Skilled response: Skilling can be a way out of the current economic crisis

Published: June 20, 2020 6:30 AM

Besides the current health crisis creating a great demand for healthcare professionals, in many other trades too, India has the advantage of skilling its youth for the global market.

 With limited natural resources, infrastructural constraints, exhausting red tape, and a burgeoning population, India’s principal resource are its people.With limited natural resources, infrastructural constraints, exhausting red tape, and a burgeoning population, India’s principal resource are its people.

By Manavendra Prasad

Covid-19 continues to ravage lives and destroy economies, causing disruption that will change the world forever. In India, this has resulted in extreme narratives, on the one hand, are those that see untold devastation of its economy, on the other are those who believe it is India’s moment to achieve its destiny.

A key factor of production to re-ignite growth in the economy from the current deep spiral inflicted by demand and supply shocks is going to be the workforce, not just as an input factor but also as an engine of demand. The extent India benefits from an imminent shake-up of global supply chains and economic order will also be determined by how well it manages its workforce. With limited natural resources, infrastructural constraints, exhausting red tape, and a burgeoning population, India’s principal resource are its people.

Therefore, India’s economy sits on the threshold of many possibilities. Is it staring at an abyss or looking towards its zenith? With around 10-12 million youth entering the workforce every year and many more millions now rendered unemployed, are we heading to social unrest and national despondency, or are we going to leverage this to emerge as an economic powerhouse.

Can we make labour available where it is required? Can the workforce be suitably skilled to participate in gainful economic activity? This is easier said than done primarily because most jobs are available in geographies far removed from where the labour primarily comes from.

India needs to relook at its manufacturing strategy, maybe get an updated one. The ‘Make in India’ plan seems to have made no noticeable change to the share of manufacturing’s contribution to India’s GDP (15.07% in 2014 to 15.4% in 2020). Cluster-based industrialisation, a model well proven by late industrialisers such as China, needs a new vigour. India needs to allocate more funds to cluster development. It needs to facilitate technology, skills, market development and integrate the MSMEs with the formal credit process.

Readying an employable workforce is a crucial element of this effort. This is best achieved when skilling is decentralised to the states which can then work with district industry centres and with local industry associations. This will create demand-led skilling opportunities. While the National Skill Development Corporation (NSDC) has built the current robust skilling eco-system, the cause will now be best served by moving the locus of control to the local administration.

Labour receiving states could work with labour supplying states for an arrangement where both parties jointly fund the skilling programs. The receiving states could determine the training modules, with a part done in the home state and the rest on the job. This will create a win-win situation and will allow industrial centres to get a well-trained workforce. Meanwhile, they can be committed to improving working conditions. This will allow better management of migrant labour, reducing hardships and protecting their rights and benefits.

Manpower supplying states shouldn’t waste the current crisis and must create a local industry. They could begin by focusing on urbanisation in small towns with the creation of manufacturing clusters for labour-intensive sectors such as food processing, wood manufacturing, apparel and any other sector in which the geography enjoys comparative advantage.

The skilling centres should be located in these small towns. Such centres will facilitate industry engagement with skilling activities, which will lead to demand-led skilling programs. Such clusters will allow greater participation of women in the workforce. Minimising migration will lower the cost of living for the workforce, besides becoming a lower input cost for industrial units setting up in manpower supplying states.

The government could consider incentivising industry for their support and contribution towards skilling and vocational education. It should strengthen the Unnati scheme that provides MGNREGA beneficiaries 100 days of training to obtain new skills.

Another opportunity that exists for India’s unemployed youth is a job opportunity in select nations abroad. After the successful start of the Indo-Japan Technical Intern Training Program, it is a model worth emulating. In other countries, too, there exist opportunities for Indian youth in multiple trades.

Besides the current health crisis creating a great demand for healthcare professionals, in many other trades too, India has the advantage of skilling its youth for the global market.

To achieve sustained high rates of growth during the coming decades, India needs to harness its workforce. With the large supply, there is much to leverage. Need of the hour, clearly, is to connect the workforce to livelihood, jobs, self-employment and entrepreneurship. Creating an environment where more self-employed and entrepreneurs can flourish, which will compound the benefits.

The author works on skills development among youth.

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