India began the last year with a renewed promise to work towards a stronger economy that sought to promote growth and financial inclusivity by way of creating more jobs and ensuring that the ever-increasing number of country’s workforce finds itself suitably skilled and employable.  

A skilled workforce is an attractive investment destination. With its growing population, India has plenty of workers. But an unskilled workforce opens up its own Pandora’s Box. Provisions in the last year’s budget stated that the government had set aside over Rs. 17,000 crore for skilling, employment generation and providing livelihood to millions of youth who enter the workforce every year.  The finance minister had announced two key initiatives on skilling; the first of which was the SANKALP programme that was announced to be launched at a cost of Rs. 4,000 crore and was aimed at providing market relevant training to 3.5 crore youth. In addition, the last year budget added that the next phase of skill strengthening for industrial value enhancement (STRIVE) will be launched in 2017-18 at a cost of Rs. 2,200 crore.

Cut to the present, when we are in the third week of January 2018 and the Finance Budget session is just around the corner; it seems like a lot more needs to be done in order to improve the scenario on ground. With around 10 million people entering the workforce every year, it becomes critical that the Budget 2018 creates the right mandate to provide accessible, relevant and effective skilling programs, lest the challenges that come with an unskilled workforce overcome the benefits of progress and development.  

Although the budget last year created many provisions to upgrade and modernize skilling programs, many still remain either inaccessible, or have lacked the quality, to bring about the necessary changes in skill-set to create a significant impact. Various efforts by the government to create skilling programs have often fallen far short of targets (both qualitatively and quantitatively); many programs altering, or altogether abandoning, their self-determined goals in the process. But in order to  build clearer provisions within the skilling framework that allow for better quality, building on the efforts already put in seems to be the best foot forward.  

Setting the right tone

Focusing on skilling and education is imperative for employability and long-term sustainability of growth; thus, an overall policy intervention that aims at quality skill development and raising educational levels from an early age might be the need of the hour. To improve the productivity in India’s workforce quality education, an otherwise stressed and neglected domain has to be elevated to a key area of focus. The improvement of primary and secondary education levels should be the solid foundation on which the workforce for tomorrow needs to build. Although the result of such changes accrues in the long run, fiscal policies in sectors such as education and health go long way in improving how productive the workforce is, in addition to enabling the masses to lead better lives. 

In other words, skill trainings need to be more comprehensive and farsighted to result in the kind of impact they seek to make. As the economy struggles to battle domestic and global challenges and technological changes bringing distraught to the markets, the past year hold several valuable lessons that should feed into the skilling policies and must be incorporated in this year’s budget. Reports show that several schemes under the Skill India mission failed to make an adequate impact and indicate that massive gaps remain, and subsequently, plenty of room for improvement still exists. 

The National Skill Development Corporation (NSDC), the nodal organization overlooking such skilling efforts should seek to bring in more private players into the fray.  Better quality training can be provided under a PPP framework and the government, in order to create a favourable directive, can provide tax deductions on skill development initiatives to the private sector. As the Budget is often used to modify behaviours, one way of ensuring that skilling programs succeed could be by providing incentives for investments in skill development, and including the provision of opportunities for training workers in specific skills. This would encourage firms to hire workers, rather than go for capital-intensive technologies. 

Making policies inclusive

There have been notable efforts towards making skilling programs more accessible in the past few years, however, the impact that they have managed to create is debatable. Furthermore, the uniformity of the impact that they have made in different geographies is also under scanner. In this context, the budget should strive to make skilling policies more inclusive and holistic. In rural and semi-urban spaces, the efficacy of the policies can be improved by creating better linkages between the many stakeholders in the process, establishing key deliverables, and cultivating a clear chain of accountability.  A recently proposed move of making training programs more district-centric is a step towards that direction. A further boost can be provided to skill development initiatives by allocating resources to improve skill levels of people already attached with other livelihood schemes like MGNREGA, which can be used to provide skill development opportunities for those who are interested in undergoing a specific skill-training course.

In addition to making skilling programs available in an accessible manner, it is imperative to look at the section of the population, within the organized sector, which finds itself facing unemployment due to technological changes. Sectors like IT have faced massive layoffs in the past one year.

With certain skills becoming obsolete, a significant percentage of the people removed were due to their need of reskilling. With similar trends being witnessed in many other sectors, it would be helpful if the budget this year creates a fund to undertake re-skilling programs. This would help to ensure educated unemployment doesn’t overwhelm the economy in the coming years.

The last Union Budget was announced at a time when the economy is seeing a growth rate of around 7 percent. The economy had just witnessed economic shocks like demonetization while at the same time was poised to usher in a uniform tax code for the first time with political consensus; GST promised to augur well for future growth and inclusion. While future projections showed an impact on the GDP growth rate, the budget last year was optimistic in its approach towards helping the economy grow and providing a boost to employment opportunities. But the realities of the past year need to serve as an awakening to policymakers. Now that the time for big and disruptive reforms is behind us, policy interventions that will support and enable equitable and sustainable growth, employment and development are crucial for a better tomorrow.

(This is the second of an eight-part series of the People Matters: The Budget Series)