The IHDS Forum is a monthly update of socio-economic developments in India by the IHDS research community, based on the India Human Development Survey, jointly conducted by NCAER and the University of Maryland. While two earlier rounds of the survey were completed in 2004-05 and 2011-12, respectively. Fieldwork for the third round was undertaken in 2022-24 and the data is currently being cleaned and processed.
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Unlike other countries, economy-wide modelling in India generally has treated the Indian nation as one entity even though one recognises that the states/regions differ significantly in respect of their resource base and factor endowments. Of course, a few models at the state level exist. However, these models do not capture the transmission channels from the rest of India since these types of models treat the rest of India as merely a balancing mechanism. A few of the existing research studies for India using a Computable General Equilibrium model use a top-down approach to analyse state-level issues. A major drawback of this approach is the lack of consideration for region-specific price effects, for which the effect of state-sponsored programmes or imperfect factor mobility or disparities across regions cannot be captured in these models. Our study is the first attempt to develop a bottom-up model–TERM (The Enormous Regional Model)-for India. The model is utilised to understand the implications of a hypothetical drought in a region (South India) and how the effect transmits to the rest of India, through a 52 commodity sector TERM model for 7 regions in India encompassing 31 states and Union Territories. Each region within the model has its own input–output database and agricultural product mix, and the simulation in this static TERM model depicts short-run effects. The study shows that despite being limited to some states in South India, the drought is likely to have a moderate impact on the Indian economy. Both GDP and employment are going to be affected at the national level, and the parameters are affected in several states in India, that are not necessarily situated in the southern region. The interconnectedness of the regions causes reduction in employment and the wage rate, leading to migration of labour and redistribution of investment.
Dynamic policymaking can ensure that India grabs this golden opportunity presented by the shifting global scenario to foster a boom in its education sector.
India’s education system is severely capacity constrained. Young people comprise almost a third of the country’s population, but only a quarter of them enrol in higher education. We need to increase the number of higher educational institutions or seats in existing institutions by almost five times to achieve the NEP 2020 target of 50 per cent youth with a college degree.
For the 420 million youth in the age group of 15–29 years, there are only 40,000 higher educational institutions of varying quality, with current enrolment of about 45 million students. The growth in the number of public higher educational institutions has been insufficient. Private institutions dominate the landscape of higher education, with almost 50 per cent of the universities in this sector. Although their growth has been faster relative to the public sector, that, too, has been inadequate to meet the rising demand, as per the Youth Report of MoSPI in 2021. Needless to say, with the rise in income levels and the size of the youth population, the competition for admission into high-quality educational institutions has increased in recent years. Not surprisingly, the excess demand for quality education leads to an exodus of about half-a-million youth to foreign shores every year.
Limited and poor-quality education is a potential cause of unemployment, underemployment and unemployability of India’s youth. How can India increase its capacity to offer quality college-level education at home?
Recent events indicate that the world’s dominant education sector is about to experience transformative shifts, with ripple effects across the globe. The US remains the largest recipient of Indian students, but the Trump administration’s anti-immigrant stance is likely to have an adverse effect on Indian parents’ preference for a US education for their children. In addition, the doors to foreign students are closing elsewhere with cuts on the number of student visas and other immigration policy changes, especially in Canada and Australia —two other countries high on the list of preferred destinations for Indian students.
India’s large and aspirational youth population puts the country in a unique position to take advantage of the coming global shifts in the higher education industry to aggressively attract private investment as well as raise public investments in its educational institutions.
With massive cuts in federal grants to US universities, along with reductions in the number of student visas or optional practical training after completion of degrees, American higher educational institutions are likely to (and are starting to) experience significant decline in foreign student enrolments. Foreign students are one of the largest sources of revenue for educational institutions in the US, Canada and Australia. These institutions will increasingly need to raise revenue resources outside the US. There are several ways in which India could attract investments by these institutions.
The government recently enacted legislation to facilitate the establishment of campuses in India by foreign universities as envisaged by the NEP 2020. However, uptake of this policy has been lukewarm so far. India needs to actively pursue high ranked foreign universities at both the central and state levels and facilitate the process of setting up standalone campuses by facilitating land acquisition and availability of other complementary inputs.
Domestic private investments in the education sector will continue to show robust growth, but while the number of private universities has doubled between 2011 and 2020, there is a deficit of trust in the quality of most private educational institutions. This can be circumvented by setting up joint programmes with foreign universities of global repute. Foreign universities entering into partnerships with Indian universities to offer joint degrees and set up campuses in collaboration with domestic institutions should be proactively encouraged and facilitated by the University Grants Commission.
The second strategy I would advocate for is investment in the existing public institutions that have been at the forefront of offering quality education for decades and carry high brand value in the country. Unfortunately, public higher education institutions are in dire straits today, with high vacancies in faculty positions that have not been filled for years, along with crumbling infrastructure. A case in point is the stagnant faculty strength of Economics departments in undergraduate colleges in Delhi University, while Ashoka University’s Economics faculty strength has grown multiple times to become the largest Economics department in the country within 15 years. This divergence indicates that there is no paucity of high-calibre candidates for faculty positions. Instead, hiring processes at public institutions have not been sufficiently adaptive. Further, public education must remain viable and effective in a relatively poor country such as ours, where the majority of students cannot afford to pay the high tuition costs charged by private educational institutions.
Expanding the capacity for quality education not only increases the human capital of the youth, it also raises youth employability while creating new job opportunities in the education sector and beyond. The education sector is one of the relatively more labour-intensive industries in India. Agglomeration economies created through education hubs have the potential to expand employment opportunities at all skill levels — from high-skilled teaching positions to mid- and low-skill providers for on campus student services. The employment elasticity in the sector has been increasing over the years — for every 10 per cent increase in investment in the education sector, there is almost a 4 per cent increase in the number of people employed in the sector. The sector also has strong inter-sectoral linkages — both backward and forward —potentially stimulating expansion and job creation in other sectors such as publishing. A burgeoning education sector would, in turn, stimulate output in industries that hire high-skill graduates and thereby raise aggregate consumption in the economy. This can create a virtuous cycle of higher domestic demand, leading to higher private investments, and thereby, faster economic growth of the country.
Dynamic policymaking can ensure that India grabs this golden opportunity presented by the shifting global scenario to foster a boom in its education sector — investing in the human capital of our youth and, at the same time, creating new employment opportunities at scale.
The writer is professor of Economics, Indian Statistical Institute, Delhi, and visiting professor, NCAER. Views are personal.
Amid developing tensions, the International Monetary Fund’s 2025 Financial Sector Stability Assessment for China arrives at a pivotal juncture. More than a domestic stocktake, it reflects the structural transformation of China’s financial system, marked by increased complexity, persistent contradictions and a steadily expanding global footprint – much of which is mediated by Chinese financial institutions.
This year’s assessment invites further scrutiny of the system’s evolving resilience and policy trade-offs. Having contributed to China’s inaugural Financial Sector Assessment Program in 2010, which played a key role in helping China embark on financial reforms in the following years, I recall one main thing. That is a large but underdeveloped financial system – bank-dominated, policy-directed and functionally insulated from global market signals.
Also among the vulnerabilities were undercapitalised banks, misallocated credit, structural dependence on real estate, opaque risk pricing and the absence of formal resolution protocols. Not only was regulation fragmented, but supervisory authorities also lacked independence and governance frameworks were nascent.
Domestic gains, lingering risks
Fifteen years on, institutional progress is evident as brought out by the 2025 assessment. Risk-based regulation is more embedded. The macroprudential toolkit has matured, with the People’s Bank of China deploying instruments under the Macroprudential Assessment regime. Regulatory oversight now extends to systemically important fintech and nonbank financial conglomerates. Capital markets have deepened, the investor base has broadened and digital finance increasingly intermediates through regulated channels.
The shift from financial repression in 2010 towards selective marketisation has helped to broaden credit allocation and improve price discovery, particularly in corporate and local government financing.
China’s macroprudential regime, however, continues to operate under institutional constraints. Due to administrative overrides and conflicting policy mandates, countercyclical capital buffers, systemic risk surcharges and borrower-based tools work less effectively. Unlike other G20 jurisdictions, China lacks legal independence and transparent, rule-based triggers in macroprudential governance, undermining credibility and market expectations.
Moreover, the financial sector’s growth has created new vulnerabilities. Smaller banks face continuing exposure to deteriorating assets, weak controls and concentration risks from local government vehicles and property developers. Many also struggle with thin margins and mismatched balance sheets.
While the 2025 assessment identifies these problems, it does not quantify the potential chain reactions and stress breaking points that demand attention from China and global finance.
Crisis management and political limits
Resolution frameworks have improved modestly. Deposit insurance – introduced in 2015 – has gained operational traction. Resolution planning and recovery mechanisms are now in place.
Yet critical institutional and legal gaps remain unresolved. The absence of binding bail-in protocols, creditor hierarchy legislation and explicit fiscal backstops continues to undermine the credibility of resolution in the event of a large-scale or cross-sectoral failure. The capacity to resolve distressed but non-systemic entities in a predictable, market-neutral way – without cascading contagion – remains untested.
The 2010 and 2025 assessments call for improved financial transparency, governance and data quality. These are no longer technocratic refinements for China but preconditions for confidence in the financial system and effective macroprudential calibration.
A persistent gap remains in the quality and timeliness of financial disclosures. While credit registry coverage and regulatory consolidation have improved, the 2025 assessment implies systemic opacity is impeding risk pricing, especially for external actors.
Global leverage and surveillance
One aspect where the 2025 assessment could have provided clearer insights into systemic risk arising from China’s expanding global financial footprint.
Since 2010, China has transformed from a net capital importer to a strategic creditor. Through its policy banks, state-owned commercial lenders and bilateral swap arrangements, China finances infrastructure, helps trade settlement and provides development lending across Asia, Africa and Latin America. Renminbi-denominated trade in Asia has grown sharply, while its share in global payments has tripled since 2010. China is also a creditor in the global bond markets, actively funding cross-border public debt.
Yet, the 2025 assessment only cursorily addresses this selective and state-mediated financial globalisation, which operates under capital account controls and geopolitical uncertainty.
As the IMF has already attempted for other internationally active economies, such as Singapore and Switzerland, the 2025 FSSA would have benefitted by going a step ahead and having a dedicated module on cross-border stress transmission, renminbi clearing hubs, the PBOC’s role and sanctions-related financial connectivity risks. That China’s established role as a global liquidity provider and payment system actor is not treated with the same analytical depth represents a missed opportunity.
China’s financial system operates with a distinct duality: functioning as a macroeconomic stabiliser and a policy-driven geoeconomic lever. This creates tensions between market signals and administrative control, liberalisation goals and geopolitical buffers.
While the 2025 FSSA acknowledges this contradiction, it leaves unexplored implications for regulatory coherence and crisis preparedness. The analysis should have moved beyond international standards to recommend approaches better suited to China’s structural uniqueness and its significance in global finance.
Looking forward
What next? China faces three strategic questions. First, can China enforce market discipline in resolving smaller institutions without resorting to implicit guarantees or policy forbearance? Second, is the renminbi’s internationalisation and the financial system’s role driven by genuine competitiveness or administrative design? Third, can monetary, fiscal and financial policy coordination stabilise an aging, debt-heavy and geopolitically vulnerable environment?
China must build on its institutional progress and the policy suggestions noted in the 2025 FSSA while adapting to a more fragmented global financial landscape. The shift from insulation, as pointed out by the IMF in 2010, as well as the shift to sensible integration, as outlined by the IMF in 2025, stays unfinished.
Whether China moves towards transparency and rules-based finance, mindful of its implications for global financial stability, or greater opacity and intervention will profoundly shape its path and role in the international monetary system.
Udaibir Das is a Visiting Professor at the National Council of Applied Economic Research, Senior Non-Resident Adviser at the Bank of England, Senior Adviser of the International Forum for Sovereign Wealth Funds, and Distinguished Fellow at the Observer Research Foundation America. He was previously at the Bank for International Settlements, the International Monetary Fund and the Reserve Bank of India. Views are personal.
India has made remarkable strides in expanding access to education for girls over the past few decades. Enrolment rates for girls in primary and secondary schools have risen significantly, and gender gaps in literacy have narrowed. Girls have surpassed boys even in gross enrolment in higher education. However, this educational success has not translated into a proportional increase in female labour force participation.
Despite robust economic growth and declining fertility, women’s participation in wage work in India has not increased over the last two decades. The latest Economic Survey (2024-25) report even marked a significant dip in wage employment among women since 2017, both in rural and urban areas. According to the World Bank, working women in India dropped from 24 percent to 18 percent between 2010 and 2020. This anomaly points to systemic barriers that prevent educated women from translating their qualifications into employment opportunities.
Conservative social norms are the most commonly blamed reason for this disconnect. However, recent evidence refutes this claim. Using the latest wave of the India Human Development Survey (IHDS) data, Sonalde Desai claimed that parental aspiration and investment in girl children have gone up over the last decade, leading to parity on enrolment in higher education and delayed marriage among girls (The Indian Express, 13 November, 2024). Young Indian women have shown considerable improvement in the first three among the four key domains of women’s empowerment, i.e., personal efficacy, power in intra-household negotiations, and societal engagements, and access to income-generating activities over the last decade. They have shown their readiness to engage in incomegenerating activities, but a lack of suitable employment opportunities is acting as a hindrance to their success.
Ajob-relevant skill gap has stood out as one of the major roadblocks on the way to women’s employment. Today, more women enrolled in higher education are studying arts, humanities, and social sciences, which have limited scope in providing employment. According to the All India Survey on Higher Education (AISHE) 2021-22, in both the undergraduate and postgraduate levels, a smaller number of females were enrolled in engineering and STEM courses compared to males. Despite a high enrolment rate, the choice of stream acts as a deterrent to women’s employment.
In addition to this, vocational training plays a role in enhancing the employability of women. The current policy offers women limited vocational training opportunities like apparel, tailoring, beauty and wellness, healthcare, and retail, which align with their traditional roles. However, well-paying jobs in a modern world require skills like English proficiency, digital literacy, IT and computer skills that schools often fail to provide.
Even with all these shortcomings, we need to acknowledge that we are unable to produce adequate jobs that attract young women to work and grow. Workplace discrimination based on gender makes the workplace toxic for women to work and thrive. Safety and security often pose a threat to their mobility for work. Offering on-the-job training, flexible work hours, or work-from-home options, and childcare facilities in the workplace have the potential to raise the labour force participation among Indian women.
The economic costs of low female labour force participation are profound. India is missing out on the demographic dividend that an educated female workforce could offer. In a period of low fertility, providing opportunities to Indian mothers with smaller family sizes to join the workforce would boost the economy. Moreover, the underutilization of half the population limits innovation, productivity, and inclusive growth.