The answer: an inadequate and outdated educational system.
One of the key reasons why India is doing well today is the revolution in services exports, where white collar staff in India are plugged into globalisation, thanks to improvements in telecom. Today, there are probably a million people working in export-oriented IT and IT-enabled services, giving exports of roughly $15 billion, for an average rate of roughly $15,000 per manyear.
But this sector is experiencing acute problems with recruitment. Employers find that an Indian college education generally induces unacceptable skills, so there is a large mass of unemployable jobseekers, coupled with a shortage of skilled people. Will high growth rates continue to come about, or will India’s growth in this area get choked owing to the tiny output of a few good universities?