India Needs a Five-Year Plan for Education.
Let us follow the German education model, support our huge MSME sector,
and keep both our forex and our young minds at home.
By Nitin Potdar
But there is a far larger leak of forex that almost no one talks about. Every year, we quietly send abroad not just our money, but our brightest young minds. I am talking about foreign education.
The Scale of India’s Education Outflow
Let me share some numbers. By recent estimates, Indian students now spend close to $70 billion a year studying abroad. This amount covers much more than tuition. It includes rent, food, travel, and the many daily costs of living in a foreign city. NITI Aayog has cited a figure of nearly ₹2.9 lakh crore spent in just four countries, America, Britain, Canada and Australia, in a single year. This is roughly ten times what our own government spends on higher education annually, and close to 2% of our entire GDP walking out of the door.
Over the last decade, Indian families have sent out an estimated ₹1.76 lakh crore chasing foreign degrees, more than three times the Union government’s yearly higher-education budget. The Prime Minister worries, rightly, about gold. I would gently say: here is a leak many times larger.
The Cost of Losing Talent
Honestly, the bigger loss is the young mind that leaves and does not come back. We raise them, school them, shape them in their most precious years, and then we gift their best, most productive decades to another country’s economy. In this decade of Viksit Bharat, when India needs every sharp engineer, doctor, scientist and entrepreneur it can lay its hands on, this is a loss we can least afford.
Fortunately, the tide has quietly begun to turn. As visas tighten and costs rise abroad, the number of students leaving has actually started to fall. That demand has not vanished; it is simply looking for a home. The only question is whether we are ready to receive them.
Why India Needs a Five-Year Plan for Education
I believe we can be. We need not invent something new; we need only look honestly at Germany, take what they have built, and roll it out with discipline and a deadline through India’s Next Five-Year Plan for Education, much like the Five-Year Plans for industry and agriculture after Independence.
We spend barely 2.7% of our GDP on education today. To change this, we must raise that to at least 4% to 5%, moving towards the 6% that NEP 2020 itself first planned. A nation that will not invest in its own classrooms has no right to complain when its brightest walk away.
Germany’s success rests on two simple beliefs: real, hands-on training belongs at the very heart of education, and a good university should be all but free. Its public universities, among the finest in the world, charge almost no tuition at all, even to foreign students, because the German taxpayer has decided that knowledge should not sit behind a price tag.
Contrast this with the American and British model of high fees met by years of student debt. I will say it plainly: that model will not work in India. It is the very system that turns education into a burden and drives our students, and our forex, out of the country.
Learning from Germany’s Dual System
So here is what our Five-Year Plan for Education should do – three clear moves, with firm targets, a budget and a deadline, exactly as we once planned our farms and our factories after Independence.
First, put real-world training at the very centre, the way Germany does. Its celebrated “dual system” is not a vague idea. It rests on a specific law, the Vocational Training Act of 1969 (the Berufsbildungsgesetz), under which a young person splits the week between a classroom and a real company, learning the theory in one and the craft in the other, while earning a modest wage.
The local Chambers of Commerce and Industry, the Industrie- und Handelskammern, register every training programme and certify the result. By the time a student graduates, he is not hunting for a job. He already has the skills, the experience and, very often, an offer in hand.
The one Indian twist we need is this. In Germany, the company pays the apprentice. However, our small enterprises, SMEs and MSMEs, simply cannot afford that. So let the government subsidise internships across our nearly 8 crore SMEs, MSMEs and startups. These enterprises already make up about a third of our GDP and employ over 32 crore people, yet they are forever starved of talent.
Pair them with our students, and we win twice over. Our graduates become genuinely employable, and the backbone of our economy gets the bright young hands it has always needed.
Building on Existing Reforms
In fact, the Government has already taken the first step. Two years ago, in the 2024 Budget, it launched the Prime Minister’s Internship Scheme to place one crore young Indians in our top 500 companies over five years. It is a fine beginning, but a voluntary one.
Let us go further. Make such internships compulsory for every listed company and let the Government subsidise the very same programme for our SMEs and MSMEs, which cannot carry the cost on their own. That one move would turn a good scheme into a national engine of job readiness.
Our own National Education Policy of 2020 already calls for exactly this: weaving training programmes and real internships into mainstream education, with the declared aim of giving at least half our learners hands-on, skill-based exposure. We have the vision on paper; we have simply never built the machinery. Fund this, and we would not be importing anything new. We would, at last, be implementing NEP 2020 itself.
Three Practical Reforms for India’s Education Future
State-Based Open Universities
Second, let the Centre fund one Open University in every State, each with complete independence and, like Germany’s, kept all but free for the student.
Independence here is not a luxury but a necessity, because every Indian State is almost a country in itself, with its own language, culture, arts, industries and way of doing business. Maharashtra is not Tamil Nadu. Punjab is not Bengal. Gujarat is not Kerala.
A single curriculum drawn up in Delhi can never do justice to that rich diversity. Let Maharashtra build courses around finance and manufacturing, Karnataka around technology, Gujarat around trade and enterprise, Kerala around health sciences, and Bengal around arts and letters. A university that grows out of the soil of its own State will always serve its young people better than one handed down from above.
Reviving India’s Great Institutions
Third, let us revive our old, great institutions instead of letting them quietly fade. Germany never abandoned its historic universities. It built around them a remarkable research ecosystem, the Max Planck and Fraunhofer institutes, while holding fast to Wilhelm von Humboldt’s conviction that teaching and research belong together.
We should do the same. Instead, create a national pool of professors, academicians and scientists, including the finest international faculty brought in on government support, and let our legacy universities connect to it and draw on its talent.
Technology can multiply the reach of one world-class teacher across the country. Such a teacher can reach a student in Nagpur or Coimbatore as easily as one in Delhi. Give our grand old universities that access, and they will rise again.
We have done exactly this before. A young, poor, newly free nation once decided, with nothing but a plan and a will, to build its dams, its steel and its grain. Today, a far stronger India can decide to build its classrooms and, in doing so, save its forex and, more importantly, keep its finest young minds at home.
Because in the end, a nation that educates its young, keeps its young. And a nation that keeps its young, keeps its future.
The author is a Senior Corporate & M&A Lawyer. Email: nitin@nitinpotdar.com