India is poised to become the world’s youngest country by 2020, with an average age of 29 years and also account for 28 per cent of the world’s workforce
At present, only 10 per cent of the working population has some amount of professional training in India, of which just an abysmal 2.5 per cent has professional training
The sun is shining brighter on India. With the economy looking up and the Reserve Bank of India’s recent rate cut, things are already looking up this New Year. In September 2014, RBI said the country’s GDP, which it estimates to be 5.5 per cent in the current financial year, will improve to 6.3 per cent in 2015-16. The one thing that the Indian economy has going for it is its rich demographic dividend. The advantage the country has over ageing economies like China and Japan is putting it in a position from where it can propel itself to the Big League of Superpowers. But, in order to be able to make the demographic dividend to its advantage, India must make sure that they are skilled and can contribute to the country’s GDP in a positive way.
Before we get into skilling, here’s a snapshot of why it is important to understand the context of India’s demographic dividend. Demographic dividend refers to a period—usually 20 to 30 years—when a greater part of the population is young and of working age. It essentially cuts spending on dependents, spurring economic growth.
With India expected to hit a headcount of about 1.4 billion in 2025, the country’s population in the 15-64 age category is expected to skyrocket over the next decade, increasing the working age population from 761 million to 869 million by 2020. Essentially, India would be experiencing a bonus workforce within the total population. Besides this, India is also poised to become the world’s youngest country by 2020, with an average age of 29 years and also account for 28 per cent of the world’s workforce.
According to Census India’s population projections, Uttar Pradesh, Bihar, Madhya Pradesh and Rajasthan will account for more than 50 per cent of the increase in India’s working age population over 2011 to 2021. This is in contrast to the addition by the four affluent states—Haryana, Maharashtra, Punjab and Gujarat— that would together add only 21.6 million to the workforce.
Harnessing the demographic dividend through appropriate skill development efforts would provide an opportunity to achieve inclusion and productivity within the country and also a reduction in the global skill shortages.
According to the United Nations, in the current decade, the working-age population will increase globally by around 600 million. The highest increase is expected in the Least Developed Countries that, by 2020 will have almost 460 million more persons in the working age than in 2011. Over the same period, the working-age population is expected to decline in the developed countries by almost 17 million.
More than half of the country’s workforce is still working in the agriculture sector, which contributes around 15 per cent to the country’s GDP. According to a FICCI report, only 2 per cent of the total workforce in India has undergone skills training.
Flashback 2010 – India Skilling
While having a huge working-age population can be an advantage, it can also become a burden if the population is not adequately skilled.
In 2010, we addressed the growing problem of finding skilled talent in our July cover story ‘India Skilling’. Four years ago, we wrote: “In an economy, where 90 per cent of jobs are skills-based, there are currently about 40 million registered unemployed people in India and probably another 260 million who are unemployed or underemployed in the age group of 18-50 years. Only 11 per cent of people in this age group have any form of vocational training and among these only a meager 1.3 per cent receives formal vocational training.”
“In the 2010, the estimates pegged the incremental human resource required by 2020 to maintain 8.5 per cent to 9 per cent growth in the economy at a staggering 240 million across various industries. The number is staggering considering that the employment exchanges in the country managed to give jobs only to 200,000 out of 40 million registered unemployed.”
It was to address this growing need that the National Skills Policy, which set a target of imparting skills training to 500 million by 2022, was formulated in 2009. Nothing major has come out of that apart from setting up of National Skills Development Council. The NSDC has planned to set up 1500 new ITIs and 5000 skill development centres across the country, as well as a National Vocational Education Qualifications Framework (NVEQF) for affiliations and accreditation of the vocational, educational and training systems.
When the Narendra Modi government took over the reins from the UPA last year, it vowed to develop India’s economy and the government made all the right noises with the Make In India campaign. Of course, the government is well aware that without skilled talent, the campaign and India’s future will fall flat on its face. Hence, with a pro-industry stand, the Union government wanted to show the seriousness with which it dealt with the skilling issue and created a new ministry called the Skills Development and Entrepreneurship ministry, with the Prime Minister himself taking a keen interest in the progress made by skilling initiatives.
The Modi government wants to take the skilling projects to the grass roots level so entire villages and towns will also benefit. But while skilling and entrepreneurship is a key agenda for the BJP government and 37 Central ministries involved in skill development and vocational training apart from agencies such as National Skill Development Corporation and the National Skill Development Agency, efforts have been largely diffused with much of the workforce remaining unskilled or semi-skilled.
At present, only 10 per cent of the workers between the ages of 15 and 59 years have some amount of professional training in India, of which just an abysmal 2.5 per cent have professional training. In contrast, globally, an average of 60 per cent to 80 per cent of a country’s workforce is skilled. In Korea, as much as 96 per cent of the workers have formal skill training.
There is no standardization of the required skills for a particular sector, leading to a fragmented and ineffective skill training curriculum. Sector-specific bodies with a skill remit such as the Sector Skills Councils have been set up, which reflects the need to shift towards demand-led provision of vocational training and education. The notion of having a degree has sunk in the mentality of the average Indian so much that it is difficult to make people realize otherwise.
In the meanwhile, the Centre is contemplating a skill development program for the armed forces personnel a year before their retirement for creating a pool of ‘Master Trainers’, Union Minister of State for Skill Development and Entrepreneurship (Independent Charge) Rajiv Pratap Rudy has said. He announced it when NSDC and Kerala Academy for Skills Excellence signed a Memorandum of Understanding. Prime Minister Narendra Modi will take stock of all the various initiatives by the government for skill development, considered essential for the success of his pet ‘Make in India’ campaign. The minister asked the private corporate sector and the public sector undertakings to contribute to skilling initiatives of the new Ministry of Skill Development and Entrepreneurship (MSDE). He was speaking at the signing of the tripartite agreement between NSDC, NSDF and the Power Grid Corporation of India (PGCI). PGCI will contribute its CSR funds for national skill qualification framework aligned with skill development activities in the country. “We are lagging behind in skill development in India by at least 50 to 55 years. We have been focusing on education but not on skill development. The next 5 to 10 years are crucial to meet the emerging challenges in making India a great power amongst the comity of nations,” Rudy said.
Integrating the large unorganized sector accounting for over 92% of employment into the mainstream — a problem that India shares with China — will remain the biggest hurdle for the government. While it is keen to push manufacturing into high gear, it also needs to design and implement skilling programs for 400 million people if they hope to make any progress in this area. This would be the Achilles heel. If they get it right, then India would be on its way to become one of the biggest superpowers in the world. For more updates, check out the Union Budget later this month that is likely to give a roadmap for the government’s skilling program.