Andy Mukherjee: The dream of a college degree is starting to look like a bad bet for India’s youth

Subscribe to enjoy similar stories.India has three good reasons to engage with one of the biggest open questions in economics today: the impact of artificial intelligence (AI) on jobs.First, the country has the world’s largest youth population. Second, its growth model has been dominated by software services, and AI tools like Anthropic’s Claude Opus are getting exceedingly good at writing code and finding bugs. But the third and possibly the most crucial point is this threat to entry-level positions comes amid an alarming oversupply of college graduates.The wage bump that graduates enjoy over school-leavers is shrinking and AI could further narrow the gap.

According to Azim Premji University’s State of Working India 2026 report, the premium peaked in 2011. There has been a surge in the number of colleges—to 450 per million youth in 2021, from fewer than 300 in 2010. But the uneven quality of the new institutions, which are mostly private, didn’t do much to create demand for their graduates.

Too many young educated males went into agriculture, construction and retail, the least promising sectors from the perspective of productivity and wages. History played a role. As China became the world’s factory in the 21st century, India emerged as its remote office.

Both pulled their masses out of poverty by creating new income streams for young people leaving villages. But India’s education system, as developed in the 19th century by its British colonial government, was designed to produce clerks and junior administrators.The pattern continued even after India’s independence. While China built a foundation of vocational skills and mass literacy that fuelled its rise, India doubled down on elite tertiary institutions.