Can India harness its demographic dividend?

Published: January 5, 2015 12:07:12 AM

Over the next 10 years, the shortage of skilled workforce, which is a problem today as well, will swell into an incapacitating factor...

Over the next 10 years, the shortage of skilled workforce, which is a problem today as well, will swell into an incapacitating factor for the Indian industry. If the current state of affairs continues, the automobile and automotive component makers will face a shortage of 35 million trained people, construction will face a shortage of 1.4 million, and gems and jewellery will face a shortfall of 4.6 million by 2022.

Currently, the supply of skilled manpower in India is approximately 3.4 million. According to the ILO, there will be a demand for 500 million skilled workers in India by 2022. A wide gap of 496.6 million skilled workers needs to be filled in eight years.

The sorry state of availability of skilled manpower can be largely attributed to the Indian education system, which does not focus on training students in employable skills. Indian education system’s focus has been more on theory and less on practical training, which helps in developing employable “skills”. Equally important is upgrading skills. Today, a large section of India’s labour force carries out tasks with outdated skills.

Unless the workforce upgrades its skill-sets, it is at the risk of getting rendered irrelevant in the new-age economy.

With one of the youngest populations in the world and a large pool of young English-speaking people, population demographics favour India.

By 2022, the average Indian’s age would be 29, compared to 37 for China and the US, and 45 for Western Europe. India has the potential not only to meet its own manpower needs but it can also cater to the manpower demand of other nations. Despite a vast majority of population in the productive age group, India has not been able to realise its demographic dividend since a good amount of working population are not employable and most industries are currently struggling with scarcity of skilled workforce.

Countries with high skill capital tend to be prosperous from the perspectives of both GDP and per capita income. Higher national prosperity also manifests in better quality of life for citizens. As Indian economy evolves from being commodity-centric to knowledge-centric, growth becomes increasingly dependent on the availability of skills. However, skills have to be marketable and relevant, resulting in economic value, otherwise there may be abundance of skilled people with sub-optimal employment, resulting in the ‘skilled unemployed’ conundrum.

The government has been emphasising on providing vocational education and training to the workforce. It formulated the National Policy on Skill Development and has set a target for providing skills to 500 million people by 2022. Providing a mechanism to acquire skills, empowering the disadvantaged sections of the society with skilling opportunities, and creating a skill growth programme for continuous improvement is the surest way of achieving inclusive and sustainable growth. The government has also professed skill development as a national priority over the next 10 years. The 11th Five-Year Plan had a detailed road-map for skill development and favoured the formation of Skill Development Missions, both at the state and national levels. In addition, the government aims to set up 1,500 new ITIs and 5,000 skill development centres across the country as well a National Vocational Qualification Framework (NVQF) for affiliations and accreditation in vocational, educational and training systems.

We, at the JBM Group, are doing our bit by training low-educated youth, provide skill development to them, and retaining them in our facilities. Over the next five years we aim to train 10,000 youth, and a special focus shall be laid on training youth from the North-East and employing them at our manufacturing units across the country.

By Nishant Arya

The author is executive director, JBM Group

Do you know What is Repo Linked Lending Rate (RLLR), Wholesale Price Index (WPI), Public Debt, Finance Commission Grants & Other Transfers, Economic Survey? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.