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Revealed
India's Third Giant Leap

This Could be One of the Biggest Opportunities for Investors




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The most under rated risk for India
Thu, 27 Jun Pre-Open

Rupee at 60 per US dollar. GDP growth at record lows. Ballooning fiscal and current account problems. The list of India's woes is indeed a long one at this point of time. In fact one would be spoilt for choice if asked to rate the risks. But we believe the most under rated and camouflaged risk is India's youth unemployment and skill set problem.

As per an article in Business Line, a report released by Aspiring Minds, states approximately, 47% of Indian graduates are unemployable. And one should note such a high percentage of unemployability is not because of the lack of opportunities, but was due to lack of sufficient knowledge of English language and cognitive skills.

This clearly signifies that, the quality of education calls for an improvement. In most of the developed countries viz EU and US, unemployment in the youth is largely due to economic crisis and resultant slowdown. In India too, the economic challenges have impacted the job creation levels. However the lack of sufficient knowledge in the graduate youths is a concern. If this continue to rise, this would impact the country adversely in the near future.

Upgrading the education system is as important for the government as is creating job opportunities. Plans like the NREGA may create employment opportunities for unskilled workers. But India is staring at a looming threat of mass scaled unemployment amongst educated youth.

Investment in the education sector is one of the last priorities the government has on its mind currently. It is already struggling hard to retain the GDP growth above 6% levels. The GDP growth numbers for the fiscal ended March 2013 rose by 5% against growth of 6.2% in FY12. This was the slowest growth in a decade. So, we doubt if budgetary plans will allow the Indian government to address the skill set issue. Given the strain on finances and other economic issues, filing education loopholes seems to be unlikely to happen in short term. However, the longer we defer a solution to India's skill set problem, the bigger will be the scale and density of unemployment crisis in the economy.

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