“Demographic Dividend or Disaster” – Atul Raja, EVP Marketing, WF analyses India’s Skilling options in Times of India

By April 2, 2016 No Comments

It was heartening to see that the Union Budget 2016-17 had ‘education, skill development and job creation’ as one of the nine pillars envisaged to transform Indian economy. Skill development as a dire need for high-quality job fulfillment is a hot button topic across the globe today, and with its low labor-cost, rich talent pool, and a young, ever burgeoning workforce, India sits at the cusp of a great opportunity to become the ‘human resource capital of the world’. India’s potential to power its global competiveness as a knowledge-based society is well-known. Therefore, higher education & training as a feeder to workforce, and an unwavering focus on skill development are strategic necessities for the country today.

"Demographic Dividend or Disaster” - Atul Raja, EVP Marketing, WF analyses India's Skilling options in Times of India

“Demographic Dividend or Disaster”

Each year, 12 million Indians join the workforce in India but majority of them are unskilled. It is estimated that more than 94% of the workforce has no technical education and merely 8% in rural and 30% in urban areas have general education of higher secondary and above. Hence, the urgent task at hand is to enhance the current skilling and technical education capacity in the country from ~4 million to ~15 million [including training requirements of the existing workforce]. Emphatic planning to fuel technical education and skill-sets will play a crucial role in the success of far-reaching initiatives like Skill India, Make in India, Digital India and Jan-Dhan Yojana.

The recent Union Budget 2016-17 has acknowledged the significance of higher education and skill development, and the allocations in this regard are noteworthy:

# Allotment of Rs. 28,840 crores to improve higher education under the aegis of Ministry of Human Resource Development (MHRD) as against Rs. 26,855 crores in 2015-16, an increase of 7.4%. By 2030, India will be amongst the youngest nations in the world and with nearly 140 million people in the college-going age group, one in every four graduates in the world will be a product of the Indian higher education system. To enhance vertical and horizontal mobility of students today will create intellectual, economic and social value for tomorrow, and foster a culture of innovation.

# Setting up of the not-for-profit, ‘Higher Education Financing Agency (HEFA)’ with an initial capital base of Rs. 1,000 crores; this avatar of a non-banking financial company is slated to provide interest-free loans to higher educational institutions for constructing new campuses, expanding or renovating existing infrastructure in top institutes like IITs and IIMs, and creating state-of-the-art laboratories. Over the next five years, the capital base of HEFA is projected to grow to Rs. 20,000+ crores through leveraging of the markets and CSR contributions. HEFA is a novel idea that recognizes the role of private sector in the education sector, but its operative and regulatory mechanisms will be crucial to smooth implementation. We will have to wait for a framework currently being developed by MHRD. The proposal of making all central and state higher educational institutions eligible as members of HEFA [with riders] could be far-reaching. However, there is no doubt that HEFA will benefit both the students as well as the financing system.

# Allotment of Rs. 1,700 crores for establishing 1500 multi-skill training institutes (MSTIs) to train youngsters for jobs and also to startup. This is a radical change from traditional ITIs. MSTIs are envisaged as the new generation ITIs focused on reach and penetration of skill development efforts at block and district levels and public-private partnerships (PPP) for better quality and ease of delivery. However, a constant realignment of skill expectations with high-demand jobs will be essential.

# A slew of measures, in addition to the multi-skill training institutes (MSTIs), have resulted in the Government’s ambitious target of skilling one crore youth over the next three years under the Pradhan Mantri Kaushal Vikas Yojana [PMKVY]; the National Skill Development Mission has created an elaborate skilling eco-system and imparted training to 76 lakh youth; entrepreneurship is being encouraged and democratized with plans to provide entrepreneurship education and training in 2200 colleges, 300 schools, 500 Government ITIs and 50 Vocational Training Centers through Massive Open Online Courses [MOOCs]. Aspiring entrepreneurs, particularly from remote parts, will be connected to mentors and credit markets; tax benefits will be given to training institutes till 2020; setting up of a National Board for Skill Development Certification in partnership with the industry and academia; model skill centers planned across 500+ districts in the country. PMKVY is the engine that will steer the skilling ecosystem in the country and the Government’s positive intent is clear with substantial funds allocation. A strong industry linkage to ensure high-quality employment opportunities can be a game changer here.

Government’s focus on higher education and skill development along with the PPP nature of multi-skill institutes and Higher Education Financing Agency is likely to spur interest in Corporate India to fulfil their CSR obligations though focused spending in these two areas. There are precedents like partnering with the National Skill Development Corporation (NSDC) in delivery. Also this is nothing new. In 2014-15 too, education and skill development were key areas that attracted large CSR spending. A total of Rs. 6,338 crores were spent on CSR by 460 companies in FY15, and education and skill development attracted 23% of the CSR spending, according to data from the Ministry of Corporate Affairs (MCA). Therefore, in FY 17, there is every likelihood of the CSR spends increasing in this space.

With 54% of our population below 25 years of age, we are sitting on a substantial but mainly unemployable workforce. By 2020, almost 60% of India’s population of 1.3 billion will be in the working age group of 15-59 years. Of these, barely 2 to 3 % are expected to have usable skills. So we are looking at two scenarios here; a massive wave of unemployment that could sweep India or generation of an unprecedented human capital resource which will outpace much of the world, catapulting India into a skills factory supplying talent to all corners of the globe.

– The author is Executive Vice President – Marketing at Wadhwani Foundation

Times on India – Ascent

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