How India can be a skilled nation by 2030 and why it is important

There is need for skilling, reskilling and upskilling of persons to participate in the global knowledge economy driven by emerging technologies like artificial intelligence and data analytics.

Finance Minister Nirmala Sitharaman is expected to increase the allocation on skill development schemes.
The skill development ecosystem is at a crossroads. (Illustration: rohnit phore)
The skill development ecosystem is at a crossroads. (Illustration: rohnit phore)

By Rajesh Agrawal & Arunkumar Pillai

As the new government settles in, one of its early agendas would be to get the skill development roadmap for the next five years right. It is an opportune moment to conduct an assessment of the past decade of skill development and contribute to discussion for future policy initiatives. The first National Policy on Skill Development launched in 2009 marked the beginning of competency-based skill development in the country. The initiative is based on the twin pillars of short-term modular training and involvement of the private sector in training delivery. The first was necessitated as India had 250-300 million youth in the ‘not in employment, education or training’ (NEET) category in 2009, with 8-9 million being added every year (with 12 million entering the workforce every year and an annual total training capacity of 3-4 million, the NEET segment keeps growing at a rate of 8-9 million every year). This was ironically in a fast-growing economy that reported skill shortages. Since long-term training was not a viable solution for this ballooning problem, the short-term modular training system where youth would be trained enough to be provided jobs in industry as semi-skilled workers was envisaged. The youth could then pick up further skills on the job and, through an effective work-based learning mechanism, become fully skilled. Similarly, it was practically impossible for the government to set up these training capacities in a short span of time. Hence policies and schemes were designed to incentivise the private sector to do so swiftly.

Much has happened since then—the setting up of the ministry of skill development and entrepreneurship (MSDE) in 2014, adoption of National Skills Qualification Framework (NSQF), strengthening of the fledgling National Skill Development Corporation (NSDC) and its enabling ecosystem of training partners and Sector Skill Councils (SSCs), the establishment of State Skill Development Missions (SSDMs), the launch of the National Skill Development Mission (NSDM) in 2015, and training of over 35 million people through various central- and state-sponsored skilling schemes.

Even though the macro socio-economic context for skill development remains largely the same as in 2009, there is renewed urgency to respond to four key trends.

First, India is racing against time to become rich before it gets old. We are paradoxically both a nation of young and old. There would more old Indians than young beyond 2035. We need to grow our per capita incomes before we age. Second, we are a young nation in an ageing world. This provides an opportunity to be a global source for skilled manpower for nations with skill shortages. Third, India’s economy is growing fast, but as it becomes more efficient, much of the output growth cannot be expected to be accompanied by job creation due to falling elasticity of labour to output. Fostering entrepreneurship amongst the youth becomes imperative for creating gainful employment opportunities for many. Lastly, the Indian economy needs to accelerate its transition to a technology-led, knowledge and innovation economy, if per capita incomes are to rise rather than stagnate at current levels. There is need for skilling, reskilling and upskilling of persons to participate in the global knowledge economy driven by emerging technologies like artificial intelligence and data analytics.

Over the last few years, we have responded to these trends with mixed results. To begin with, there is denying that the skill development agenda has been successful on three counts—institution building, increasing the training capacity and improving access, and creating awareness for the need to be skilled. No sector can be expected to have long-term sustenance unless the policies, operations and monitoring are institutionalised. As noted previously, the last decade has seen the setting up of various institutions and this phase continues with the restructuring of some of them and reconfiguring of roles between them. There has also been a 3-4 fold increase in training capacity with widespread geographic access—600 model training centres called the Pradhan Mantri Kaushal Kendras (PMKK) and over 5,000 scheme-based training centres have been established—as over 10 million people get trained annually under various skill development initiatives. Finally, there is growing awareness of the need for skilling amongst the youth and employers, and skills is a buzzword today that none can ignore.

Notwithstanding these positives, there are major performance outcome challenges. Some of the key ones are less than desirable quality of skills training, low participation of women and marginalised groups, need for higher industry engagement and higher trainee motivation, and less dependence on grant funding.

These performance outcome challenges stem principally from two factors. The first is related to the inherent behaviours of both the trainee and industry.

Vocational training is perceived as training for the less educated and for those who have not fared well in the education system. Also, industry’s willingness to skill or pay a premium for a skilled person is absent as it perceives no marketplace benefits for the costs incurred. The second is related to policy design issues that have been less than successful in breaking the impedance of these stakeholder behavioural motivations. The design problem on the policy level must be resolved so that the key stakeholders see more value in skill development.

To begin with, a new policy design needs to first focus on transforming the current push system into a pull-based one. This would call for the following:
Empower the trainee, so that she makes an informed choice about the programme she wishes to pursue, through counselling support and making payment through skill vouchers;
Conduct a rigorous quality-grading of skill training institutions to weed out undesirable ones to support the empowered trainee in making this choice;
Strengthen the assessment and certification system to make it robust and hence credible;
Find ways and means to incentivise industry through a light-touch approach to participate in the skill development agenda especially through apprenticeships;
Decentralise the skill development initiative by building capacity at the district and state level for planning and monitoring the implementation of schemes; and
Provide enabling support for embedding skills in education and lifelong learning. This calls for initiatives focused on vocationalisation of school and college curricula. There is also a need to operationalise NSQF as a framework for lifelong learning and developing pathways between the skill development system and the current academic system.

Second, to address the challenge of low pace of job creation, the policy has to focus on:
Skilling and providing enabling support for entrepreneurship; and
Recognition of Prior Learning (RPL) of the skilled but uncertified persons for transitioning them from the unorganised to the organised sector.
Third, to address the overseas opportunity for skilled Indians, the policy needs to build on its current initiatives for placements in Japan with similar government-to-government (G2G) approaches to other overseas markets like the EU. For traditional overseas markets like GCC countries, creating capacities to assess competencies of the emigrants is imperative.
Finally, the policy should focus on skilling in emerging technologies to enable India to transition into a global knowledge economy and support mission mode initiatives like Make in India, Smart Cities, doubling farmers’ incomes, etc.

The skill development ecosystem is at a crossroads. While the foundations for a sustainable skill development ecosystem have been laid over last five years, the time has come to build on it and work over the current decade to create a skilled nation by 2030. Anything less than that would be a grave injustice to the potential of the youth of this nation.

Agrawal is joint secretary, MSDE, and Pillai is partner, Government & Public Services, EY. Views are personal

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.