Jul 17, 2008

India - Overcoming the skills deficit

Beneath the glitter of impressive economic growth rates, India faces a silent crisis: a shortage of skills. The longstanding problem gained fresh relevance after the economy changed tack in the 1990s. New situations call for new solutions. An altered pattern of employment — a declining role for the public sector as a job-provider — is one consequence of economic reforms. Moreover, as the latest Economic Survey makes clear, future India’s jobs for the mass es will come not from agriculture but from the manufacturing and service sectors. While this poses an immense challenge, India’s demographics offer a rare opportunity: the potential for higher economic performance thanks to a projected increase in its working age population to 68.4 per cent by 2026. The draft National Policy on Skills Development reflects national concern that this demographic dividend should not be wasted. For only a better skilled workforce can maximise the demographic advantage and improve global competitiveness. The lack of precise information on the current skills deficit is a major handicap for any meaningful planning but data on vocational training can be a proxy. By that measure, India falls far short of the mark. A mere five per cent of the labour force has vocational training, which compares poorly with industrialised nations (60 per cent to 80 per cent) or even with major developing countries such as Mexico (28 per cent).
The current thinking is to formulate a national policy that is comprehensive and equitable. The idea is ambitious but the challenges in putting it to work are enormous. The draft policy conceptualises widening the training framework to include school- or institution-based training, training by industry, and lifelong learning. But its emphasis, which could be an overemphasis, on the vocational stream is evident. Proposals include creating a National Vocational Qualifications Framework and increasing coverage of vocations to 4,000. If the policy is to succeed, it must meet the needs of the private sector, which looks for a wide skills spectrum. The proposed National Skills Development Agency has its task cut out to offer facilities that will quickly make millions employable. The planned investment of two per cent of gross domestic product for training in the Eleventh Plan, rising progressively to five per cent in the next two Plans, is welcome. However, if the history of public investment shortfall in the social sector — education and health, crucially — repeats itself, plans to overcome the skills deficit will remain weak statements of intent. India will then continue to fall short of its potential and will jeopardise its economic development.

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