Skill Landscape of India
Dr. Ritesh Saxena
Skills and knowledge are the driving forces of economic growth and social development for any country. India is expected to be home to a skilled workforce of 500 million by 2022. About 12 million persons are expected to join the workforce every year. This talent pool needs to be adequately skilled. It is thus estimated that the required capacity for training the new workforce as well as portion of the existing workforce would be about 15 million annually.
Out of the current workforce of about 450 million, only about 8%-9% are engaged in the organized/formal sector. In India, only about 5% of the workforce has marketable skills, as compared to 50% to 60% in other countries. The magnitude of the challenge is further evident from the fact that about 12 million persons are expected to join the workforce every year. This emerging socio-economic scenario is poised to drive the demand for skilling India.
Projected Demand and Demand-Supply Gap
India is one of the few countries in the world where the working age population will be far in excess of those dependent on them and as per the World Bank, this will continue for at least three decades. This has increasingly been recognized as a potential source of significant strength for the national economy, provided we are able to equip and continuously upgrade the skills of the population in the working age group.
On a long-term basis, up to 2022, it is expected that India’s GDP will grow at a CAGR of about 8%. With these growth rates, we expect that the employment in the economy will be about 500 million by 2022. For an economy to sustain this growth rate it is essential that the workforce be exposed to some form of skilling or the other (could be through higher/technical education or vocation skills or a combination of both). Thus it is expected that India will have to be home to a skilled workforce of 500 million persons by 2022.
The following table presents the share of employment in various sectors for various growth scenarios till 2022. We do not see the proportion of employment to change significantly between 2017 and 2022.
Source: ‘The Challenge of Employment in India – An Informal Economy Perspective’ (April, 2009) and IMaCS analysis
Illustrative human resource requirements across select sectors till 2022
Source: National Skill Development Corporation (NSDC)
If India wants to become a manufacturing-hub, given its requirement for employment generation to reap the demographic advantage; it must focus on skill development instead of present education system. Since, India’s education system has been skewed in favour of formal education focusing on academics; it has done well in services/tertiary sector. As this sector is the most important recipient of formally educated work-force. Manufacturing processes, on the other hand, does not require academic skills to that extent, for majority of work-force. As a result, the people employed in this sector are either uneducated or unskilled as low-end firms can’t afford college graduates; or they are over-educated and yet unskilled at the task required, in case of firms that can pay. The education required for manufacturing is very basic that enables a person to read and understand instructions and make basic calculations; while the skills actually required vary from painting, welding, polishing, assembling, packaging, and equipment handling, among others. Thus, a complete overhaul of the existing education system is required.
In recognition of these needs, the Government of India has adopted skill development as a national priority over the next 10 years. The Eleventh Five Year Plan detailed a road-map for skill development in India, and favoured the formation of Skill Development Missions, both at the State and National levels. To create such an institutional base for skill development in India at the national level, a ‘Coordinated Action on Skill Development’ with a three-tier institutional structure consisting of the PM’s National Council on Skill Development, the National Skill Development Coordination Board (NSDCB) and the National Skill Development Corporation (NSDC) was created in early 2008. Country is now focusing on the skill landscape with an aim to become the Skill Capital of the world whereby India can become a big supplier of skilled resources to the entire world.