India’s population growth would raise its labour force availability but that alone won’t be enough to make the economy stronger or improve fiscal outcomes, due to the quality of education in the country, Moody’s Investors Service said in a report on Monday.
Emphasising that better educational outcomes will help countries like India avoid potential job losses from digitalisation and Artificial Intelligence in the long run, especially in services like call centres and BPOs, Moody’s bracketed India’s current education outcome levels with that of Pakistan and Bangladesh.
In a report on Sovereigns in South and South East Asia, titled ‘Population growth alone will not drive credit benefits for emerging economies’, the rating major said it expects continued population growth in the region to support economic expansion as working-age populations will remain large compared with younger and older citizens.
“However, the availability and scale of labour inputs alone will not drive materially stronger economic strength or better fiscal outcomes. Other conditions such as strong education and quality infrastructure are also key to reaping the benefits,” it noted.
“There remains a considerable gap in the quality of education between Pakistan, Bangladesh and India compared with China and other peers in South East Asia, which contributes to labour force participation imbalances,” Moody’s added.
India, Bangladesh, Indonesia, Pakistan, the Philippines and Vietnam will account for a third of the global population increase over the next 20 years and 40% of the uptick in working age population, the agency reckoned.
Stating that variations in the total mean years of schooling likely reflects gender disparities in educational achievement, Moody’s said the difference in the proportion of the male and female population that has completed an upper secondary education is most pronounced in India and Bangladesh.
“The development of relevant engineering and programming expertise may actually provide employment opportunities, not only in technology-related fields, but also in higher-value-added manufacturing given the increasingly complex products being produced in some of these large countries, for example, smartphones in India and electric vehicles in Vietnam,” the report said.
