The budget should emphasize on Tax Sops as incentives instead of subsidies. 10k Crore was allocated to promote apprenticeships under the NAPS program, however, this hasn’t made a mark and the budget allocated has been highly underutilized.
With unemployment at 45-year high, finance minister Nirmala Sitharaman has to come up with certain innovative measures to generate more jobs. according to experts apprenticeship and skill development can be one of the solutions to the jobs problem. Sumit Kumar, Vice President – NETAP, TeamLease Skills University said, “Apprenticeship is a growth driver for the Government as it addresses skill gap in the labor market, improving labor and industrial productivity, and accelerate GDP growth rate. The focus of the new government should be to increase the participation of apprentices in the labor market from 0.1% to at least 3%.”
On how to get this number up, Kumar said, “To ramp up the numbers, government’s objective should be ease of doing apprenticeships focusing on execution and implementation of apprenticeships to increase participation of employers and adoption by the youth.”
According to Kumar these are the three key areas that the budget needs to address in terms of apprenticeship and skilling:
1. The budget should emphasize on Tax Sops as incentives instead of subsidies. 10k Crore was allocated to promote apprenticeships under the NAPS program, however, this hasn’t made a mark and the budget allocated has been highly underutilized. Instead of a subsidy model, employers should get tax sops to encourage employers to appoint apprentices. A slab model would encourage employers to optimize utilization of the 10% quota under apprentices ACT. India has 71 million registered enterprises, even if 10% of these enterprises start deploying apprentices, 7 million enterprises will make a huge impact to apprentices head count.
2. Monetary rewards to employers to absorb apprentices into employment should also be a focus for the budget. Employers who absorb apprentices on to their pay roll after completion of training should be rewarded monetarily. Higher the absorption rate, higher the rewards. This will yield to two benefits – increase in formal employment which is a big concern as on date and secondly increase in industrial and labor productivity which is expected out of employees who have gone through formal structured apprenticeship training. Currently, only 4% of our labor force in India is formally trained unlike in China which has 84%. Apprenticeship could accelerate the GDP growth rate.
3. Consolidating all work based learning programs and employability schemes under one jurisdiction, and recognizing them under Apprentices ACT. This will give flexibility to employers to choose a program relevant to their organization, resulting in increase in participation of employers and narrowing the skill gap.