India's Higher Education Woes: Spiraling dropout rates can derail the next generation

MAY 28, 2018

Adwaith Goud

Problem Statement

Sustainable development begins with education and education paves the way for availing better employment opportunities. Eventually, the general population will be able to afford spending more which is going to positively affect the economic growth of the country. An increase in the average educational attainment of a country’s population by one year increases annual per capita GDP growth from 2% to 2.5%. [1] BRICS nations are home to over 40% of the world’s population and have a major impact on the human talent across the globe. China overtook USA as the country with the world’s largest tertiary education population. As of 2014, BRICS account for over one in three university students worldwide.[1.1]

India is set to become one of the world’s youngest country with 64% of the population falling under the working age group category. In fact, it is estimated that the average age of the country would be 29 by the year 2020. Data suggests that young India contributes about 34% of the gross national income. [2] Education becomes an important factor in harnessing the demographic dividend.

India has close to 1 million people reaching employable age every month. [3] However, several articles reveal the stark truth about the unemployability problem in India. [4] [5] This can be mainly attributed to the gap in the skill requirements in the industries and the education provided at the higher education levels. Although correlation doesn’t mean causation, it is important to note that the states with higher enrollment ratio have lower unemployment rates (although Sikkim seems to be an outlier) as seen in the graph below [Figure 1].

Education Woes

Indian higher education is the third largest in the world. It is expected that India would overtake the US in 5 years and China in the next 15 years. [6] Higher education can no longer take a back-seat in India, especially in this fast-paced and competitive world. A simple Google search highlights the shortcomings of Indian higher education in terms of quality, infrastructure, and governance to name a few.

Through this blog post, we hope to highlight some of the possible reasons where we are lagging when it comes to higher education.

Data Analyzed

Data for this study has been aggregated from multiple sources. The major problem faced during the project was data uniformity. Statistics were reported for different years by various sources and the numbers do not match across all the sources. Data in survey reports was available in PDF format, which made it difficult to extract. Some of the sources from which data was collected is as follows:

  1. The global comparison values were obtained from the official UNESCO website
  2. Data on Gross Enrollment Ratios (GER) and expenditure were sourced from NITI Aayog and India’s Open Government Data Portal
  3. Further data such as transition rates, dropout reasons, expenditure, etc. was available through reports published by, “All India Survey on Higher Education (AISHE)”, and “The National Sample Survey Office (NSSO), Ministry of Statistics and Programme Implementation (MOSPI)”.

Insights from Proposed Analysis

When the Right to Education (RTE) Act came into force in April 2010, India joined the list of over 130 countries which ensured free, compulsory, and non – discriminatory education to children in the age group of 6 – 14 years.[7]

This act seems to have ensured that India has high enrollment rates at the primary education level as evident from the graph below [Figure 2].

Education Woes

The Gross Enrollment Ratio (GER) [8] at primary education level is comparable or even better than countries from developed regions. Although higher GER doesn’t translate to better enrollment as the GER includes students who are above or below the age level of the corresponding education level which could also indicate a higher percentage of repeat students.

As the level of education increases, we can see that the enrollment ratio decreases drastically. Exploring the insights further into this blog provides us with the possible reasons for this disparity.

The transition rate indicates the number of students who have progressed to the next level of education, i.e., from secondary to higher secondary [Figure 3]. We see that the transition rate from Secondary (IX – X) to Higher Secondary (XI – XII) is significantly low in rural areas as compared to overall transition rate.

Education Woes

Financial constraints are one of the most prevalent reasons for students dropping out. However, data suggests that the primary reason for dropping out for males is engaging in economic activities while for females, the reason was engaging in domestic activities. In addition to that, the second most prevalent reason for females dropping out was marriage [Figure 4].

Education Woes

As of 2012, India spends 3.3% of its GDP on education [Figure 5]. Further, as of 2017, the number has increased to 3.7%. Although this is an improvement, the share of GDP devoted to education remains low for India among other BRICS nations. The average spend on education as a percentage of GDP among BRICS nations stands at 4.8%. [9]

Education Woes

A further deep dive into the data reveals that at the Center and State level, the expenditure on education is lowest at the tertiary level [Figure 6]. It is possible that because of the regulations of RTE Act, which emphasizes on providing education for children between ages 6 and 14, most of the budget is allocated to elementary education (thus ignoring the higher levels).

Education Woes

Insights from Proposed Analysis

As reported by Mint [10], states with higher per capita income tend to spend more on education [Figure 7].

Education Woes

Higher spend translates to higher GER at the tertiary level. This is evident in states such as Sikkim, Delhi, Tamil Nadu etc. where the population can afford to spend more on education leading to slightly higher GER than other states [Figure 8].

Education Woes

We notice that as the education level increases, the personal expenditure for a student increases significantly [Figure 9]. Personal expenditure includes course fees, books, stationery, transport, private coaching and miscellaneous expenses. The differentiation is narrowed at the graduate and postgraduate levels. Another important observation is that at graduate and postgraduate levels, the expenditure for female students is more than their male counterparts in the rural areas and is at par with the expenditure for an urban female. We believe that the opportunities for girls at the rural level are limited and they migrate to urban areas seeking better opportunities which in turn leads to higher expenditure.

Education Woes

Private aided and private unaided institutes have higher expenditure per student in both rural and urban areas as compared to government institutes [Figure 10].

Education Woes

Government institutes seem to be the obvious choice for higher education. If we look at the type of institutions attended by the population, we observe that students from rural areas have preferred government institutions [Figure 11]. Despite this, private institutions still have the most significant share of students.

Education Woes

Students believe that private institutions have a better environment for learning. But, another major reason seems to be that government institutions have tougher barriers to enroll into and hence students choose private institutes [Figure 12].

Education Woes

It is possible that the government has limited monetary resources to allocate to their institutes. Majority of this budget is going to select few institutes’ infrastructures and research programs. To get the best output for their investment, these government-run institutes are extremely selective in their admission process.

Hence students tend to choose private institutes as an alternative, where the selection criteria are more lenient, but the expenditure is much higher. Unaided private institutes with their “management fee” have even higher expenditures where the student must bear the maximum burden of the institute costs.

Students have limited choice in opting for private institutes where the enrollment becomes a luxury rather than a necessity. A lot of students cannot afford to shell out the required fees in these institutes and are forced to discontinue their higher education.

In a very Catch 22 scenario, with fewer students pursuing higher education, the cost per student is going to rise and as the cost rises, fewer students are going to pursue higher education.


There is a possibility that students don’t see any positive trade-off in pursuing higher education with the current job market. Based on the information collated and analysis done, we have observed the following:

  1. India’s enrollment rate at the tertiary education level is alarmingly low with students dropping out for engaging in domestic/economic activities.
  2. The Indian government’s spend on education is at a meager 3% which primarily proceeds towards primary education and government institutes at the tertiary level.
  3. With limited seats in government colleges, students often choose private institutes as an alternative where the personal expenditure is higher, and students have to bear the brunt of the high fee structure.

Education is every citizen’s right and it is the government’s duty to make it more inclusive and affordable. RTE has the right intentions but needs to scale up at an exponential rate to make any significant impact by the next decade. India’s higher education enrollment rates need to be supplemented with a strong teacher to student ratio, Citations per faculty, research capabilities to be on par with the rest of the world. We wanted to understand and highlight the reasons behind low access to higher education in India, identify the reasons why students drop out from higher education institutions and other factors that determine access to higher education.

Here are our concluding thoughts on how higher education can be improved:

  1. Making higher education more inclusive and economically strong (it should be our top priority). Based on the Mint article, there have been demands to increase the spend on education to 6% and an upcoming higher education fund agency is expected to support the requirements as well [11].
  2. Better governance and autonomy for private institutions offering higher education
  3. We also hope to see more collaboration with foreign universities which are holistic and inclusive, and not just limited to resource sharing, faculty, and student exchange programs.

The education sector is very vast and complex. There are new and innovative programs being launched in India that encourage the perusal of education for all and we hope to explore many more domains of this sector in the future.


  8. Gross enrollment Ratio is defined as the number of students enrolled in a given level of education, regardless of age, expressed as a percentage of the official school-age population corresponding to the same level of education.
  11. 11.

Graph References

  • Data for [Figure 1] has been sourced from NITI Aayog site (GER) and Wiki (Unemployment Rate)
  • Data for [Figure 2] has been aggregated from the UNESCO site
  • Figures [3-4] and Figures [9-12] have been sourced from the following site
  • Data for [Figure 5] is available at the United Nations Development Programme (UNDP) website
  • [Figure 6] has been obtained using MHRD data
  • [Figure 7] data sourced from Mint
  • [Figure 8] was created using data from NITI Aayog site