Thousands of students marched through India’s streets and cities last week in protest against the NEET paper leaks. Parents have questioned whether years of sacrifice still guarantee a fair opportunity. The controversy surrounding NEET has shaken confidence in one of India’s most important gateways into higher education.

Alongside have emerged widely reported claims that India has witnessed as many as 152 examination paper leaks since 2018, a statistic that has become central to today’s political debate over educational governance. This while investigations and official responses around fast-track courts investigating leaks continue.

Most commentary has focused on policing examinations, stricter punishments for perpetrators or technological fixes. Still others call for administrative reform. Necessary though these are, they avoid a far bigger question. Is trust the missing variable in the education-innovation linkage, particularly in the AI era?

For decades, economists, policymakers and educators believed the relationship between education and innovation was almost automatic. Schools created skills for universities. Universities created graduates. Graduates created innovation. Innovation generated prosperity and growth. That simple pipeline underpinned India’s rise from a developing economy into a global technology powerhouse.

AI (artificial intelligence) however is now disrupting every stage of that pipeline. The challenge facing India is therefore no longer simply educational. It is institutional and the above old model is breaking down, compounded by failing institutional trust that foster and perpetuate paper leaks.

Education as a social contract

The global post-war social contract with education rested on a simple assumption. Invest more in education. Produce more graduates. Generate more innovation and increase national prosperity like Japan, South Korea, or China. For decades, that model largely worked worldwide. India also built one of the world’s largest higher education systems. Its engineering graduates transformed global software industries. Its universities became engines of economic mobility.

But AI is now changing the production function of knowledge itself. Machines now perform many routine cognitive tasks once rewarded in classrooms. They summarise information. Generate software, write reports, and analyse data. Overall knowledge acquisition is becoming cheaper than ever before.

What becomes valuable instead are precisely those capabilities machines struggle to replicate, ethical judgment, creativity, interdisciplinary reasoning, and the ability to frame entirely new problems. Notice at its core, trust remains a foundational element.

Global scepticism about education

This comes also when there is a rise in global scepticism around the value of education. This comes also when recent research suggests that education matters not simply because it produces workers, but because it expands knowledge available to entire societies. Kanwar (2026) finds that additional years of schooling increase patenting primarily through their contribution to national knowledge stocks, with particularly large effects among countries already close to the global technological frontier. Di Sima (2026) shows that reforms strengthening academic freedom significantly increase graduate creativity, especially where universities enjoy institutional autonomy rather than centralised control. Di Sima (2023) demonstrates that external examinations can improve entrepreneurial behaviour by strengthening opportunity recognition and encouraging productive risk-taking. Biasi, Deming and Moser (2022) meanwhile argue that education broadens the innovation pipeline itself by ensuring that talented individuals from wider backgrounds reach the technological frontier.

Together these studies reveal something striking. Education affects innovation through multiple channels. Knowledge, creativity, opportunity and ultimately institutions and access. Yet they all quietly assume one condition. That citizens trust educational institutions. Trust is the hidden assumption running through the entire education-innovation literature. Perhaps now, it deserves to become a policy question in its own right.

India is not alone in confronting this trust challenge however. China (which also had leaks in Gaokao) is redesigning approximately 12,000 undergraduate programmes, and integrating artificial intelligence, quantum technologies, semiconductors and advanced manufacturing into higher education.

Across Europe, apprenticeships, dual education systems, lifelong learning, and microcredentials are expanding rapidly. North American employers increasingly recruit based on demonstrable skills rather than degrees alone.

So, while knowledge has become abundant, credential monopolies are disappearing. Educational ecosystems, and not educational factories, are becoming the source of national competitive advantage.

Overall thus, the real question around the student protests in India is whether the country can lead in this reset of education-innovation relationship, bringing forth trust? Or will it become a laggard in this regard resulting ultimately in a flight of human capital overseas.

An alternative wishful future

India often asks these days how it can become an AI leader. Its children are shining the country globally in Olympiads, though many are tutored in coaching centres. Perhaps those are the wrong questions and cause for celebration. Pausing a moment, can we ask instead if the country can be known as one with the world’s most trusted educational institutions, working with the fairest examinations, and with the most transparent admissions?

Imagine if we suddenly have independent accreditation and academic freedom rankings on the uptrend. Or even that Indian degrees are so trusted that foreign students from rich countries start flocking to Indian universities.

Such a reputation could itself become a differentiated national innovation strategy, though given the paper leak protests, this may sound wishful thinking. However, the economic logic here is simple. Trust in the educational ecosystem reduces transaction costs, encourages entrepreneurship, attracts investments, enables collaboration and allows societies to scale inclusive innovation faster, more so in the face of radical technologies imminent on a nation like AI.

Thus if trust truly is the missing variable, then researchers and policymakers should urgently try to answer at least two questions learning from the NEET paper leaks protests this week. First, does institutional trust independently influence national innovation outcomes beyond education spending and human capital? Second, which educational ecosystems (universities, apprenticeships, vocational systems or hybrid models) maximises trusted inclusive innovation in an AI age?

The bottom line is that 21st century will not simply reward countries that produce more graduates or creates the most powerful AI. It may reward those that build educational institutions society trusts enough to collaborate. The student protests should therefore be understood not merely as demonstrations against administrative failures. They are a warning that the education-innovation linkage itself is severely broken and not just in India but perhaps globally. If India can restore trust before others do, it may discover that it is not merely a desirable characteristic of education. It is the core missing variable in the education-innovation relationship, particularly in the AI era.

Chirantan Chatterjee is a Professor of Economics at U-Sussex and 2025 Founding Fellow of the Royal Economic Society, U.K. He is also a Visiting Professor at the EMLYON Business School, the Max Planck Institute (MIPLC) and Ahmedabad-U, also 2018-2021 ICICI Bank Chair at IIM Ahmedabad and 2018-19 Campbell & Teller National Fellow at Hoover Institution, Stanford University.

Published - July 29, 2026 12:02 am IST