The recent chaos in the stock market, the war in Iraq, and recession are some consequences of the globalization process. For centuries, the West waged war for colonies in a process that ended with the Second World War. Afterwards, it was considered better to control the poor countries by using sophisticated tools of international finance.

Terror groups changed this equation by bringing war to America. The Bush administration has responded by the occupation of Iraq. But the costs of policing and running a far-away land will soon compel the US to revert to the policy of indirect control. The focus will shift back to the contest between the US, Europe, and Asia for economic supremacy. Educational preparedness will be central to this contest. At the end of the current transitional periods, much shuffling in the relative powers of nations would have occurred.

The technological advantage that US and Western Europe possess hastens globalization at terms beneficial to them. But this change is driven not just by military might but also the relentless shift of economic power to Asia. India is already the world's fourth largest economy – China and Japan are the second and the third largest -- and it is destined to influence world change in a vital manner.

Although development is measured through the index of economic prosperity, it means the capacity of people to make reasoned, independent choices and corresponding action. It means a development of the spirit out of which emerges material development and this requires an excellent system of education.

As an aspiring technological Great Power, India must be prepared also in the fields that lie at the intersection of technology, society, and commerce. The decisions by those who understand the dynamics of technological change are often as important, if not more, than those who implement the technology. In the West, universities have pioneered these studies, helping America to dominate science and technology for over fifty years.

The best place for the study of this interface between technology and society are the IITs and the universities, but they are currently doing a good job only in undergraduate education, being ill equipped to deal with research for a variety of reasons. The Indian system of centralized control makes it impossible for them to plan in a visionary sense. The situation of the IITs has reached a crisis point, mirroring what happened to the older universities about 30 years ago.

The Indian higher education faces the intertwined problems of system and content. The system is bad because the bureaucrats who run it don't know better, and the contents are unsatisfactory because the universities do not have the capacity to update and adapt.

If one were to begin with small reforms at the IITs and the universities, I would recommend:

• Forbid the hiring of the institution's own Ph.D. graduates for a period of 5 years after the award of Ph.D. degree. At present the universities suffer from massive inbreeding that chokes new ideas and encourages sycophancy.
• Increase the faculty salaries to more competitive levels at the IITs and the research universities. Currently, fresh graduates can earn more than a senior professor. There should be additional incentives for professors who are good at research. On the other hand, standards for promotion in the professorial hierarchy need to be raised.
• Have each IIT and major university develop a vision plan to become an internationally recognized centre in postgraduate studies and research. Short-term and long-term goals, and the strategy to achieve the goals, should be clearly articulated. This exercise must be done both at the departmental and the university levels.
• The British introduced a scheme a few years ago for ranking of research colleges and universities by an independent agency to determine the level of funding from the education ministry. This scheme has worked well in UK and given that India has a similar system of funding, it should be adopted.

The openings for advanced degrees must be increased. As a typical example, Delhi University (with more than a 220,000 students in its undergraduate –12 + 3 -- programs) has only about 120 openings each year for the MA program in economics, and similar numbers in other disciplines. This is too low. If you have wondered why there are many Telugus in the US and very few people from UP and Bihar, one reason is that Andhra Pradesh has more than 150 engineering colleges whereas UP and Bihar have less than ten each.

The IITs are good in the teaching of the mainstream engineering specializations. This may have been fine in an age of complete bureaucratic control, as was the case with India before the reforms of 1991 when not much was happening in the economy. But now many sectors of the economy have been privatized and technology is changing society in unforeseen ways. In such an uncertain world, the education sector needs to be nimble, questioning received wisdom and creating new syntheses.

Now to the question of content: The Indian universities ape the West, with no reference to India's own cultural and scientific heritage. The approach is a barely concealed program to represent Indian culture as the “backward Other” to the “progressive” West. It is ironic that Indian education should uncritically extol the West at the same time that the West is in a crisis of faith related to its institutions of culture and education. With mounting problems of drug addiction and teenage pregnancies at high school, existential hopelessness in middle age, and dysfunctional social organization that makes a virtue of greed, wise people are asking if the West should not learn from the East.

The Indian crisis is not a fault of our tradition; it is a consequence of India's unfortunate historical experience of the past few centuries. Writing about a hundred years ago, Sri Aurobindo described the problem in the following words in his Call to the Youth of India:

The most striking instance [of our incapacity and impotence] is our continued helplessness in the face of the new conditions and new knowledge imposed upon us by recent European contact. We have tried to assimilate, we have tried to reject, we have tried to select; but we have not been able to do any of these things successfully. Successful assimilation depends on mastery; but we have not mastered European conditions and knowledge, but rather we have been seized, subjected and enslaved by them. Successful rejection is possible only when we have intelligent possession of that which we wish to keep. Our rejection too must be an intelligent rejection; we must reject because we have understood, not because we have failed to understand. But our Hinduism, our old culture are precisely the possessions we have cherished with the least intelligence; throughout the whole range of life we do things without knowing why we do them, we believe things without knowing why we believe them, we assert things without knowing what right we have to assert them, - or, at most, it is because some books or some Brahmin enjoins it, because Shankara thinks it, or because someone has so interpreted something that he asserts to be a fundamental Scripture of our religion. Nothing is our own, nothing native to our intelligence, all is derived. Little have we understood the new knowledge; we have only understood what the Europeans want us to thinks about themselves and their modern civilization. Our English culture - if culture it can be called - has increased tenfold the evil of our dependence instead of remedying it.

More even than the other two processes, successful selection requires the independent play of intellect. If we merely receive new ideas and institutions in the light in which they are presented to us, we shall, instead of selecting, imitate - blindly, foolishly and inappropriately. If we receive them in the light given by our previous knowledge, which was on so many points nil, we shall as blindly and foolishly reject. Selection demands that we shall see things not as a foreigner sees them or as the orthodox Pandit sees them, but as they are themselves. But we have selected at random, we have rejected at random, we have not known how to assimilate or choose. In the upshot we have merely suffered the European impact, overborne at points, crassly resisting at others, and altogether, miserable, enslaved by our environment, able neither to perish nor to survive. We preserve indeed certain ingenuity and subtlety; we can imitate with an appearance of brightness; we can play plausibly, even brilliantly with the minutiae of a subject; but we fail to think usefully, we fail to master the life and heart of things. Yet it is only by mastering the life and heart of things that we can hope, as a nation, to survive.

How shall we recover our lost intellectual freedom and elasticity? By reversing, for a time at least, the process by which we lost it, by liberating our minds in all subjects from the thralldom to authority. This is not what the reformers and the Anglicized require of us. They ask us indeed to abandon authority, to revolt against custom and superstition, to have free and enlightened minds. But they mean by these sounding recommendations that we should renounce the authority of Sayana for the authority of Max Muller, the Monism of Shankara for the Monism of Hegel, the written Shastra for the unwritten law of European social opinion, the dogmatism of Brahmin Pundits for the dogmatism of European scientists, thinkers and scholars. Such a foolish exchange of servitude can receive the assent of no self-respecting mind. Let us break our chains, venerable as they are, but let it be in order to be free, - in the name of truth, not in the name of Europe. It would be a poor bargain to exchange our old Indian illuminations, however dark they may have grown to us, for a derivative European enlightenment or replace the superstitions of popular Hinduism by the superstitions of materialistic Science.

The problem of Indian education has become worse since the above lines were written. The bureaucracy is now more entrenched. A single authority, a product of Indira Gandhi's Faustian bargain with the Communist Party, controls the writing of textbooks with disastrous results. Unfortunately, the present regime has not addressed the question of systemic reform. Much political capital has been expended on the matter of the revision of the textbooks. But lacking a proper objective process, the next government will throw out the current books.

Reform of education is a mighty challenge given the hostility to it by the entrenched bureaucracy. Perhaps, the way out is to legislate the creation of private research universities. The small steps already taken in this direction are not sure-footed: just an ad hoc approval of privately controlled and largely unregulated undergraduate colleges. Lacking vision or thought to excellence, these colleges are only one notch above cram schools.