Every year, I meet students at the point where education turns into expectation. They have submitted assignments, passed exams, earned credits and carried home the degree their families often regard as the bridge to security. In India, that faith is still rational, as higher education continues to improve the odds. In 2021–22, India enrolled 4.33 crore students in higher education, and the gross enrolment ratio rose to 28.4. An EAC-PM working paper found that workers with graduate education or above were 43.8 percentage points less likely to be in informal employment than workers with lower education.1
So, a degree does still carry real promise in India. But that promise now must prove itself in a more demanding labour market. Employers increasingly look beyond completion to conversion, asking whether graduates can turn academic learning into judgment, communication, and competent action in practical settings.
For as long as I can certainly recall, it was the university that supplied the credential and employers supplied the runway. That runway is regrettably much shorter. Now, firms expect graduates to learn faster, contribute earlier, and work confidently inside digital and AI-enabled systems from the start. And in what seems to be record time, the degree no longer settles readiness.
It is AI that has made this pressure visible across the economy, and its effects are not confined to software engineering or data science. Graduates entering finance, marketing, consulting, education, healthcare, and more, are likely to encounter a bombardment of automated workflows, AI-assisted research and data tools that can turn a rough instruction into a usable first draft. The basic environment of work has definitely changed.
Of course, a graduate does not need to become a coder or machine-learning engineer to be employable. But AI and data fluency have become part of the basic grammar of work, and employers need graduates who can define the problem before reaching for the software. The true test is whether the employee can regularly ask sharper questions, test outputs against evidence and context and recognise when a response is wrong, regardless of how impressive it reads.
The economics around this are fairly clean, actually. AI lowers the cost of basic execution and raises the value of judgment. When a tool can produce a memo, spreadsheet, presentation or code in seconds, the scarce skill becomes scrutiny. That means actively deciding what matters, what is missing, what is credible, and what should happen next.
India’s labour market already shows the strain between educational attainment and work readiness. The ILO-IHD India Employment Report 2024 found that youth account for almost 83% of India’s unemployed, while the share of unemployed youth with at least secondary education rose from 35.2% in 2000 to 65.7% in 2022.2 So, no, education, as we have known it, has not lost its value. The problem is that credentials alone cannot carry the full burden of employability.
Employer evidence points in the same direction. Indeed’s India research reports that 42% of hiring managers struggle to find candidates with the required skills.3 Microsoft and LinkedIn’s India findings show that 92% of Indian knowledge workers already use AI at work, while 80% of Indian leaders say they would prefer a less experienced candidate with AI skills over a more experienced candidate without them.4 The takeaway? Employers now treat AI competence as a mainstream signal of work readiness, rather than a niche credential reserved for technical roles.
As for the employability equation, I would not label this as “degree versus skills”. That framing is far too crude. The stronger signal is a degree joined to demonstrable capability. After all, employers still value the disciplinary foundations that come with a more classical education. Their scrutiny now falls on whether graduates can put those foundations to work by evaluating evidence, communicating clearly and adapting when tasks are unfamiliar. They do not need graduates who merely know facts. Facts, while ever important, are getting exponentially cheaper to obtain.
Frankly, this is where critical thinking stops being brochure language and becomes workplace capacity. An economics student may know market theory, but can she interpret a changing consumer dataset? A public policy student may understand institutions, but can he write an actionable decision memo for an administrator with limited time? A team of commerce graduates may know accounting principles, but can they use AI-assisted tools without handing final professional judgment over to the machine? From this, the strongest graduates will show their value through learning speed, communication and the ability to apply knowledge when conditions are incomplete.
Universities remain essential for precisely this reason, as they are meant to build intellectual foundations and disciplinary seriousness. Those qualities become more important in an AI-shaped economy, where speed is abundant and judgment seems scarce. At the same time, those qualities become more important in an AI-shaped economy, where speed is abundant and judgment is scarce. The test is transferable. Can their students use what they have learned under uncertainty and constraint?
Answering that requires stronger links between academic study and applied work. Internships, apprenticeships and case-based learning should become normal parts of higher education. Graduates should leave with knowledge and proof of capability. That proof may come through portfolios, technical demonstrations, research briefs or project work that shows how a student thinks when the answer is not waiting in a textbook.
Fortunately, policy has begun to move in this direction. NEP 2020 links education to gainful employment and learning outcomes, while UGC and AICTE frameworks increasingly support multidisciplinary learning, internships, apprenticeships, credit for skills, and flexible lifelong learning pathways.5 Skill India initiatives and newer digital skilling platforms reinforce the same broad shift. And since 2022, many AI and machine-learning offerings outside traditional higher education have expanded because employers and learners are responding to needs that formal systems still struggle to meet.
The task therefore is to make academic learning more transferable without making universities less academic. Easier said than done, I know. But employability cannot be treated as a one-time achievement secured at graduation. In the age of AI, the first job is only the first test; and graduates will need to continuously reskill, upskill and reinterpret their own expertise. While certainly not without its trials, this may mean that we are edging closer to a society that favours the “forever learner”. Personally, I find that a rather hopeful direction.
To sum up, yes, degrees still matter. They remain one of the strongest foundations for opportunity, especially in a labour market where formal work carries deep value. But the employability premium now belongs to graduates who keep converting education into capability. A degree may certify what a student has studied. Adaptability, judgment and applied skill will determine what that graduate can become.
References:
1 Press Information Bureau, Government of India, “Ministry of Education Releases All India Survey on Higher Education (AISHE) 2021–2022,” January 25, 2024, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1999713®=48&lang=2.
2 International Labour Organization and Institute for Human Development, India Employment Report 2024: Youth Employment, Education and Skills, March 29, 2024, https://www.ilo.org/publications/india-employment-report-2024-youth-employment-education-and-skills.
3 Indeed Editorial Team, “The Skills Gap Dilemma: Why 42% of Hiring Managers Can’t Find the Talent They Need—and How to Fix It,” Indeed, July 3, 2025, https://in.indeed.com/insights/the-skills-gap-dilemma-why-hiring-managers-cant-find-talent-how-to-fix-it.
4 Microsoft, “92% of Indian Knowledge Workers Use AI in the Workplace, Finds Microsoft and LinkedIn 2024 Work Trend Index,” May 16, 2024, https://news.microsoft.com/source/asia/2024/05/16/92-of-indian-knowledge-workers-use-ai-in-the-workplace-finds-microsoft-and-linkedin-2024-work-trend-index/.
5 Ministry of Education, Government of India, National Education Policy 2020, 2020, https://aicte.gov.in/sites/default/files/nep2020.pdf.
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