Recent abrupt closures of prominent coaching centers have left many students stranded, highlighting systemic issues within India’s coaching industry.

Unreliable Practices and Aggressive Marketing

• False Promises: Many coaching centers make misleading claims of guaranteed success, creating unrealistic expectations among students.
• Upselling and Loans: These institutions often push students into purchasing additional courses and taking out loans, resulting in significant financial strain.

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Impact on Students

• Mental Health: The intense pressure to succeed has led to tragic incidents, including student suicides.
• Poor Learning: The focus on entrance exam preparation often overshadows a well-rounded education, particularly in senior years.
• Physical and Mental Health Issues: The demanding study schedules imposed by coaching centers can contribute to both mental and physical health issues.

Growing Coaching Market

• Growing Market: In 2024, India’s private tutoring industry was valued at approximately ₹58,000 crore, with an anticipated annual growth rate of 15%.
• Competition: The current emphasis on STEM education and competitive entrance exams is fueling the increasing demand for coaching centers.
• Dummy School: An emerging trend is the rise of “dummy schools,” where coaching centers advise students to only attend school for exams, focusing their studies entirely on coaching. 
  • This model is eroding the integrity of the school system and hindering holistic education, reducing learning to exam preparation.

National Education Policy 2020

• Assessment Reforms: The National Education Policy (NEP) 2020 advocates for shifting from summative to formative assessments to reduce the emphasis on exam-centric learning. 
  • Scrapping No Detention Policy: However, the central government’s decision to abolish the ‘no-detention policy’ for Class 5 and Class 8 students, allowing those who fail exams to repeat the year.
• Eliminating Coaching Dependency: NEP aims to improve the quality of school education to make external coaching centers unnecessary.
• Teacher Investment: The policy underscores the importance of investing in qualified teachers and offering competitive salaries to improve learning outcomes.

Regulatory Measures to Protect Students

• In January 2024, the central government issued guidelines to regulate coaching centers, prioritizing transparency and student welfare.
• Challenges Persist: While some states have introduced laws to curb malpractices within the coaching industry, others have not, resulting in inconsistent enforcement.

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EdTech: A Double-Edged Sword

• The COVID-19 pandemic significantly accelerated the adoption of online learning platforms, leading to a surge in edtech startups.
• However, with the reopening of schools, the edtech sector has faced challenges, including reduced investments and job losses.
• When effectively regulated, edtech can complement traditional education by offering personalized learning and skill development opportunities.

Recommendations for Reform

• Strengthen the school curriculum to reduce the reliance on external coaching.
• Implement caps on coaching fees and ensure transparent refund policies to protect both students and parents.
• Encourage models that provide individualized attention, addressing the unique needs of each student.

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Conclusion

A balanced approach, supported by both traditional and digital education, will ensure students receive quality education while safeguarding their mental and financial well-being.

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2025 marks the 30th anniversary of the signing of Marrakesh Agreement. The Marrakesh Agreement establishing the World Trade Organization was signed on 15 April 1994, leading to the birth of the WTO on 1 January 1995.

• Origin: The World Trade Organization (WTO), which came into existence in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT), was originally created to promote free and fair global trade. Its mission was to ensure that trade flows as smoothly, predictably, and freely as possible by reducing barriers and offering a platform for negotiations.

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Decline of the WTO’s Credibility

• Once the cornerstone of global trade, the WTO now faces significant challenges, including rising economic nationalism, trade wars, and institutional paralysis.
• Dispute Settlement Mechanism Crisis: The WTO’s dispute settlement mechanism, once hailed as its crown jewel, has been inoperable since 2019. 
  • Reason: The WTO’s dispute settlement mechanism, once its crown jewel, has been nonfunctional since 2019 due to the U.S. blocking judicial appointments. This has crippled the WTO’s ability to resolve trade disputes and enforce rules effectively.
• U.S.-China Trade War: The WTO failed to address the U.S.-China trade war, as both nations bypassed its framework, imposing unilateral tariffs and retaliatory measures, further exposing the WTO’s declining relevance.
• Economic Nationalism: The rise of protectionism, exemplified by policies like America’s “America First” and India’s “Atmanirbhar Bharat,” highlights countries prioritizing their own interests over multilateral solutions.
• Intellectual Property Rights: A major point of contention within the WTO has been the manipulation of intellectual property rights (IPR), particularly under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement.
  • Unfavourable: Developed nations, notably the U.S. and the European Union, have used IPR laws to favor their pharmaceutical and technology industries, often to the detriment of developing countries.
  • Pandemic Example: During the COVID-19 pandemic, the WTO faced widespread criticism for its slow response to calls for waiving patent protections on vaccines.
• Rise of Regional Trade Agreements: The stagnation of the WTO has coincided with the increasing prominence of regional trade agreements (RTAs) such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP).
  • Bypassing Authority: These agreements bypass the WTO framework, offering countries alternative pathways to trade liberalization. This undermines the WTO’s authority, as countries find it more beneficial to negotiate trade terms outside of the multilateral system.
• Unfulfilled Promises for Developing Nations: Developing countries, once hopeful that the WTO would address trade inequalities, now feel neglected.
  • The Doha Development Agenda, launched in 2001 to address their concerns, remains incomplete. Wealthier nations continue to provide agricultural subsidies, putting developing countries at a disadvantage. 
  • Additionally, environmental and labor standards have been used by developed nations as non-tariff barriers to restrict exports from poorer economies. The WTO’s failure to deliver on its promises has fueled resentment and eroded trust among emerging nations.

Way Forward

• Restore the Appellate Body: Reviving the Appellate Body is crucial to restore the WTO’s dispute resolution mechanism.
• Enforce Trade Rules Effectively: Strengthening the enforcement of global trade rules will help regain trust and authority.
• Ensure Equitable Benefits: Both developed and developing nations should benefit fairly from global trade policies.
• Address IPR Misuse: Tackling the manipulation of intellectual property rights is essential for fairer trade.
• Ensure Fair Agricultural Policies: Reforms in agricultural policies are needed to level the playing field for developing nations.
• Prioritise Interest of Developing Nations: Addressing needs and priorities of developing nations is essential for WTO’s effectiveness.

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Conclusion

If urgent reforms are not undertaken, the global trading system may soon witness the demise of an institution that was once deemed indispensable to global economic cooperation.

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India aspires to be a ‘Viksit Bharat’ by 2047; ; 100 years after independence. However, Historically, most nations have managed to move only one income bracket higher over the past 80 years. The question is whether India can defy the historical trends.

World Bank Classification of Economies

• The World Bank annually classifies economies into four income groups: low, lower-middle, upper-middle, and high income. This classification, updated each July 1, relies on the Gross National Income (GNI) per capita of the previous calendar year.
• For the fiscal year 2024, the income classifications are as follows;
  • Low-Income: With per capita equal or less than $1,135 
    • Example: Congo, Afghanistan
  • Lower-Middle Income: With per capita income between $1,136 to $4,465 
    • Example: India, Pakistan
  • Upper-Middle Income: With per capita income between $4,466 to $13,845
    • Example: China, Mexico
  • High-Income: With per capita income equal or more than $13,846 
    • USA, Japan, Germany
    • 58 countries are high income countries and they are mostly North American (USA, Canada), European and some east Asian (like Japan, South Korea) countries.

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India’s Current Status

• Where Does India Stand?: India is currently classified as a “lower-middle income” nation. While its growth is consistent, it is still insufficient to reach high-income status.
• What Does Data State?: Historically, most nations have managed to move only one income bracket higher over the past 80 years. 
• Understanding Through Example: For example, although India aims to become a high-income country, data shows that most countries can only jump one level. This suggests that India has a higher probability of becoming an upper-middle-income country rather than a high-income nation.

Lessons for India

• Which Countries Became Rich?: However, only four nations have successfully transitioned or jumped two categories to reach high-income status. India can draw lessons from these countries to achieve its goal of becoming a “Viksit Bharat” (developed India) by 2047.
  • Japan: After the end of World War II, Japan was in ruins. However, through advancements in technology and a focus on exports, it managed to become a high-income country.
  • South Korea: In the 1950s, South Korea was a low-income country and faced a dictatorial rule shortly after its independence. Despite these challenges, South Korea experienced rapid industrialization.
    • Unlike democracies, where land acquisition and development are subject to lengthy processes, authoritarian regimes can sometimes expedite these processes.
  • Taiwan: A small country, Taiwan successfully transitioned into a high-income nation. It built strong domestic industries, particularly in semiconductors and chip manufacturing, making it a global leader in technology.
  • Singapore: Singapore, starting under a dictatorial regime, transformed into a global financial hub. The efficiency and stability provided by its government played a key role in its economic success.

Challenge of Middle Income Trap

• Middle Income Trap: Many countries face the “middle-income trap,” where they have achieved a certain level of economic development but remain stuck in the upper-middle-income bracket without transitioning to high-income status. 
• China’s Example: China, Mexico, Turkey are currently an upper-middle-income country and face the challenge of moving past this stage.
• Reason: Several factors contribute to this phenomenon:
  • Rising Labor Costs: As economies develop, wages increase, which diminishes their competitive edge in labor-intensive industries. This makes it challenging for these countries to compete with low-income countries in manufacturing exports.
  • Lack of Innovation: Middle-income countries often struggle to transition from growth driven by factor accumulation (such as labor and capital) to growth driven by innovation.
    • Without significant investment in research and development, education, and technology, these countries find it difficult to move up the value chain.
  • Limited Industrial Diversification: Reliance on one or two industries can hinder economic resilience. Diversification into higher value-added sectors is essential for sustained growth, but many countries face challenges in achieving this.
  • Weak Institutions and Governance: Poor governance, corruption, and weak institutions can impede economic progress by discouraging investment and stifling entrepreneurial activities.
  • Demographic Challenges: Aging populations can lead to a shrinking workforce, reducing economic dynamism and increasing the burden on social welfare systems.

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Growth Models – What Works?

• Washington Consensus: According to the IMF and the World Bank, the Washington Consensus advocates for promoting free markets, privatization, and free trade as key factors for long-term economic growth. 
  • Failure or Success?: While this model has led to increases in per capita income, it has not consistently resulted in countries reaching high-income status. The model helps in boosting economic growth in the short run, but it has not proven sufficient for creating lasting wealth at the national level.
• Inclusive Institutions: Economists Daron Acemoglu and James A. Robinson argue that strong institutions are crucial for long-term development. They propose that establishing inclusive institutions—such as democracy, the rule of law, and an independent judiciary—helps a nation grow. 
  • Failure or Success?: However, examples like China and the early years of South Korea (before 1988, when it was under a dictatorship) show that countries can grow without inclusive institutions in the initial stages. 
  • While this model suggests that inclusive institutions are beneficial, it doesn’t always account for the rapid development seen in countries with non-democratic systems.
• Economic Nationalism: This model focuses on strategically protecting nascent industries until they become competitive enough to succeed on their own. It encourages protecting industries from foreign competition, promoting domestic innovation, and strategically importing technology to support development. This approach includes developing export champions and fostering domestic competition.
  • Best Model: By nurturing homegrown industries and securing competitive advantages, countries can transition to high-income status over time. Countries like China and Japan followed this model.

Why Has India Lagged Behind?

• Weak Competition (Pre-1991 Era): Before the 1991 economic reforms, Indian industries were highly protected from foreign competition. While this protection shielded local industries, it also led to a lack of competition, which stifled innovation and efficiency. The private sector did not grow at the pace needed to drive economic development, resulting in low levels of innovation.
• Poor Execution of Export Zones: While India promoted exports through the creation of Special Economic Zones (SEZs), the implementation of these zones was inefficient. The poor execution and management of SEZs meant that India could not fully capitalize on the potential of these export hubs.
• Competition Between Governments: Unlike in China, where local governments were empowered to compete and innovate, India followed a top-down approach where local governments had limited authority. This lack of local empowerment hindered the development of regional economies and slowed overall growth.
• No Culling of Inefficient Businesses: In India, there was no process to phase out inefficient or underperforming businesses. Without an effective mechanism for removing or restructuring weak businesses, the economy was burdened by non-competitive sectors.
• Weak Industrial Protection and Poor Execution: Industrial protection measures in India were weak, and their execution was inconsistent. This lack of robust support meant that industries did not develop to their full potential, and the execution of policies related to export zones and industrial development was often subpar.

What India Needs to Do?

• Industrial Policy: India needs to support industries that have the potential for global competitiveness while eliminating inefficient sectors. Performance-based incentives should be implemented to encourage innovation and growth in key industries.
• Export Growth: India must focus on competing globally, just like China and Vietnam. Both the manufacturing and service sectors need to be prepared for global competition.
• Skill Development: India must invest heavily in skill development, following the examples of countries like Germany and South Korea. This includes retraining workers, creating new vocational training programs, and ensuring that the workforce has the necessary skills to compete in the modern global economy.
• Fast Correction: India should be more agile in fixing ineffective policies. A system for quickly identifying and correcting policy shortcomings will help the country adapt to changing economic conditions and stay competitive.
• Infrastructure Reforms: Improving infrastructure is key to economic development. India must focus on enhancing connectivity, reducing bureaucratic hurdles, and improving logistics to facilitate smoother trade and business operations.

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Conclusion

To achieve the vision of a Viksit Bharat by 2047, India must address the deep-rooted challenges that have hindered its growth and work towards a transformative strategy.

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