Skill India

Skill India imperatives for economic growth

By: Chander Shekhar Mehra
There is rising unemployment in India, which does not bode well for the future. With a major chunk of population in the young cohort, the challenges in the current system of skill development need to be revisited.
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The labour force of India is second only to China. It is expected to increase further as India is likely to touch a median age of 29 years by 2020 (E&Y and ASSOCHAM, 2014), while other economies including China and the Western countries will have older populations. This rising population of young people should, in theory, help India reap its demographic dividend that will set the nation on a sustained  high growth trajectory. With the Indian economy touted to touch the 10 trillion USD gross domestic product (GDP) by 2030 (NDTV, 2014), relevant skill sets will play an important role in shaping the economy. However, these simplistic assumptions have ignored the fundamentals of the Indian economy.

For the overall growth of the country, all the states in the country need to do well. This necessitates a narrowing down of significant differences in the economic achievements of the different states overtime. Convergence happens through trade and through mobility of factors of production. However, during the 2000s, despite the overall standard of living increasing, states have become divergent in terms of economic achievements (Economic Survey, 2016-2017).

According to the convergence hypothesis, growth rate of a state with lower per capita output tends to be higher than the growth rate of a state with higher per capita output. This happens due to the diminishing returns to capital in the latter category of states. Consequently, the poorer states are able to catch up with the richer or more developed states thereby leading to convergence at the national level.

Convergence can be categorised as absolute or conditional. In the case of absolute convergence if the difference between regions is in the initial capital-labour ratio, per capita incomes of regions converge to similar steady figures overtime. In the case of conditional convergence, savings, depreciation and/or population growth rates that differ across regions come into play (Sanga and Shaban, 2017).

According to the Economic Survey of India 2016-17, evaluation over the period 1994-2014 showed that the less developed states in India were unable to catch up with the developed ones. Using the growth and log value of initial levels of per capita state GDP to study the situation regarding convergence among the states, the Survey had found that the relationship between these two parameters is positive. Ideally it should be negative as less developed states are expected to grow faster as per the convergence theory.

The reason behind this puzzle is the skill gap that exists in India. The Economic Survey 2016-2017, while dealing with the challenge of convergence, highlighted that India mainly relied upon the growth of skill-intensive sectors rather than the ones with low-skills to boost its economic growth. This is evident not only from the dominance of the service sector over the manufacturing sector, but also from the level and pattern of specialisation that is visible within manufacturing.

If availability of skills is a binding constraint, then labour productivity need not be necessarily high in capital scarce states. In other words, given the structure of economy where skill-intensive sectors have been the main engine of growth what is required is skilled labour force; not just a labour-force. In addition, if the less developed states are unable to generate the required skills among their workforce, convergence among states may never happen.
The Present Situation

Only a minuscule proportion of the working age population in India has any vocational or technical education. Moreover, it does not meet the demands of the industry. Employers complain about the lack of conformity between what is taught in the classrooms and what is required by the industry. The majority of trained personnel are invariably those who acquired hereditary skills or learnt on job. This becomes important considering that technical/professional knowledge improves employability. Comparing the figures with other countries, such as China where nearly half of the workforce has formal skills training, India presents a sorry state. Table 1 shows the proportion of working age population without any technical education has remained stagnant at an overwhelming proportion of 97 per cent during the period 1999-2000 to 2011-12 (NSSO, various years).

It was to address this skill gap that the Government of India launched the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) in 2015 with the aim to provide formal skills training to around 400 million people by the year 2022. Prior to this, the Ministry of Skill Development and Entrepreneurship (MSDE) was created in 2014. The present article highlights the challenges faced by the skill India initiatives and provides suggestions for improving the skill development ecosystem in
the country.

The present Skill Development set-up

Designing appropriate curricula

One of the primary tasks of the government is to design curricula that meet the requirements of employers. However, there is no clarity on how the government proposes to achieve this. The gravity of the situation can be gauged from the fact that 58 and 62 per cent of unemployed graduates and post-graduates respectively in the country have mentioned ‘non-availability of jobs matching their skill and education’ as the primary reason for their unemployment (Labour Bureau, 2016).

Multiplicity of agencies

While the government put in place the MSDE as a nodal point for the implementation and coordination of all skill development efforts, the existence of different government departments, government and private training institutions have made coordination and streamlining a challenge and is also hampering coordination with employers.

There are more than a dozen different government bodies that are running skill development programmes in the country. They include ministries of agriculture; rural development; micro, small and medium enterprises;  human resource development; housing and poverty alleviation; textiles; tourism and culture; communication and information technology; tribal affairs; women and child development; commerce and industry; development of north eastern region;home affairs;social justice and empowerment; food processing; minority affairs and chemicals and fertilisers. This is resulting not only in considerable duplication of work, but also in inefficiency. For example, all ministries  put together achieved only 42 per cent as compared to MSDE alone contributing 58 per cent of the targeted skill development (MSDE Report, 2016).

 Quality of vocational and technical education

The Department of School Education (MHRD) has been allocated a ‘vocational guidance’ framework instead of a vocational education or vocational education and training, which points towards the nature of the programme. Moreover, the standards for the vocational education developed by the Central Institute of Vocational Education (CIVE), Bhopal, are yet to be approved by the National Skills Qualification Committee (NSQC), which is the authority that sets standards. Further, the quality is further compromised as the trainers more often than not are contractual and poorly remunerated.

According to the India Skills Report 2017, in an employability skill test conducted for those below the age of 30, only 40.4 per cent were found employable. Also, out of the 2 million people trained during the period July 2015 to April 2016, only 80,000 were able to secure a placement. State-wise placement of those trained by the National Skill Development Corporation (NSDC) training partners is given in figure 1.

Way forward

Incorporating skill training at the school level

Policy makers need to realise that all children do not necessarily plan to pursue higher education. Many children plan to start earning soon after completing their school education. Of all those who want to pursue higher education, not all are able to secure a seat given its limited availability. Thus, introducing vocational education at school level will enable students to make wise career choices and shift from rote learning to practical skills. As per the Report of the Committee for Rationalization and Optimisation of the Functioning of the Sector Skill Councils, Volume I of MSDE, around 4817 schools in the country with 4,47,350 students have vocational education at the secondary and higher secondary levels.

Expanding the scope of skill development

The skill development initiative can be expanded to areas such as health care. Bridging gaps in knowledge and appropriately applying available technology can help reduce deficiencies in quality of health care—especially in rural areas.

While the industrial sector has always been the focus of vocational initiatives, expanding the scope to agriculture and allied activities can not only increase farm income, but also regulate the migration to cities. One can argue that the addition to knowledge enhances skills. The ‘mKisanSMSPortal’, which provides information, advice and services relating to agricultural practices to farmers may be seen as a step in this direction. As per the Ministry of Agriculture, since the inauguration of the scheme in 2013, nearly 3270 million messages or more than 10440 million SMSs have been sent to the farmers across the country.

The recent launch of Recognition of Prior Learning (RPL) programme in agriculture and allied sectors by the government of Odisha is a positive step that aims at providing skill training to farmers, especially small and marginal farmers, and agricultural workers in the State. The training is being provided by the Odisha University of Agriculture and Technology (OUAT) and aims at increasing the income level of farmers and agricultural workers. Launched in 2017, the programme is being implemented on a pilot basis in which 2,000 farmers and agriculture workers are being involved (The New Indian Express, 2017).

Financing through a special fund

Given the constraints faced by the Indian government in financing vocational and technical education in the country, the most feasible option would be to set up a special fund by diverting the tax levied on companies, for exclusive training and education use. Such a system has been a success in many countries. For instance the early training funds in Brazil have made a significant impact by financing preemployment training (Mehrotra, 2016).

Increased coordination between industry and institutes

Tie ups between institutes and the corporate sector need to be enhanced, not only to guarantee placement, but also to ensure that the skill development initiative is meeting their requirements. This is important when it is observed that 79.2 per cent of firms in China offer formal training programmes for their employees as compared to only 35.9 per cent of firms in India (Kumar and Kapoor, 2015).

According to the MSDE Annual Report (2016-17), the training needs in the country during the period 2017 to 2022 will be 126.872 million. The top ten sectors according to the training need are presented in figure 2.

In today’s competitive environment, simple domain knowledge is not sufficient to ensure employment. There is a need to focus on other aspects like learning agility and integrity and values to ensure that candidates become employable. Policy makers also flag increase in hiring numbers (Fig. 3) in different sectors of the economy to analyse their skill development efforts.

Improving coordination within the government

There is an urgent need to eliminate  the multi-plicity of agencies and all skill development initiatives should be undertaken by MSDE. Resources of other related ministries/departments should be pooled and brought under MSDE, which should also include the coordination between states and skill development mission.

Improved curriculum

Overhauling the curricula of skill development in India is a compelling necessity. The fact that formally trained people are finding it difficult to secure employment shows that the curricula is outdated and does not meet the requirements of corporate and the changing economic environment. Also, new programmes that focus on product development or product management techniques should be developed. This will not only help existing firms, but also give a boost to the start-up culture in India. To meet the challenges of a globalised world, what is needed is an integrated curriculum focussing on liberal arts rather than on specialisations.

Endnote

The rising young population of India not only presents a challenge, but also an opportunity. Demographic dividend can easily turn into demographic burden if the working age population is not employable. One must take into account that educated unemployment population may result in a far greater concern than uneducated unemployed population. Therefore, it is essential that the skill development initiatives concentrate on imparting practical skills relevant to the changing socio-economic environment.

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