The significance of skills in the economic development process of a country has never been in as much limelight as has been the case in recent days. A BCG report neatly sums up the issue; globally, there would be a shortage of 47 million skilled workers by the year 2020, and in India alone in this timeframe there would be an excess supply of 43 million skilled labour. On one hand skill development offers an immense economic advantage, and on the other if the youth of the country are not empowered with the right skills to make them employable, there could be a huge irreparable political and societal damage. The current budget has, however, been largely passive in terms of catalytical impetus that could have been created through both fiscal and policy measures. It is now hoped that the 18 ministries and various agencies involved directly or indirectly with skill development mission would accomplish the objectives through imaginative rethinking of spend as well as effective implementation processes.
While in the last Budget the National Skill Development Corporation (NSDC) was conceived, more attention would have been welcome this year on the framework required for its effective functioning. One of the key objectives of NSDC being nurturing new initiatives for skill development, funding of new initiatives should ideally be housed in a separate entity to act as a social venture capitalist with the clear mandate to support projects that are scalable and have the potential to deliver profits along with meeting the skill requirements of states/industries, unlike the traditional approach of not-for-profit status for such initiatives. This is on account of the fact that profits alone would motivate the entrepreneurs to innovate and keep upgrading the skill development models that would be truly world class. One of the key constraints in skill development is that their growth and expansion is not just dependent on capital, but more importantly tweaking the model with the changing requirements of the industry and also having the requisite management capability to do so.
Requirements of skills in the organised and unorganised sectors and skill development initiatives in the rural and urban locations call for different approaches. Often times there is impetus for training in areas where immediate shortage is envisaged or absence of skills is experienced, leaving out those areas which if triggered, could lead to creation of whole new economic possibilities. The case in point is the ?unique technology skills? required in giving a new lease of life to areas such as arts and crafts, which could lead to a whole new business opportunity by itself. A separate fund should be created to support such initiatives that may have long gestation periods for returns, but in the long run, would help in reengineering the business model for such professions and help nurture entrepreneurship in a successful manner.
In order to give a fillip to the skill development process, tax breaks for companies investing in large scale integrated skill development and deployment models would have been most welcome, however, the current budget has not been supportive of this possibility. The existing scheme of the governments to make reimbursements on skills training should be augmented with bank loans as well. The reimbursement of fee for vocational training at Rs 15 per hour has to be revisited as it does not encourage skill development in emerging areas which involve higher costs to deliver. Currently, the bank loans for courses, which are priced at less than Rs 50,000, are not encouraged much by several banks. Innovative lending practices would help, for instance, training and setting up a small venture as an entrepreneur could go hand in hand and a financing plan spread over a three-year period could be considered by the government.
Current private-public collaborative models have had limited successes with respect to skill development. Private-public collaboration with predefined end goals and commitment of minimum financial returns would attract several private sector organisations to participate in larger numbers. Such an initiative is feasible to be considered at the district level, starting with skills survey, categorisation of available skills and skills assessment of the youth above the age of 15 years, leading to development of talent. Just as the Chinese model that propelled the country to become the global capital for manufacturing, at every district, the integrated model should also include deployment of such talent in small & medium scale ventures to be set up with funding support, thereby ensuring minimal migration of labour in search of jobs to the cities. Skills transformation initiatives should be pursued with a holistic approach that would enable the ecosystem to be developed in order to create a sustainable employment potential, on the strength of a differentiated strategy for both rural and urban locations. Such a dual model has been successfully developed in Germany.
?The author is CEO, Global Talent Track Ltd
