Skilling India Nov10

SKILLING INDIA
THE BILLION PEOPLE CHALLENGE
NOVEMBER 2010
Skilling India The Billion People Challenge

A report by CRISIL Centre for Economic Research
CRISIL, Skilling India: The Billion People Challenge, November 2010
Skilling India The Billion People Challenge

A report by CRISIL Centre for Economic Research
CRISIL Centre for Economic Research
Key messages
With its population forecast to rise from 1.2 billion in 2010 to almost
1.5 billion in the next twenty years, India will become the worlds most
populous country by 2030.
India is also set to become the largest contributor to the global workforce.
Its working-age population (15-59 years) is likely to swell from 749 million
to 962 million over 2010 to 2030.
If Indias working-age population, its so-called demographic dividend, is

productively employed, Indias economic growth prospects will brighten.
India can create jobs in the scale required on a sustained basis only with
changes in its policy frameworks for education and workforce management.
If the current trends in Indias labour participation and unemployment rate

continue, about 423 million in Indias working-age population will be
unemployed or unable to participate in the job market by 2030.
Since the job market is biased towards high-skill labour, the creation of jobs
for low-skill labour, who would continue to dominate its workforce, will
challenge India.
Closing the skill gaps of its qualified workforce will be critical, as India
depends more on human capital than its peer countries that have a similar
level of economic development.
The workforce will increase the most in states that are the poorest and offer
the lowest employment opportunity. Creating jobs for the swelling
workforce in these states will be a major challenge.
Labour skill-mismatch and shortage could adversely impact Indias

economic growth and wage costs; India would have to bear a greater fiscal
burden to support its unemployed.
Analytical contacts
Dharmakirti Joshi
Vidya Mahambare
Poonam Munjal
djoshi@crisil.com
vmahambare@crisil.com
pmunjal@crisil.com
Errata - Earlier print run of the report had a data error in the third paragraph of page 11. This error has been
rectified in this soft copy
Key messages
With its population forecast to rise from 1.2 billion in 2010 to almost
1.5 billion in the next twenty years, India will become the worlds most
populous country by 2030.
India is also set to become the largest contributor to the global workforce.
Its working-age population (15-59 years) is likely to swell from 749 million
to 962 million over 2010 to 2030.
If Indias working-age population, its so-called demographic dividend, is

productively employed, Indias economic growth prospects will brighten.
India can create jobs in the scale required on a sustained basis only with
changes in its policy frameworks for education and workforce management.
If the current trends in Indias labour participation and unemployment rate

continue, about 423 million in Indias working-age population will be
unemployed or unable to participate in the job market by 2030.
Since the job market is biased towards high-skill labour, the creation of jobs
for low-skill labour, who would continue to dominate its workforce, will
challenge India.
Closing the skill gaps of its qualified workforce will be critical, as India
depends more on human capital than its peer countries that have a similar
level of economic development.
The workforce will increase the most in states that are the poorest and offer
the lowest employment opportunity. Creating jobs for the swelling
workforce in these states will be a major challenge.
Labour skill-mismatch and shortage could adversely impact Indias

economic growth and wage costs; India would have to bear a greater fiscal
burden to support its unemployed.
Analytical contacts
Dharmakirti Joshi
Vidya Mahambare
Poonam Munjal
djoshi@crisil.com
vmahambare@crisil.com
pmunjal@crisil.com
Errata - Earlier print run of the report had a data error in the third paragraph of page 11. This error has been
rectified in this soft copy
Contents
Introduction ........................................................................................ 3
Introduction
Quality
Quantity
Indias demographic edge in the global context ................................. 4

Indias labour supply ........................................................................... 5
Education
Indias labour demand ........................................................................10

Skills
Young and
large
workforce
The outcome........................................................................................13
Conclusion...........................................................................................16
Evolving demographics unambiguously point out that India will remain a young
nation and the largest contributor to the global workforce over the next few
decades - an exceptional strength compared to the rapidly ageing population in
the Western countries, and that in China, owing to its one-child policy. Although
investment, reforms and infrastructure are likely drivers of Indias economic
growth, no growth driver is as certain as the availability of people in Indias
working-age group. A young population is Indias demographic dividend. It
gives India the potential to become a global production hub as well as a large
consumer of goods and services. Further, since the age-group of 45-60 years is
the key contributor to household savings, Indias savings rate, which has
increased rapidly in the last decade, will get a further boost thereby supporting
investment.
The rise in its working-age population, however, is necessary but not sufficient
for India to sustain its economic growth. If India does not create enough jobs
and its workers are not adequately prepared for those jobs, its demographic
dividend may turn into a liability.
This report examines the pros and cons of the swelling working-age population
by taking stock of Indias likely demand for labour. It analyses Indias labourmarket imbalances and highlights how skill mismatch and shortage can impact
productivity growth which is critical for India to enhance its long-term growth.
And finally, it identifies fiscal implications of Indias population dynamics.
Contents
Introduction ........................................................................................ 3
Introduction
Quality
Quantity
Indias demographic edge in the global context ................................. 4

Indias labour supply ........................................................................... 5
Education
Indias labour demand ........................................................................10

Skills
Young and
large
workforce
The outcome........................................................................................13
Conclusion...........................................................................................16
Evolving demographics unambiguously point out that India will remain a young
nation and the largest contributor to the global workforce over the next few
decades - an exceptional strength compared to the rapidly ageing population in
the Western countries, and that in China, owing to its one-child policy. Although
investment, reforms and infrastructure are likely drivers of Indias economic
growth, no growth driver is as certain as the availability of people in Indias
working-age group. A young population is Indias demographic dividend. It
gives India the potential to become a global production hub as well as a large
consumer of goods and services. Further, since the age-group of 45-60 years is
the key contributor to household savings, Indias savings rate, which has
increased rapidly in the last decade, will get a further boost thereby supporting
investment.
The rise in its working-age population, however, is necessary but not sufficient
for India to sustain its economic growth. If India does not create enough jobs
and its workers are not adequately prepared for those jobs, its demographic
dividend may turn into a liability.
This report examines the pros and cons of the swelling working-age population
by taking stock of Indias likely demand for labour. It analyses Indias labourmarket imbalances and highlights how skill mismatch and shortage can impact
productivity growth which is critical for India to enhance its long-term growth.
And finally, it identifies fiscal implications of Indias population dynamics.
Figure 1
Indias bulging
working-age
population
Indian demographics in the global context
Indias labour supply
India will be the world's most populous country by 2030

Indias share in world population in 2010, at 17.6 per cent, is the
largest, after China, according to UN World Population Prospects
2008. With Indias population forecast to grow at 1.0 per cent per
year, significantly faster than that of China at 0.4 per cent per year,
India will become the most populated country in the world by 2030.
Indias population is likely to rise from 1.21 billion in 2010 to 1.48
billion by 2030, and further to 1.6 billion by 2050 (figure 1).
How many?
Only 61 per cent of working-age population is available for work
According to the National Sample Survey Organisations (NSSO)
latest large-sample survey in 2004-05, Indias labour-force
participation rate was a mere 61 per cent for that year. The balance
39 per cent of the working-age population, consisting mostly of
women, kept away from the workforce for various reasons such as
studying further (9.3 per cent), raising children and managing
households (15.9 per cent), or engaging themselves in other
household duties (12.1 per cent).
million
1,800
60+ years
Working women are a minority

According to the NSSO survey, while only 13.8 per cent of workingage men stayed out of Indias workforce in 2004-05, most of whom
did so to study further, about 65.4 per cent of working-age women
kept away from work. Hence, of the 282 million working-age
women, only around 94 million were employed and another 4.3
million women were looking for work.
1,200
15-59 years
600
0-14 years
0
2010
2020
2030
2040
2050
Source: UN World Population Prospects, 2008 Revision
and have the largest working-age population

More significantly, India will have the largest number of people in the
working age group of 15-59 years (figure 1). (The working age group,
as per the Indian definition, is taken as the age group of 15-59 years
throughout this report.) As on 2010, half of Indias population is
below 25 years of age, and 62 per cent of its population is in the
working-age group. India, thus, accounts for 17.5 per cent of the
worlds total working-age population. From 2010 to 2030, Indias total
working-age population is poised to rise from 749 million to 962
million, accounting for about 28 per cent of the increase in the
worlds total working-age population over the period. In contrast, the
working-age population of China will shrink by 45 million (figure 2).
Figure 2
Addition to working age
population between 2010
and 2030
In India, the working-age population

represents the total number of people in the
working-age group of 15-59 years. 'Labourforce participation rate' refers to the share
of people in this group, who are working or
are willing to work, in total working-age
population.
India is set to become the largest

contributor to the global workforce.
India has a higher real-dependency ratio

Indias real dependency ratio of 1.67 dependents per employed
person in 2010 far exceeds the conventional dependency ratio of
0.62. A cause for optimism is, the real and conventional dependency
ratios are both set to decline over the next few decades - while the
conventional dependency ratio will come down from 0.62 in 2010 to
0.54 in 2030, the real dependency ratio will fall from 1.67 to 1.54 over
the period.
Given India's low rate of labour-force

participation, its dependency ratio (DR) - a
conventional measure of the number of
children and old-aged persons supported by
each working-age person - masks the extent
of dependency. Real dependency ratio
(RDR), measured as the proportion of nonworking population - children, old-age and
working-age people who are not working to working population, would be a more
appropriate measure of the dependency.
million
340
213
14
-11
Africa
India
US
Japan
-45
China
-54
Europe
Figure 1
Indias bulging
working-age
population
Indian demographics in the global context
Indias labour supply
India will be the world's most populous country by 2030

Indias share in world population in 2010, at 17.6 per cent, is the
largest, after China, according to UN World Population Prospects
2008. With Indias population forecast to grow at 1.0 per cent per
year, significantly faster than that of China at 0.4 per cent per year,
India will become the most populated country in the world by 2030.
Indias population is likely to rise from 1.21 billion in 2010 to 1.48
billion by 2030, and further to 1.6 billion by 2050 (figure 1).
How many?
Only 61 per cent of working-age population is available for work
According to the National Sample Survey Organisations (NSSO)
latest large-sample survey in 2004-05, Indias labour-force
participation rate was a mere 61 per cent for that year. The balance
39 per cent of the working-age population, consisting mostly of
women, kept away from the workforce for various reasons such as
studying further (9.3 per cent), raising children and managing
households (15.9 per cent), or engaging themselves in other
household duties (12.1 per cent).
million
1,800
60+ years
Working women are a minority

According to the NSSO survey, while only 13.8 per cent of workingage men stayed out of Indias workforce in 2004-05, most of whom
did so to study further, about 65.4 per cent of working-age women
kept away from work. Hence, of the 282 million working-age
women, only around 94 million were employed and another 4.3
million women were looking for work.
1,200
15-59 years
600
0-14 years
0
2010
2020
2030
2040
2050
and have the largest working-age population

More significantly, India will have the largest number of people in the
working age group of 15-59 years (figure 1). (The working age group,
as per the Indian definition, is taken as the age group of 15-59 years
throughout this report.) As on 2010, half of Indias population is
below 25 years of age, and 62 per cent of its population is in the
working-age group. India, thus, accounts for 17.5 per cent of the
worlds total working-age population. From 2010 to 2030, Indias total
working-age population is poised to rise from 749 million to 962
million, accounting for about 28 per cent of the increase in the
worlds total working-age population over the period. In contrast, the
working-age population of China will shrink by 45 million (figure 2).
Figure 2
Addition to working age
population between 2010
and 2030
In India, the working-age population

represents the total number of people in the
working-age group of 15-59 years. 'Labourforce participation rate' refers to the share
of people in this group, who are working or
are willing to work, in total working-age
population.
India is set to become the largest

contributor to the global workforce.
India has a higher real-dependency ratio

Indias real dependency ratio of 1.67 dependents per employed
person in 2010 far exceeds the conventional dependency ratio of
0.62. A cause for optimism is, the real and conventional dependency
ratios are both set to decline over the next few decades - while the
conventional dependency ratio will come down from 0.62 in 2010 to
0.54 in 2030, the real dependency ratio will fall from 1.67 to 1.54 over
the period.
Given India's low rate of labour-force

participation, its dependency ratio (DR) - a
conventional measure of the number of
children and old-aged persons supported by
each working-age person - masks the extent
of dependency. Real dependency ratio
(RDR), measured as the proportion of nonworking population - children, old-age and
working-age people who are not working to working population, would be a more
appropriate measure of the dependency.
million
340
213
14
-11
Africa
India
US
Japan
-45
China
-54
Europe
Regional demographic diversity will be unfavourable

According to Census of Indias population projections, Uttar
Pradesh, Bihar, Madhya Pradesh and Rajasthan will account for more
than 50 per cent of the increase in Indias working age population
over 2011 to 2021. These states, also the poorest four states among
the 15 major states, based on per capita income (Net Domestic
Product), would add 54 million to Indias workforce, whereas the four
most affluent states - Haryana, Maharashtra, Punjab and Gujarat would together add only 21.6 million to the workforce (figure 3). The
maximum increase in working-age population will therefore take
place in states that are the poorest and offer the lowest employment
opportunity.
Figure 3
State-wise
incremental workingage population over
2011 to 2021
The working-age population will increase

the most in states that are the poorest and
offer the lowest employment opportunity.
70
56
42
28
14
0
1980
2010 1980
2010 1980
2010 1980
2010 1980
2010
India
Malaysia
Korea
Thailand
China
Source: Barro-Lee Dataset 2010
Persistent drop-out rates and lack of teachers plague Indias

education system
Indias school drop-out rate continues to be alarming. As on 2006-07,
only 17 of 100 children who entered 1st grade completed 10th grade
(figure 5). Drop-out rates have, however, marginally declined over the
past two decades.
Uttar Pradesh
Bihar
Maharashtra
Madhya Pradesh
Rajasthan
West Bengal
Gujarat
Andhra Pradesh
Karnataka
Jharkhand
Haryana
Orissa
Chhattisgarh
Tamil Nadu
Punjab
Kerala
Jammu & Kashmir
Uttarakhand
Himachal Pradesh
0
Figure 4
Share of population
more than 15 years of
age, without schooling
Figure 5
Share of children
dropping out of
schools
Boys
Indias drop-out rates are declining, but not

fast enough.
Girls
100
75
50
25
0
1980-81
2006-07P
Primary
(Grade I-IV)
10
15
20
25
1980-81
2006-07P
Middle
(Grade V-VII)
1980-81
2006-07P
High
(Grade VII-X)
Source: Selected Socio-Economic Statistics, India, 2008
million
Source: Population Projections, Census of India
How good?
High levels of illiteracy
About 23.7 per cent of Indian men were illiterate in 2006-07 whereas
almost 46.6 per cent of women were illiterate. Although Indias
literacy has improved over the past four decades, the proportion of
its illiterate population, over 15 years of age continues to be much
more than in most other developing countries (figure 4).
Due to neglect of basic education, a large

proportion of working-age people are not
equipped to compete in the job market.
One-fifth of Indias primary schools are single-teacher schools. India,

similar to sub-Sahara African countries, has a pupil-teacher ratio of
45, which lags behind most Asian countries. According to the Global
Education Digest 2010, China and Japan have a pupil-teacher ratio
of 18, whereas Indonesia and Malaysia have a pupil-teacher ratio of
17 and 15. Indias pupil-teacher ratio in primary schools has been
rising over a period of time, which is worrisome (figure 6). The lack
of a sufficient number of teachers has adversely affected the quality
of learning in Indias schools (figure 7).
High pupil-teacher ratio impacts quality of

schooling.
Regional demographic diversity will be unfavourable

According to Census of Indias population projections, Uttar
Pradesh, Bihar, Madhya Pradesh and Rajasthan will account for more
than 50 per cent of the increase in Indias working age population
over 2011 to 2021. These states, also the poorest four states among
the 15 major states, based on per capita income (Net Domestic
Product), would add 54 million to Indias workforce, whereas the four
most affluent states - Haryana, Maharashtra, Punjab and Gujarat would together add only 21.6 million to the workforce (figure 3). The
maximum increase in working-age population will therefore take
place in states that are the poorest and offer the lowest employment
opportunity.
Figure 3
State-wise
incremental workingage population over
2011 to 2021
The working-age population will increase

the most in states that are the poorest and
offer the lowest employment opportunity.
70
56
42
28
14
0
1980
2010 1980
2010 1980
2010 1980
2010 1980
2010
India
Malaysia
Korea
Thailand
China
Source: Barro-Lee Dataset 2010
Persistent drop-out rates and lack of teachers plague Indias

education system
Indias school drop-out rate continues to be alarming. As on 2006-07,
only 17 of 100 children who entered 1st grade completed 10th grade
(figure 5). Drop-out rates have, however, marginally declined over the
past two decades.
Uttar Pradesh
Bihar
Maharashtra
Madhya Pradesh
Rajasthan
West Bengal
Gujarat
Andhra Pradesh
Karnataka
Jharkhand
Haryana
Orissa
Chhattisgarh
Tamil Nadu
Punjab
Kerala
Jammu & Kashmir
Uttarakhand
Himachal Pradesh
0
Figure 4
Share of population
more than 15 years of
age, without schooling
Figure 5
Share of children
dropping out of
schools
Boys
Indias drop-out rates are declining, but not

fast enough.
Girls
100
75
50
25
0
1980-81
2006-07P
Primary
(Grade I-IV)
10
15
20
25
1980-81
2006-07P
Middle
(Grade V-VII)
1980-81
2006-07P
High
(Grade VII-X)
million
Source: Population Projections, Census of India
How good?
High levels of illiteracy
About 23.7 per cent of Indian men were illiterate in 2006-07 whereas
almost 46.6 per cent of women were illiterate. Although Indias
literacy has improved over the past four decades, the proportion of
its illiterate population, over 15 years of age continues to be much
more than in most other developing countries (figure 4).
Due to neglect of basic education, a large

proportion of working-age people are not
equipped to compete in the job market.
One-fifth of Indias primary schools are single-teacher schools. India,

similar to sub-Sahara African countries, has a pupil-teacher ratio of
45, which lags behind most Asian countries. According to the Global
Education Digest 2010, China and Japan have a pupil-teacher ratio
of 18, whereas Indonesia and Malaysia have a pupil-teacher ratio of
17 and 15. Indias pupil-teacher ratio in primary schools has been
rising over a period of time, which is worrisome (figure 6). The lack
of a sufficient number of teachers has adversely affected the quality
of learning in Indias schools (figure 7).
High pupil-teacher ratio impacts quality of

schooling.
Figure 6
Pupils per teacher
nos
Inadequate education and skills make a large proportion of

educated youth unemployable
As on 2004-05, only 78 million of the 257 million youth were
qualified in the secondary level - 10th grade or above. Only 23 per
cent of these qualified youth held at least a diploma or a graduate
degree. Even within this minority of graduate youth, a large
proportion remained unemployed (figure 9).
50
Primary
45
40
35
Middle
30
Secondary
Only a minority of Indian youth receive

education up to degree or diploma level and
a significant proportion of these youth are
unemployed. An employable individual is
one who has the necessary skill sets to
undertake a job, requiring minimal
additional training.
25
1980-81
1990-91
2000-01
2006-07P
During the economic upturn in the past decade, unemployment was

the highest for diploma and certificate holders, followed closely by
graduates and postgraduates. More than 30 per cent of Indias
engineering postgraduate diploma holders were unemployed (figure
9). This implies that, despite sufficient educational qualification, the
workforce does not have skills that are required by the job market.
Figure 7
Percentage of
students with
learning achievement
Poor quality of schooling affects skill

competency of Indias labour force.
70
Language
45
Figure 9
Unemployment
rates among
educated youth
Environmental studies/Science
Mathematics
20
Class V
%
36.5
30.2
21.4
22.6
25.7
25.7
19.7
Class VII
15.9
Lack of vocational training is a hurdle for Indias youth

In 2004-05, only 28 million of Indias 257 million job-seeking
population in the age group of 15-29 received any form of vocational
training. And, only 9 million of these 28 million received formal
vocational training from training institutes; the others acquired skills
informally from their preceding generation or other household
members (figure 8).
Figure 8
Percentage of
youth population
with vocational
training
%
91.1
86.2
4.3
Formally
skilled
9.5
Non-formally
skilled
Unskilled
3.0
5.9
Formally
skilled
Non-formally
Skilled
Male
Source: National Sample Survey Organisation, 61st Round, 2004-05
Female
Unskilled
Technical
degree
Agri
Engg/Tech Medicine
Diploma - Undergraduate
Lack of vocational training diminishes

employability.
Agri
Engg/Tech Medicine
Diploma - Graduate and above
Total Educated
youth
Looking ahead
Although India will have the worlds largest pool of working-age
people by 2030, if the current trend in labour participation continues,
only 539 million out of 962 million people of working age would be
working by 2030. In the absence of any significant reforms in school
and higher education, the quality of Indias labour force would
remain below par.
CRISIL Researchs study on Indias education services industry,
August 2010, points out, rather disturbingly, that although engineer
turnout from Indias institutes will almost double over 2011 to 2015 from 0.37 million to 0.65 million engineers, their employability will
diminish further. As a result, most industries, including IT services,
will face a talent bottleneck.
Figure 6
Pupils per teacher
nos
Inadequate education and skills make a large proportion of

educated youth unemployable
As on 2004-05, only 78 million of the 257 million youth were
qualified in the secondary level - 10th grade or above. Only 23 per
cent of these qualified youth held at least a diploma or a graduate
degree. Even within this minority of graduate youth, a large
proportion remained unemployed (figure 9).
50
Primary
45
40
35
Middle
30
Secondary
Only a minority of Indian youth receive

education up to degree or diploma level and
a significant proportion of these youth are
unemployed. An employable individual is
one who has the necessary skill sets to
undertake a job, requiring minimal
additional training.
25
1980-81
1990-91
2000-01
2006-07P
During the economic upturn in the past decade, unemployment was

the highest for diploma and certificate holders, followed closely by
graduates and postgraduates. More than 30 per cent of Indias
engineering postgraduate diploma holders were unemployed (figure
9). This implies that, despite sufficient educational qualification, the
workforce does not have skills that are required by the job market.
Figure 7
Percentage of
students with
learning achievement
Poor quality of schooling affects skill

competency of Indias labour force.
70
Language
45
Figure 9
Unemployment
rates among
educated youth
Environmental studies/Science
Mathematics
20
Class V
%
36.5
30.2
21.4
22.6
25.7
25.7
19.7
Class VII
15.9
Lack of vocational training is a hurdle for Indias youth

In 2004-05, only 28 million of Indias 257 million job-seeking
population in the age group of 15-29 received any form of vocational
training. And, only 9 million of these 28 million received formal
vocational training from training institutes; the others acquired skills
informally from their preceding generation or other household
members (figure 8).
Figure 8
Percentage of
youth population
with vocational
training
%
91.1
86.2
4.3
Formally
skilled
9.5
Non-formally
skilled
Unskilled
3.0
5.9
Formally
skilled
Non-formally
Skilled
Male
Female
Unskilled
Technical
degree
Agri
Engg/Tech Medicine
Diploma - Undergraduate
Lack of vocational training diminishes

employability.
Agri
Engg/Tech Medicine
Diploma - Graduate and above
Total Educated
youth
Looking ahead
Although India will have the worlds largest pool of working-age
people by 2030, if the current trend in labour participation continues,
only 539 million out of 962 million people of working age would be
working by 2030. In the absence of any significant reforms in school
and higher education, the quality of Indias labour force would
remain below par.
CRISIL Researchs study on Indias education services industry,
August 2010, points out, rather disturbingly, that although engineer
turnout from Indias institutes will almost double over 2011 to 2015 from 0.37 million to 0.65 million engineers, their employability will
diminish further. As a result, most industries, including IT services,
will face a talent bottleneck.
10
Indias labour demand

Economic cycles create mismatch between labour demand and
supply
During an economic upturn, when demand in an economy rapidly
grows, demand for labour exceeds the supply of employable
workforce. The reverse of this happens during a downturn. The
consequent mismatch between labour demand and supply is normal,
and not a cause of concern.
Economic cycles and India's development

pattern, which is governed by economic
policies, determine the nature of India's
labour demand.
Neither has industry expanded fast enough

nor has it been able to absorb labour to its
fullest potential, owing partly to India's rigid
labour laws that discourage employment by
the organised sector.
The restrictive labour laws impact employment in three ways - i)

entrepreneurs get discouraged from entering the industrial sector; ii)
industry tries to substitute labour with capital, thereby reducing the
employment intensity of industrial production, an undesirable
outcome in a labour-surplus economy; iii) smaller-than-optimal-size
firms proliferate in the formal sector as industry tries to go around
labour laws by outsourcing work to the informal sector. It is therefore
of little surprise that despite an accelerated GDP growth,
employment by the organised sector has decreased during the past
few years.
Indias unconventional economic development has led to excess

employment in agriculture
When an economy is in the initial stages of development, the share
of the agriculture sector tends to be high. Then, the share of industry
increases, and eventually, services account for a dominant share of
the GDP. In this pattern of economic development, labour is
transferred from agriculture to industry and finally to services. Indias
pattern of economic development has, however, been quite
unconventional.
The share of agriculture in Indias GDP came down sharply from 30
per cent in 1993-94 to 18.9 per cent in 2004-05 (figure 10).
Agricultures contribution to total employment, however, reduced
narrowly from 62.3 per cent to 56.1 per cent. In contrast, the share of
industry and services in GDP together rose by just over 11
percentage points to 81.1 per cent whereas the share of employment
in these sectors grew only by 6 percentage points. Thus, more than
half of Indias total employed population remains occupied in
agriculture even though the sector currently contributes less than 20
per cent to GDP.
Policy barriers curtail labour demand in industry

In 2004-05, industry contributed 28 per cent to GDP and employed
19 per cent of Indias workforce Even as far back as 1983-84,
industrys share in GDP and employment was about 24 and 14 per
cent. Indias restrictive labour laws are partly responsible for
discouraging growth in industry and employment. For instance,
labour laws restrict units that employ more than 100 workers from
firing employees.
A disproportionately large share of

population continues to depend on
agriculture for employment.
Unanticipated growth in services increases demand for skilled

labour
The expansion of service industries such as IT/ITeS and financial
services over the past decade created a major discontinuity in Indias
pattern of economic development. A sudden and sharp rise in labour
demand in these industries sparked a scarcity of skilled manpower,
and pushed up wages of skilled manpower beyond the growth in
their productivity. Employment in the IT/ITeS export industry alone
increased from 0.38 million in 2002-03 to 1.77 million in 2009-10.
Owing to advances in technology and

differences in regulations, the high-skilled
services sector has expanded rapidly relative
to industry, creating a demand for a specific
type of skill-set, which, in turn, has resulted
in skill mismatch.
Looking ahead
Figure 10
Share of major
sectors in GDP and
employment
GDP
Employment
62.3
56.1
53.1
44.8
30.0
25.2
18.9
1993-94
2004-05
Agriculture
15.4
1993-94
Industry
28.0
18.8
2004-05
25.1
22.4
1993-94
If the current pattern of employment distribution across agriculture,

industry and services continues, employment in services would rise
from 135.5 million in 2010 to around 177.4 million in 2030, whereas
labour demand in the industrial sector would only increase from 91
million to 119 million over the period.
2004-05
Services
Source: Central Statistical Organisation, National Sample Survey Organisation
11
10
Indias labour demand

Economic cycles create mismatch between labour demand and
supply
During an economic upturn, when demand in an economy rapidly
grows, demand for labour exceeds the supply of employable
workforce. The reverse of this happens during a downturn. The
consequent mismatch between labour demand and supply is normal,
and not a cause of concern.
Economic cycles and India's development

pattern, which is governed by economic
policies, determine the nature of India's
labour demand.
Neither has industry expanded fast enough

nor has it been able to absorb labour to its
fullest potential, owing partly to India's rigid
labour laws that discourage employment by
the organised sector.
The restrictive labour laws impact employment in three ways - i)

entrepreneurs get discouraged from entering the industrial sector; ii)
industry tries to substitute labour with capital, thereby reducing the
employment intensity of industrial production, an undesirable
outcome in a labour-surplus economy; iii) smaller-than-optimal-size
firms proliferate in the formal sector as industry tries to go around
labour laws by outsourcing work to the informal sector. It is therefore
of little surprise that despite an accelerated GDP growth,
employment by the organised sector has decreased during the past
few years.
Indias unconventional economic development has led to excess

employment in agriculture
When an economy is in the initial stages of development, the share
of the agriculture sector tends to be high. Then, the share of industry
increases, and eventually, services account for a dominant share of
the GDP. In this pattern of economic development, labour is
transferred from agriculture to industry and finally to services. Indias
pattern of economic development has, however, been quite
unconventional.
The share of agriculture in Indias GDP came down sharply from 30
per cent in 1993-94 to 18.9 per cent in 2004-05 (figure 10).
Agricultures contribution to total employment, however, reduced
narrowly from 62.3 per cent to 56.1 per cent. In contrast, the share of
industry and services in GDP together rose by just over 11
percentage points to 81.1 per cent whereas the share of employment
in these sectors grew only by 6 percentage points. Thus, more than
half of Indias total employed population remains occupied in
agriculture even though the sector currently contributes less than 20
per cent to GDP.
Policy barriers curtail labour demand in industry

In 2004-05, industry contributed 28 per cent to GDP and employed
19 per cent of Indias workforce Even as far back as 1983-84,
industrys share in GDP and employment was about 24 and 14 per
cent. Indias restrictive labour laws are partly responsible for
discouraging growth in industry and employment. For instance,
labour laws restrict units that employ more than 100 workers from
firing employees.
A disproportionately large share of

population continues to depend on
agriculture for employment.
Unanticipated growth in services increases demand for skilled

labour
The expansion of service industries such as IT/ITeS and financial
services over the past decade created a major discontinuity in Indias
pattern of economic development. A sudden and sharp rise in labour
demand in these industries sparked a scarcity of skilled manpower,
and pushed up wages of skilled manpower beyond the growth in
their productivity. Employment in the IT/ITeS export industry alone
increased from 0.38 million in 2002-03 to 1.77 million in 2009-10.
Owing to advances in technology and

differences in regulations, the high-skilled
services sector has expanded rapidly relative
to industry, creating a demand for a specific
type of skill-set, which, in turn, has resulted
in skill mismatch.
Looking ahead
Figure 10
Share of major
sectors in GDP and
employment
GDP
Employment
62.3
56.1
53.1
44.8
30.0
25.2
18.9
1993-94
2004-05
Agriculture
15.4
1993-94
Industry
28.0
18.8
2004-05
25.1
22.4
1993-94
If the current pattern of employment distribution across agriculture,

industry and services continues, employment in services would rise
from 135.5 million in 2010 to around 177.4 million in 2030, whereas
labour demand in the industrial sector would only increase from 91
million to 119 million over the period.
2004-05
Services
Source: Central Statistical Organisation, National Sample Survey Organisation
11
12
The outcome
With sectors that require a highly-skilled workforce - financial

services, IT/ITeS, biotechnology and pharmaceuticals - set to expand
briskly over the next decade, Indias transition to a knowledge-based
economy would require a new generation of educated and skilled
workforce.
The potential trends in labour supply and demand indicate the nature
of imbalances in the labour market. The imbalances are likely to have
the following effects on the labour market.
The challenge of skill mismatch
The mismatch in Indias workforce demand and supply is as much in
jobs that require basic vocational skills like welding, plumbing and
paramedics as it is in jobs that require well-qualified manpower.
CRISIL Researchs report on Education services, August 2010,

forecasts that demand for labour is set to grow rapidly over the next
five years in knowledge-based industries such as IT/ITeS and
financial services as well as in industries such as infrastructure,
construction, mining and healthcare that require people with
vocational skills such as technicians, welders, fitters and paramedics.
If the current trends in the nature of labour demand and supply

continue, skill mismatch would continue to plague the Indian labour
market. The mismatch would continue to stem from skill shortages,
where there are not enough people with a specific type of skill to
meet demand. For example, even at present, knowledge-based
industries such as IT/ITeS have trouble recruiting the kind of
information technology specialists they need. A new generation of
educated and skilled people, who are in short supply, will be required
to spearhead Indias transition to a knowledge-based economy.
Consequently, wages and attrition rates would continue to rise in
industries that face the skill mismatch.
The report estimates that the IT industry will generate 0.62 million
jobs, and public and private sector banks will add 0.25 million and
0.09 million employees, over 2011 to 2015. Most of the jobs in
public-sector banks are likely to require managerial skills; almost onethird of public sector banks current workforce is expected to retire
over the period, of which 50 per cent would be officers.
Although the service sector would continue to be Indias growth
engine, it would, given its relatively low labour-intensity of
production, nevertheless be unable to generate sufficient employment
to reduce the disguised unemployment in agriculture. India will need
to create jobs in labour-intensive industries to absorb the sizeable
workforce from agriculture in industry. In order to reduce the share
of employment in agriculture from about 50 per cent to 25 per cent
by 2030, industry would have to double its labour demand from 119
million in 2010 to 274 million in 2030 (figure 11).
Figure 11
Employment in major
sectors of the
economy
million
274.6
234.0
177.4 177.4
150.7
119.1
91.0
Agriculture
2010 Estimated
Industry
2030 Status quo
At the same time, a vast number of qualified workers, who are a

correct fit, on paper, for knowledge-based jobs, would continue to
remain unemployed. This suggests that skill shortage relates, in part,
to a scarcity of people with the required skills, experience and quality
of education.
Removing constraints to expansion of

labour-intensive industries would be the key
to absorb excess labour in agriculture.
306.2
135.5
Skill shortage in knowledge-based jobs

relates, in part, to a scarcity of people with
the required skills, experience and quality of
education.
Skill shortage would also persist in jobs requiring vocational skills.

Opportunities in infrastructure, construction, mining and healthcare
have increased the demand for vocationally-trained workers. As
formal vocational training has not been widespread, skilled workers
to meet the rising demand from these sectors are likely to remain in
short supply.
Services
2030 Desired
Source: National Sample Survey Organisation, CRISIL estimates
13
12
The outcome
With sectors that require a highly-skilled workforce - financial

services, IT/ITeS, biotechnology and pharmaceuticals - set to expand
briskly over the next decade, Indias transition to a knowledge-based
economy would require a new generation of educated and skilled
workforce.
The potential trends in labour supply and demand indicate the nature
of imbalances in the labour market. The imbalances are likely to have
the following effects on the labour market.
The challenge of skill mismatch
The mismatch in Indias workforce demand and supply is as much in
jobs that require basic vocational skills like welding, plumbing and
paramedics as it is in jobs that require well-qualified manpower.
CRISIL Researchs report on Education services, August 2010,

forecasts that demand for labour is set to grow rapidly over the next
five years in knowledge-based industries such as IT/ITeS and
financial services as well as in industries such as infrastructure,
construction, mining and healthcare that require people with
vocational skills such as technicians, welders, fitters and paramedics.
If the current trends in the nature of labour demand and supply

continue, skill mismatch would continue to plague the Indian labour
market. The mismatch would continue to stem from skill shortages,
where there are not enough people with a specific type of skill to
meet demand. For example, even at present, knowledge-based
industries such as IT/ITeS have trouble recruiting the kind of
information technology specialists they need. A new generation of
educated and skilled people, who are in short supply, will be required
to spearhead Indias transition to a knowledge-based economy.
Consequently, wages and attrition rates would continue to rise in
industries that face the skill mismatch.
The report estimates that the IT industry will generate 0.62 million
jobs, and public and private sector banks will add 0.25 million and
0.09 million employees, over 2011 to 2015. Most of the jobs in
public-sector banks are likely to require managerial skills; almost onethird of public sector banks current workforce is expected to retire
over the period, of which 50 per cent would be officers.
Although the service sector would continue to be Indias growth
engine, it would, given its relatively low labour-intensity of
production, nevertheless be unable to generate sufficient employment
to reduce the disguised unemployment in agriculture. India will need
to create jobs in labour-intensive industries to absorb the sizeable
workforce from agriculture in industry. In order to reduce the share
of employment in agriculture from about 50 per cent to 25 per cent
by 2030, industry would have to double its labour demand from 119
million in 2010 to 274 million in 2030 (figure 11).
Figure 11
Employment in major
sectors of the
economy
million
274.6
234.0
177.4 177.4
150.7
119.1
91.0
Agriculture
2010 Estimated
Industry
2030 Status quo
At the same time, a vast number of qualified workers, who are a

correct fit, on paper, for knowledge-based jobs, would continue to
remain unemployed. This suggests that skill shortage relates, in part,
to a scarcity of people with the required skills, experience and quality
of education.
Removing constraints to expansion of

labour-intensive industries would be the key
to absorb excess labour in agriculture.
306.2
135.5
Skill shortage in knowledge-based jobs

relates, in part, to a scarcity of people with
the required skills, experience and quality of
education.
Skill shortage would also persist in jobs requiring vocational skills.

Opportunities in infrastructure, construction, mining and healthcare
have increased the demand for vocationally-trained workers. As
formal vocational training has not been widespread, skilled workers
to meet the rising demand from these sectors are likely to remain in
short supply.
Services
2030 Desired
Source: National Sample Survey Organisation, CRISIL estimates
13
14
Shortage of high-skill labour can constrain productivity and

economic growth
If India is to achieve and sustain double-digit economic growth in the
near future, the key would be to raise the supply potential of the
economy. The number of hours of work and the productivity of
workforce, measured as output per unit of workforce, affect the
supply of goods and services. Keeping the number of working hours
unchanged, India will need to increase employment or productivity to
maintain its current growth rate. Growth in labour productivity
would be especially critical in high-end service sectors.
Three factors determine growth in labour productivity - more capital
per unit of workforce, advances in technology, and quality of
workforce. Notwithstanding a rise in investment rate and advances in
technology, India is likely to fall short of skilled workers, which
would adversely affect the rate at which its labour productivity rises.
As the demand for skilled workers increases, if relatively low-quality
workers are added to the workforce, they would drag down overall
workforce quality and impact productivity growth. Further, skilled
workers would have to put in longer hours for sustaining the current
growth rate, which, in turn, would adversely affect their productivity.
Thus, given its shortage of skilled workers, the growth in productivity
of Indias workforce could slow down in future.
Skill shortage could raise inequality and inflation
The bargaining power of companies with their skilled employees is
severely restricted during phases of skill shortage. Wages hence
increase at a greater rate than productivity growth. Excessive wage
growth for a section of population would impact income inequality
and inflation. Also, if shortages in skills are significant, companies
would avoid investing in new technologies which may require a
specific type of skilled labour. The companies would thus produce
relatively less-differentiated and lower-quality products.
Given its shortage of skilled workers, the

growth in productivity of Indias workforce
could slow down in future.
Disguised employment will continue in agriculture

A large army of undereducated, unskilled and hence unemployable
labour is unable to meaningfully plug into the fast-growing service
sector. Without deliberate policy efforts to expand the labourintensive industrial sector, a majority of Indias workforce would
remain trapped in the agricultural sector.
Fiscal burden of a young and unemployed population
The fiscal burden of an ageing population is a phenomenon that will
plague Western economies in the coming years. As their working-age
population shrinks and their ageing population expands, the Western
governments would have to spend more on social security, health
care and welfare programmes.
Indias likely increased transfers to

employment-generating schemes would
create a permanent fiscal burden and crowd
out expenditures on education, healthcare
and infrastructure.
Although India, in contrast, has a relatively younger population, the

youth-dominated population will yield an economic dividend only if
it finds gainful employment. If it does not, the economy will be
fraught with social tensions and instability.
India is currently addressing the issue of unemployment through
social security schemes such as Mahatma Gandhi NREGA (National
Rural Employment Guarantee Act), which is at best a stop-gap
solution. If the Indian economy is unable to generate employment
for its swelling working-age population over the next decade, the
government will need to transfer more funds through social security
schemes to provide income to the unemployed and underemployed.
The likely increased transfers to employment-generating schemes
would create a permanent fiscal burden and crowd out expenditures
on education, healthcare and infrastructure.
15
14
Shortage of high-skill labour can constrain productivity and

economic growth
If India is to achieve and sustain double-digit economic growth in the
near future, the key would be to raise the supply potential of the
economy. The number of hours of work and the productivity of
workforce, measured as output per unit of workforce, affect the
supply of goods and services. Keeping the number of working hours
unchanged, India will need to increase employment or productivity to
maintain its current growth rate. Growth in labour productivity
would be especially critical in high-end service sectors.
Three factors determine growth in labour productivity - more capital
per unit of workforce, advances in technology, and quality of
workforce. Notwithstanding a rise in investment rate and advances in
technology, India is likely to fall short of skilled workers, which
would adversely affect the rate at which its labour productivity rises.
As the demand for skilled workers increases, if relatively low-quality
workers are added to the workforce, they would drag down overall
workforce quality and impact productivity growth. Further, skilled
workers would have to put in longer hours for sustaining the current
growth rate, which, in turn, would adversely affect their productivity.
Thus, given its shortage of skilled workers, the growth in productivity
of Indias workforce could slow down in future.
Skill shortage could raise inequality and inflation
The bargaining power of companies with their skilled employees is
severely restricted during phases of skill shortage. Wages hence
increase at a greater rate than productivity growth. Excessive wage
growth for a section of population would impact income inequality
and inflation. Also, if shortages in skills are significant, companies
would avoid investing in new technologies which may require a
specific type of skilled labour. The companies would thus produce
relatively less-differentiated and lower-quality products.
Given its shortage of skilled workers, the

growth in productivity of Indias workforce
could slow down in future.
Disguised employment will continue in agriculture

A large army of undereducated, unskilled and hence unemployable
labour is unable to meaningfully plug into the fast-growing service
sector. Without deliberate policy efforts to expand the labourintensive industrial sector, a majority of Indias workforce would
remain trapped in the agricultural sector.
Fiscal burden of a young and unemployed population
The fiscal burden of an ageing population is a phenomenon that will
plague Western economies in the coming years. As their working-age
population shrinks and their ageing population expands, the Western
governments would have to spend more on social security, health
care and welfare programmes.
Indias likely increased transfers to

employment-generating schemes would
create a permanent fiscal burden and crowd
out expenditures on education, healthcare
and infrastructure.
Although India, in contrast, has a relatively younger population, the

youth-dominated population will yield an economic dividend only if
it finds gainful employment. If it does not, the economy will be
fraught with social tensions and instability.
India is currently addressing the issue of unemployment through
social security schemes such as Mahatma Gandhi NREGA (National
Rural Employment Guarantee Act), which is at best a stop-gap
solution. If the Indian economy is unable to generate employment
for its swelling working-age population over the next decade, the
government will need to transfer more funds through social security
schemes to provide income to the unemployed and underemployed.
The likely increased transfers to employment-generating schemes
would create a permanent fiscal burden and crowd out expenditures
on education, healthcare and infrastructure.
15
16
Conclusion
Higher education
relevance, quality
and quantity
Challenge of a knowledge based economy

Alleviating shortage
of skilled labour
supply...
Vocational
training and skills
Schooling quality
and drop-out rates
training, and workforce management, economic growth will soon hit

a speed breaker. If labour and industrial policies are not reformed,
people with different education and skill levels, or from different
states, would have unequal economic prospects. Indias industrial
sector may not be able to scale up to absorb the excess workforce in
agriculture. This could, in turn, block efforts to reduce income
inequality in India.
...to enable skillintensive industries

to continue to drive
Indias growth
success
In addition to government initiatives, corporate investment in

employee education and training would continue to play a critical role
to meet the rising demand for high-skilled workers. A number of
Indian corporates, especially from IT/ITeS, already provide focused
training to improve their peoples skills. Also, some corporates, like
CRISIL, have a study-work programme that equips a graduate with
analytical and financial skills, and then absorb the trained candidate in
their operations.
Challenge of basic employment

With low education
levels resulting in
excess supply of
relatively unskilled
labour...
...the challenge is to
create sufficient
employment for the
labour largely trapped
in agriculture
Favourable demographics position India to fill the void created by

countries with an ageing population, and become a major player in
global business. The manner in which India uses this opportunity will
determine whether it will reap its demographic dividend. Apart from
tackling spatial challenges arising from a remarkable disparity in the
demographics of its states, India will have to address the critical
issues of creating jobs and preparing its youth to participate in its
economic growth.
Apart from tackling spatial challenges

arising from a remarkable disparity in the
demographics of its states, India will have
to address the critical issues of creating
jobs and preparing its youth to participate
in its economic growth.
Although an increased rate of savings and investment, which India

has achieved and sustained since the early 2000s, is essential for
ensuring a rapid pace of economic growth, an educated workforce
and job opportunities are critical for sustaining the growth over a
long period, and for realising the demographic dividend. This would
be especially true for India since it depends more on its human
capital than its peer countries that are at a similar level of economic
development.
In addition to government initiatives,

corporate investment in employee
education and training would continue to
play a critical role to meet the rising
demand for high-skilled workers.
India will need to alter its policy framework and give incentives for
creating sufficient jobs and alleviating workforce skill-mismatch. If
status quo persists in Indias policy frameworks for education and
17
16
Conclusion
Higher education
relevance, quality
and quantity
Challenge of a knowledge based economy

Alleviating shortage
of skilled labour
supply...
Vocational
training and skills
Schooling quality
and drop-out rates
training, and workforce management, economic growth will soon hit

a speed breaker. If labour and industrial policies are not reformed,
people with different education and skill levels, or from different
states, would have unequal economic prospects. Indias industrial
sector may not be able to scale up to absorb the excess workforce in
agriculture. This could, in turn, block efforts to reduce income
inequality in India.
...to enable skillintensive industries

to continue to drive
Indias growth
success
In addition to government initiatives, corporate investment in

employee education and training would continue to play a critical role
to meet the rising demand for high-skilled workers. A number of
Indian corporates, especially from IT/ITeS, already provide focused
training to improve their peoples skills. Also, some corporates, like
CRISIL, have a study-work programme that equips a graduate with
analytical and financial skills, and then absorb the trained candidate in
their operations.
Challenge of basic employment

With low education
levels resulting in
excess supply of
relatively unskilled
labour...
...the challenge is to
create sufficient
employment for the
labour largely trapped
in agriculture
Favourable demographics position India to fill the void created by

countries with an ageing population, and become a major player in
global business. The manner in which India uses this opportunity will
determine whether it will reap its demographic dividend. Apart from
tackling spatial challenges arising from a remarkable disparity in the
demographics of its states, India will have to address the critical
issues of creating jobs and preparing its youth to participate in its
economic growth.
Apart from tackling spatial challenges

arising from a remarkable disparity in the
demographics of its states, India will have
to address the critical issues of creating
jobs and preparing its youth to participate
in its economic growth.
Although an increased rate of savings and investment, which India

has achieved and sustained since the early 2000s, is essential for
ensuring a rapid pace of economic growth, an educated workforce
and job opportunities are critical for sustaining the growth over a
long period, and for realising the demographic dividend. This would
be especially true for India since it depends more on its human
capital than its peer countries that are at a similar level of economic
development.
In addition to government initiatives,

corporate investment in employee
education and training would continue to
play a critical role to meet the rising
demand for high-skilled workers.
India will need to alter its policy framework and give incentives for
creating sufficient jobs and alleviating workforce skill-mismatch. If
status quo persists in Indias policy frameworks for education and
17
CRISIL Centre for Economic Research (C-CER)

The Centre for Economic Research is a division of CRISIL. Set up in April 2002,
C-CER reflects CRISILs commitment to provide an integrated research offering
to help corporates and policy makers take more informed business decisions.
C-CER applies sound economic principles to real world applications, creating
conceptual and contextual linkages that are unique to CRISIL. C-CER also
supports Standard & Poors Asia Pacific by analysing and forecasting
macroeconomic variables for 14 countries in the region.
C-CERs core strengths emerge from a strong understanding of and capabilities
in the following areas:
l
Macroeconomics: Regular monitoring and forecasting of macroeconomic

indicators, assessment of domestic and global events, and analysis of longterm structural changes in the economy.
Financial Economics: Analysis and forecasting of interest rates and
exchange rates.
Public Finance: Analysis and forecasting of central and state government
revenues, expenditures and borrowing requirements.
Environmental Economics: Analysis of Indian firms impact on
environmental, social and governance parameters.
C-CER reviews developments in the Indian economy on a monthly basis and

provides its outlook on the economy through a dedicated publication
CRISIL EcoView. CRISIL EcoView is used by CEOs, CFOs, economists,
corporate strategy teams, marketing teams, treasuries and knowledge
management teams of various corporates and management consultancy firms to
make appropriate strategy level decisions.
The C-CER team comprises senior economists with over a decades experience
of working with premier research institutes.
Dharmakirti Joshi
Sunil K. Sinha
Vidya Mahambare
Poonam Munjal
Parul Bhardwaj
Dipti Saletore
Chief Economist
Senior Economist
Senior Economist
Economist
Economist
Economist
CRISIL Centre for Economic Research (C-CER)

The Centre for Economic Research is a division of CRISIL. Set up in April 2002,
C-CER reflects CRISILs commitment to provide an integrated research offering
to help corporates and policy makers take more informed business decisions.
C-CER applies sound economic principles to real world applications, creating
conceptual and contextual linkages that are unique to CRISIL. C-CER also
supports Standard & Poors Asia Pacific by analysing and forecasting
macroeconomic variables for 14 countries in the region.
C-CERs core strengths emerge from a strong understanding of and capabilities
in the following areas:
l
Macroeconomics: Regular monitoring and forecasting of macroeconomic

indicators, assessment of domestic and global events, and analysis of longterm structural changes in the economy.
Financial Economics: Analysis and forecasting of interest rates and
exchange rates.
Public Finance: Analysis and forecasting of central and state government
revenues, expenditures and borrowing requirements.
Environmental Economics: Analysis of Indian firms impact on
environmental, social and governance parameters.
C-CER reviews developments in the Indian economy on a monthly basis and

provides its outlook on the economy through a dedicated publication
CRISIL EcoView. CRISIL EcoView is used by CEOs, CFOs, economists,
corporate strategy teams, marketing teams, treasuries and knowledge
management teams of various corporates and management consultancy firms to
make appropriate strategy level decisions.
The C-CER team comprises senior economists with over a decades experience
of working with premier research institutes.
Dharmakirti Joshi
Sunil K. Sinha
Vidya Mahambare
Poonam Munjal
Parul Bhardwaj
Dipti Saletore
Chief Economist
Senior Economist
Senior Economist
Economist
Economist
Economist
About CRISIL Limited
Head office
CRISIL is Indias leading Ratings, Research, Risk and Policy Advisory company.
CRISIL House
Central Avenue,
Hiranandani Business Park
Powai, Mumbai - 400 076
Phone : 91-22-3342 3000
Fax : 91-22-3342 3001
CRISIL offers domestic and international customers a unique combination of local

insights and global perspectives, delivering independent information, opinions and
solutions that help them make better informed business and investment decisions,
improve the efficiency of markets and market participants, and help shape
infrastructure policy and projects. Its integrated range of capabilities includes credit
ratings and risk assessment; research on Indias economy, industries and companies;
investment research outsourcing; fund services; risk management and infrastructure
advisory services.
Regional offices in India

Ahmedabad
Unit No.706, 7th Floor,
Venus Atlantis, Near Reliance Petrol Pump,
Prahladnagar, Ahmedabad 380 015.
Phone: 91-79-4024 4500
Fax: 91-79-2755 9863
Bengaluru
W-101, Sunrise Chambers,
22, Ulsoor Road,
Bengaluru - 560 042
Phone: 91 (80) 2558 0899, 2559 4802
Fax: 91 (80) 2559 4801
Disclaimer
The Centre for Economic Research, CRISIL (C-CER), a division of CRISIL Limited has taken due care in preparing this
Report. Information has been obtained by C-CER from sources it considers reliable. However, CCER does not
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Skilling India Nov10

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SKILLING INDIA

THE BILLION PEOPLE CHALLENGE

Skilling India The Billion People Challenge

CRISIL, Skilling India: The Billion People Challenge, November 2010

Skilling India The Billion People Challenge

CRISIL, Skilling India: The Billion People Challenge, November 2010

CRISIL Centre for Economic Research

If Indias working-age population, its so-called demographic dividend, is

If the current trends in Indias labour participation and unemployment rate

Labour skill-mismatch and shortage could adversely impact Indias

CRISIL, Skilling India: The Billion People Challenge, November 2010

CRISIL Centre for Economic Research

If Indias working-age population, its so-called demographic dividend, is

If the current trends in Indias labour participation and unemployment rate

Labour skill-mismatch and shortage could adversely impact Indias

CRISIL, Skilling India: The Billion People Challenge, November 2010

CRISIL Centre for Economic Research

Indias demographic edge in the global context ................................. 4

Indias labour demand ........................................................................10

CRISIL, Skilling India: The Billion People Challenge, November 2010

CRISIL Centre for Economic Research

Indias demographic edge in the global context ................................. 4

Indias labour demand ........................................................................10

CRISIL, Skilling India: The Billion People Challenge, November 2010

CRISIL Centre for Economic Research

Indian demographics in the global context

Indias labour supply

India will be the world's most populous country by 2030

Working women are a minority

Source: UN World Population Prospects, 2008 Revision

and have the largest working-age population

In India, the working-age population

India is set to become the largest

India has a higher real-dependency ratio

Given India's low rate of labour-force

Source: UN World Population Prospects, 2008 Revision

CRISIL, Skilling India: The Billion People Challenge, November 2010

CRISIL Centre for Economic Research

Indian demographics in the global context

Indias labour supply

India will be the world's most populous country by 2030

Working women are a minority

Source: UN World Population Prospects, 2008 Revision

and have the largest working-age population

In India, the working-age population

India is set to become the largest

India has a higher real-dependency ratio

Given India's low rate of labour-force

Source: UN World Population Prospects, 2008 Revision

CRISIL, Skilling India: The Billion People Challenge, November 2010

CRISIL Centre for Economic Research

Regional demographic diversity will be unfavourable

The working-age population will increase

Persistent drop-out rates and lack of teachers plague Indias

Indias drop-out rates are declining, but not

Source: Selected Socio-Economic Statistics, India, 2008

Source: Population Projections, Census of India

Due to neglect of basic education, a large

One-fifth of Indias primary schools are single-teacher schools. India,

High pupil-teacher ratio impacts quality of

CRISIL, Skilling India: The Billion People Challenge, November 2010

CRISIL Centre for Economic Research

Regional demographic diversity will be unfavourable

The working-age population will increase