The International Centre Goa.