Skilling efforts need to be scaled up

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April 21, 2022

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April 21, 2022 - Updated 09:00 pm IST

For India to gain from its positive demographics, the skill gap
must be bridged. Corporates can help by complementing govt’s
efforts
By RAJIV KUMARSHASHANK SHAH
The upskilling and re-skilling needs of the larger working population have been largely
unmet
| Photo Credit:
MOORTHY M
India is one of the youngest nations in the world with the average Indian being 28 years;
the average Chinese is 37 years and Japanese, 48 years. Of the nearly 135 crore Indians
in 2021, around 34 per cent (46.42 crore) were below 19 years, and nearly 56 per cent
(75.16 crore) between the age of 20 and 59. By 2041, this demographic will change, but
with 59 per cent (88.97 crore) of its population between 20 and 59, India could be the
world’s largest pool of human resources.

To convert this pool into human capital will require steadfast focus on skilling and
education Over the next two decades, the labour force in the industrialised world is
expected to decline by 4 per cent, while in India it will increase by nearly 20 per cent.

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India could become the supplier of talent and skills if its workforce across age groups is
equipped with employable skills that keep pace with the exponentially changing
technological ecosystem.

The 2015 Report on National Policy on Skill Development and Entrepreneurship had
estimated that only 4.7 per cent of the total workforce in India had undergone formal skill
training compared with 52 per cent in the US, 80 per cent in Japan, and 96 per cent in
South Korea.

A skill gap study conducted by the National Skill Development Corporation (NSDC) over
2010-2014 indicated an additional net incremental requirement of 10.97 crore skilled
manpower in 24 key sectors by 2022. In addition, 29.82 crore farm and nonfarm sector
workforce needed to be skilled, reskilled, and upskilled. Thus, the National Skill
Development Mission estimated that 40 crore Indians needed to be skilled by 2022.

A 2020 NSO survey revealed that one out of every eight students enrolled in a school or
college drops out before completing education; 63 per cent of these are at the school
level. The maximum dropouts occur at the upper primary (17.5 per cent) and secondary
school (19.8 per cent) years. Less than 40 per cent students pursued higher secondary
and/or higher education. These dropout trends combined with estimates of skilling
requirements by NSDC reveals that a significant effort has to be mounted to take
advantage of our positive demographics.

The ecosystem
The skilling ecosystem in India dates back to 1956. Over time, a fairly vast institutional
system for training and skills has evolved. This includes 15,154 Industrial Training
Institutes, of which 11,892 are private; 36 Sector Skills Councils, 33 National Skills
Training Institutes, and 2,188 training partners registered with NSDC.

The flagship Pradhan Mantri Kaushal Vikas Yojana (PMKVY) scheme was launched in
2015 with a budget of ₹12,000 crore to benefit one crore youth with industry-relevant skill
training for better livelihood. With a Kaushal Kendra in each Parliamentary constituency,
nearly 1.35 crore candidates have been trained and 24.14 lakh reportedly placed by
2022.

The SANKALP programme with an outlay of ₹4,455 crore, and the STRIVE project with
an outlay of ₹2,200 crore are other significant skilling interventions. The ITIs are post-
secondary schools that have been at the heart of the skill development endeavors in India
since 1969. Between 2015 and 2022, the number of ITI seats available increased from
15.8 lakh to 24.92 lakh. But 44.37 per cent of seats remained vacant.

About 2.16 crore candidates have been enrolled in ITIs and PMKVY in the nearly 16,000
centers over the last seven years through an outlay of ₹22,500 crores under MSDE
schemes and about ₹600 crore provided to the Directorate General of Training for ITIs
and associated institutions.

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In addition, nearly 40 skill development programmes are implemented by 20 central
ministries/departments. MSDE contributes about 55 per cent of the skilling achieved.
Initiatives by all ministries have resulted in nearly four crore people being trained through
various formal skills programmes over the last seven years, as compared to the target of
skilling 40 crore people by 2022.

With the rise in higher education GER (gross enrolment ratio) to 27.1 per cent, and
diverse skilling initiatives at the Central and State levels, India has substantially
addressed the education and skilling needs of the incremental annual addition of 1.2
crore youth to the workforce.

However, it is the upskilling and re-skilling needs of the larger working population that
have been largely unmet. According to PLFS data 2019-20, 86.1 per cent of those
between 15 and 59 years had not received any vocational training. The remaining 13.9
per cent had received training through diverse formal and informal channels.

There is more than enough evidence that upskilling the already employed workforce
could lead to greater productivity in the economy, higher incomes for workers, and higher
profitability for firms. Hence, PMKVY could equally prioritise upskilling initiatives in the
PPP mode. Many countries have proactive participation from industry players in their
skilling efforts.

In the UK, the UK Employer Levy on large employers was introduced to fund increased
apprenticeship. In Australia, industry-directed training packages were devised and
managed by industry-led skill bodies. Germany follows the dual TVET systems where in-
school training is funded by the government and out-of-school training by employers.
These practices have relevant lessons for the Indian skilling effort.

Corporate participation
Since the implementation of the mandatory CSR law, corporations in India have invested
over ₹100,000 crore in diverse social projects. Of these, about ₹6,877 crore was spent in
skilling and livelihood enhancement projects. Maharashtra, Tamil Nadu, Odisha,
Karnataka, and Gujarat were the top five recipient States.

According to a NASSCOM Report in 2021, every rupee invested in skill training

programmes earned a return of ₹2-19 measured on the basis of the candidate’s salary.
The average was an impressive ₹6.67, implying 600-plus per cent return on outlays on
training. Thus, investing in skill development is a win-win solution for corporate India as
well as the nation.

In the last two years, PLI schemes with an outlay of ₹1.97-lakh-crore across 13 key
sectors have the potential to create national manufacturing champions and generate
employment opportunities for the country’s youth. However, for sustained success, the
scale of the skilling effort both for the entrant workers and even more importantly for the
existing workforce would be vital. It is only by raising the quality of skills of its existing
workforce, that India will be able to meet its aspirational development goals.

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To complement government efforts, systematic corporate investments in skilling could
play a decisive role in attracting larger investments at the national level. Corporations
could consider industry-level collaborations to provide industry-specific skills. This would
be a CSR investment with a substantial social return, while adding to the availability of
quality manpower for their respective sectors. During this decade, India Inc. can play a
catalytic role in increasing the availability of skilled manpower in the country.

Shah is senior specialist, and Kumar is vice-chairman, NITI Aayog. Views are personal

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