By Nirvikar Singh

India’s economic growth has been notoriously stingy in generating jobs that pay better than traditional jobs like agriculture or low-level services. Among the reasons for this undesirable feature of India’s growth are policies that either discourage using labour versus capital, or discourage the creation of productive, dynamic firms, irrespective of how they manage their labour-capital mix. Another reason has been the education system’s failure to give people the right skills for productive employment. This is a policy failure, but also partly a consequence of the aforementioned biases against labour and entrepreneurship. Many Indians leave low-productivity agriculture for urban jobs, but those jobs are often also low-productivity.

High-skilled Indians, a labour elite, have always thrived, and have particularly benefitted from India’s opening up of its economy since 1991, as well as the impacts of information technology (IT). Those changes gave skilled Indians greater access to productive, high-paid jobs. But skill acquisition has been rationed by the education system, as well as failures in health and early child welfare policies which add their own constraints on what people can accomplish as they enter the workforce.

The source of some of the benefits that have accrued to skilled Indian workers is captured in an aphorism of Brad DeLong, an American economist: “IT and the Internet amplify brain power in the same way that the technologies of the industrial revolution amplified........

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