1. Success through skills

Success through skills

The government can minimise the skills gap by partnering the private sector and setting up institutes of higher learning

Published: March 30, 2015 12:11 AM

Opportunities are scarce, so it’s important to reap them on time. Indeed, the World Bank (2013) had predicted that India is going to have its demographic dividend till 2040—a once-in-a-lifetime opportunity for any nation. But do we have the required skill-sets to combat the rising societal needs for providing access to information, primary health care, education to all, efficiently reduce carbon footprint, provide safe drinking water, mitigate natural and man-made disasters, and many alike hindrances to quality life? The government is focusing on setting up new institutes of higher learning (mostly technical) wherein it expects to train the human resource with the required skill-sets that could cater to this huge societal demand. But how prepared are we and can the government alone cater to this call of the hour?

As pointed out in the World Economic Forum (2010), the issue of skills gap is leading the world towards a global demographic shock, and in near future human capital is expected to surpass financial capital as the critical economic engine of growth. India is exception.

Creating new institutions?

India is encouraging skill-based education at all levels, especially in the higher education sector. As per MHRD (2013), the enrolment in engineering and technology is around 19% of the total students opting for higher education and is growing. It needs to reap the benefit from a knowledge-based economy with employability characterised by demand and supply of highly skilled labour force. In India’s case, skill nurtured in an interdisciplinary environment can respond to society’s demands in a much efficient manner compared to a simple technician.

Many institutes of higher learning are being created by the government—tagged as institutes of national importance. They are of great importance to nation building. However, UNESCO (2012), mentioned that although India graduates 4.5 lakh engineers each year, only 25% are able to acquire the required skills to get employed. Employers’ experience that most of these graduates do have a ‘degree’ but their communication skills, knowledge about the society and its dynamics are poor and these factors can be counterproductive in today’s era of cut-throat competition. Of the 50 crore workforce in India, organised sector employment is around 9% and, of this, only about 5% have marketable skills. The flip-side of the story is that majority of new employments are going to be in the unorganised sector where, as per CII, only 2% have received formal vocational training and another 8% have received non-formal vocational training. So, what is really wrong with the approach?

Sources suggest that the preference pattern for students opting for technical education is much tilted towards private engineering colleges compared to government engineering colleges. There are examples of many such government institutions where seats remained unoccupied.

One of the reasons for such skewed preferences is the dearth of infrastructure and limited placement opportunities in the ‘new’ or ‘not so old/reputed’ government engineering colleges. So, simply pumping money to create new institutions of higher learning would not really solve the skills gap—rather, it may be counterproductive and end up by producing only few more graduates and postgraduates, not ‘skills’.

A call for ‘twin steps’

India has witnessed a steady migration of workforce from the agricultural sector to construction, manufacturing, etc. An estimate by Mehrothra et al (2013) showed that of the 42.1 crore workers in the age group of 15-59, around 30% are illiterate and among this the proportion of illiterate workers is maximum in agriculture and allied activities. Migration of these workers also inherited the incidence of illiteracy which might lead to slowing down of those non-agricultural sectors due to skill shortage—a situation which India can’t afford to sustain. The alternative to this grave situation is to think of implementable strategies that can still replenish the existing human capital and create new ones. One way to combat this skills gap is to create new institutions of higher learning with better infrastructure and competent faculties and, in parallel, enable the existing skilled workers to advice the non-skilled as how to move forward, given the limitations. There can be no compromise to build and strengthen these ‘twin steps’. For example, an engineer with an interdisciplinary set-up can probably help disseminate efficient use of pesticides, fertilisers and hormones to the farmers and help the agriculture sector. However, it’s sad to mention that, as of 2012, all the major agricultural universities (around 22) in India taken together produced only 29,000 graduates and postgraduates annually—inadequate for a country like ours.

The linkage effect

Assuming that, by 2022, India’s GDP will grow at a CAGR of about 8%, employment in the economy will rise by around 50 crore. Thus, it is equally important that this army of working population be trained in skills catering to the societal demand for a better tomorrow. There are two important factors that need to be cropped-in while estimating the demand for skills. One, even if the government makes it compulsory to impart some dose of vocational education during secondary education and above, the number of working population to be trained would be around 23 crore by 2022, as per conservative estimates. Two, first generation learners (as of date) who are engaged in some ‘work’ (work is defined as activities contributing to economic growth) need to get their skills replenished and acquire the then used skills to remain equally productive in the workforce. Naturally, to cater to this huge demand for trained professionals, India has no other alternative other than rely on the strategy of ‘twin steps’—create new institutions of higher learning specific to the creation of skilled workers and simultaneously enable the already skilled to advice the unskilled for efficient production.

Operating strategies

However, from where will the money and required expertise come? Successive governments have been instrumental to provide budgetary support for setting up institutes of higher learning catering to skills-based education. But the initiative has been supplemented by the private sector as well—at least to move towards a solution where both the public sector and the private sector would join hands and share the responsibility. However, with growing deficits and expenditure management policies, it is seen that, over time, the infrastructural growth of these institutions has suffered, and thus the quality of education. Further, in Budget FY16, the total allocation of the Department of School Education & Literacy and the Department of Higher Education together has been reduced by around 16.5% from FY15 (BE), which is sure to have its own scars on the outcomes in the days ahead. Therefore, for striking a balance between the rise in needs and expenditure management, though very slow, options are opening up for cost recovery in the public higher learning institutes as well. The government is developing PPP models in higher and technical education. Such sharing (both cost and expertise) is expected to maximise equitable access to higher learning.

The socio-economically disadvantaged groups can also benefit from such schemes. Through PPP models the problem of skill shortage in terms of faculty and infrastructure can be minimised. Private players can also act as osmosizers in the domain of higher and technical education.
It is time for the government to rethink on the existing strategies and take a call. As prudent private players, we are always ready to cooperate for the growth and development of the nation.

By Debdulal Thakur

The author, a former economist at the National Institute of Public Finance and Policy, Delhi, is assistant professor, Dept of Economics, BITS Pilani (KK Birla Goa Campus). Views are personal

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