MUMBAI'S VENERABLE ELPHINSTONE COLLEGE SITS stolidly in a city transformed by India's economic boom. Though Mumbai's legendary poverty remains painfully apparent, it is home to the thriving Indian stock market, the Bollywood film industry, and a burgeoning tech sector. Even the city's name (formerly Bombay) is different. Yet when I returned to Elphinstone recently after a 40-year absence I found the college barely changed, its extraordinary 19th-century Indo-Islamic-Gothic main buildings lightly renovated, its classrooms and library much as I had left them long ago. The condition of Elphinstone, one of India's most prestigious colleges, is a telling sign of the state of higher education in the world's largest democracy. Under-investment has led to stagnation.
Stagnation is no longer a word that people reflexively apply to India. Starting in the early 1990s, the nation rocketed to prominence as the world's second-fastest-growing large economy. Moreover, it is growing not mainly by the standard means of low-wage manufacturing, like China, but through the provision of knowledge-intensive services and software, with globally recognized homegrown corporations such as Infosys and Tata Consultancy Services in the lead. In the coming year, however, these two high-tech giants will hire thousands of college graduates from abroad.
The problem is not so much the quantity of Indian university graduates as their quality. India has the world's third-largest system of higher education, with 10.5 million students studying at 17,625 institutions. Last year, these institutions turned out nearly 700,000 graduates in science and engineering disciplines alone. However, in a recent opinion survey, human resources managers at multinational companies in India said they would consider hiring only 10 to 25 percent of Indian graduates.
Virtually all of the world's academic systems are shaped like a pyramid, with a small, elite sector at the top, a large, relatively unselective middle, and a bottom usually composed of vocationally oriented postsecondary institutions. Patterns of funding, government support, and management necessarily vary for each sector, with costs per student in the elite sector much higher. India long ago chose a pyramid with a very broad bottom and a miniscule top, and it shows few signs of changing. Its policy has been to spend little on higher education and spread its money widely, devoting only 0.37 percent of its gross domestic product (GDP) to postsecondary education. Only countries such as Japan and South Korea, where the vast majority of students attend largely unsubsidized private universities, approach India's low government spending levels. China spends 0.50 percent of GDP on colleges and universities, while the United States spends 1.41 percent and the United Kingdom 1.07 percent. Even more remarkably, the share of Indian GDP devoted to higher education has hardly budged in years.
As a result of this approach, the entire Indian system strains even to achieve mediocrity. More fatefully, its top tier is stuck in a state of arrested development. The absence of a significant group of world-class universities is perhaps the most serious impediment to India's ambition to build a sophisticated knowledge-based economy.
At the pinnacle of the nation s higher education establishment stand the seven Indian Institutes of Technology (IITs), which have won fame around the world for their prowess in engineering, along with five institutes of management, the All India Institute of Medical Sciences, and a handful of schools such as the Tata Institute of Fundamental Research, focused on the physical sciences, and the Tara Institute of Social Sciences. But all of these institutes are fairly specialized, lacking a university's full panoply of research and teaching programs. And they are small. The seven IITs have a total of 30,000 students, about as many as a single state university campus in the United States. …