India urgently needs tax reforms like the Direct Taxes Code (DTC) and the Goods and Services Tax (GST), which will improve the ease of doing business and also improve the Tax/GDP ratio. Also, with current average spending at $400 per student compared to $6,000 in countries like the US, there is a need to invest more on higher education.

In order to promote entrepreneurship, cheap loans should be sanctioned for new businesses in growing sectors like IT, biotechnology, clean energy, etc. In order to create more opportunities for highly skilled people, the emphasis should be on promoting exchange of services and movement of labour, while being a signatory of Free Trade Agreements (FTAs).

The low cost advantage that India currently enjoys in the services sector is not sustainable in the long term. And to move up the value chain we need to invest heavily and immediately in research and development (R&D ) as its benefits will be reaped only after five to six years. We currently spend 0.9% of GDP on R&D compared to a global average of 2%.

The government also needs to consider the reduction or removal of educational services from the ambit of the service tax. This would make services like coaching classes, vocational training , workshops, etc, more affordable for students and result in better education standards in the country.

Primary education is the most important part of the education system, and in order to improve the overall state of education in the country, more allocation needs to be made towards it through the Right To Education (RTE) Act. In the budget of 2011, Rs 21,000 crore was allocated to RTE - an increase of 40%. However, this needs to be more than doubled to Rs 45,000 crore as estimated by the planning commission for the 12Five-Year plan.

If these structural changes take place in our education system, it will definitely lead us to a path of sustainable and rapid growth in the coming decades.

Source: Times of India, India,  dated 12/03/2012