Counterview Desk
A policy research paper by the top Paris-based non-profit think tank, Institut Montaigne, has regretted that, five years on, the Narendra Modi government’s “first education-related full-fledged initiative” pertaining to vocational training, Skill India, is anywhere near achieving two of its desired goals – provide employment to the youth, and make them capable enough to become entrepreneurs.
The failure, says the paper, authored by scholars Christophe Jaffrelot and Sanskruthi Kalyankar, has come despite the fact that Modi linked Skill India with his Make in India initiative in order to ensure that the Indian capacity for harnessing entrepreneurship in the MSME (micro, small and medium enterprises) sector contributes, only 17% of GDP as compared to 85% in Taiwan, 60% in China and 50% in Singapore, goes up drastically.
A very important aspect of Skill India, say the authors, was its public private partnership (PPP) character: the entrepreneurs were requested to “earmark 2% of their payroll bill (including for contract labor) for skill development initiatives”; these funds were to be channelized to the government’s coffer in order to finance Skill India. In parallel, the ITIs were supposed to “tie up with industry in the relevant trades to improve placement opportunities for candidates”.
With this aim in mind, Modi launched Pradhan Mantri Kaushal Vikas Yojana (PMKVY) in 2015, presented as “the flagship scheme” of the Ministry of Skill Development & Entrepreneurship (MSDE), in order to enable a large number of Indian youth to take up industry-relevant skill training, completely paid by the government, the paper, “Demographic Dividend or Demographic Burden? India’s Education Challenge”, notes.
Today, there are more than 15,044 ITIs with capacity of approximately 2.6 seats, which means that since the inception of the Ministry of Skill Development and Entrepreneurship (MSDE) in 2014, there has been a 32% increase in ITI count and 54% increase in seating capacity.
New types training centers have seen the light of the day with the rise of new programs. For instance, 450 Pradhan Mantri Kaushal Kendras (PMKK) have been “operationalized” in 2017-18. The objective was “to train a minimum of 300 million skilled people by the year 2022”.
The PMKVY’s budget was about Rs 1.2 billion for four years (2016-2020). Its main tool was the “Short Term Training” which could last between 150 and 300 hours and which included some placement assistance by Training Partners upon successful completion of their assessment by the candidates. Today, there are more than 15,044 ITIs with capacity of approximately 2.6 seats,, which means that since the inception of the MSDE in 2014, there has been a 32% increase in ITI count and 54% increase in seating capacity.
New types training centers have seen the light of the day with the rise of new programs. For instance, 450 Pradhan Mantri Kaushal Kendras (PMKK) have been “operationalized” in 2017-18. While these achievements are commendable, they fall short of the initial objectives.
The target of this government scheme was to reach out to 300 million young people by 2022 but only a mere 25 million had been trained under this scheme by the end of 2018116. This is partly due to mismanagement and partly to the fact that funds available for Skill India, either were not spent quickly enough because of a lack of candidates.
Indeed vocational training faces a social stigma of being an option for the less-academically able students or because of a paucity of funds, as evident from a letter that the Director of the MSDE sent to the officers in charge of this program in the States and Union Territories of India:
“As already mentioned in the circular of even number dated March 26, 2019, progress … has been found to be slow and has not achieved the expected/ desired target. Also, it is observed that total releases to States till date has been only Rs 760 crore as against projected financial progress of Rs 2023 crore expected till March 2019.
The failure, says the paper, authored by scholars Christophe Jaffrelot and Sanskruthi Kalyankar, has come despite the fact that Modi linked Skill India with his Make in India initiative in order to ensure that the Indian capacity for harnessing entrepreneurship in the MSME (micro, small and medium enterprises) sector contributes, only 17% of GDP as compared to 85% in Taiwan, 60% in China and 50% in Singapore, goes up drastically.
A very important aspect of Skill India, say the authors, was its public private partnership (PPP) character: the entrepreneurs were requested to “earmark 2% of their payroll bill (including for contract labor) for skill development initiatives”; these funds were to be channelized to the government’s coffer in order to finance Skill India. In parallel, the ITIs were supposed to “tie up with industry in the relevant trades to improve placement opportunities for candidates”.
With this aim in mind, Modi launched Pradhan Mantri Kaushal Vikas Yojana (PMKVY) in 2015, presented as “the flagship scheme” of the Ministry of Skill Development & Entrepreneurship (MSDE), in order to enable a large number of Indian youth to take up industry-relevant skill training, completely paid by the government, the paper, “Demographic Dividend or Demographic Burden? India’s Education Challenge”, notes.
Excerpts:
The PMKVY’s budget was about Rs 1.2 billion for four years (2016-2020). Its main tool was the “Short Term Training” which could last between 150 and 300 hours and which included some placement assistance by Training Partners upon successful completion of their assessment by the candidates.Today, there are more than 15,044 ITIs with capacity of approximately 2.6 seats, which means that since the inception of the Ministry of Skill Development and Entrepreneurship (MSDE) in 2014, there has been a 32% increase in ITI count and 54% increase in seating capacity.
New types training centers have seen the light of the day with the rise of new programs. For instance, 450 Pradhan Mantri Kaushal Kendras (PMKK) have been “operationalized” in 2017-18. The objective was “to train a minimum of 300 million skilled people by the year 2022”.
The PMKVY’s budget was about Rs 1.2 billion for four years (2016-2020). Its main tool was the “Short Term Training” which could last between 150 and 300 hours and which included some placement assistance by Training Partners upon successful completion of their assessment by the candidates. Today, there are more than 15,044 ITIs with capacity of approximately 2.6 seats,, which means that since the inception of the MSDE in 2014, there has been a 32% increase in ITI count and 54% increase in seating capacity.
New types training centers have seen the light of the day with the rise of new programs. For instance, 450 Pradhan Mantri Kaushal Kendras (PMKK) have been “operationalized” in 2017-18. While these achievements are commendable, they fall short of the initial objectives.
The target of this government scheme was to reach out to 300 million young people by 2022 but only a mere 25 million had been trained under this scheme by the end of 2018116. This is partly due to mismanagement and partly to the fact that funds available for Skill India, either were not spent quickly enough because of a lack of candidates.
Indeed vocational training faces a social stigma of being an option for the less-academically able students or because of a paucity of funds, as evident from a letter that the Director of the MSDE sent to the officers in charge of this program in the States and Union Territories of India:
“As already mentioned in the circular of even number dated March 26, 2019, progress … has been found to be slow and has not achieved the expected/ desired target. Also, it is observed that total releases to States till date has been only Rs 760 crore as against projected financial progress of Rs 2023 crore expected till March 2019.
“Hence, it has been decided that 50% of the total lag in expenditure (Rs 631.58 crore) till March 2019 shall be reduced from the total sanction of the States/UTs. States/UTs are requested to revise their physical targets downwards keeping in view the reduced allocation and average per unit cost of trainings being achieved in the State/UT…”
The money problem showed that, in 2018, only 16% of the youth who had received “formal training were funded by the government”. But the real problem lays elsewhere: those who have been trained don’t find jobs.
The money problem showed that, in 2018, only 16% of the youth who had received “formal training were funded by the government”. But the real problem lays elsewhere: those who have been trained don’t find jobs.
The number of those who have benefited from the Skill India scheme has increased, from 350,000 in 2016-17 to 1.6 million in 2017-18, but the percentage of those who could find a job upon completion of their training has dropped from more than 50% to 30%.
If one focuses only on the PMKVY, the results are even more disappointing. Responding to a question in the Rajya Sabha in March 2018, the then minister for skill development, Dharmendra Pradhan, said that in the framework of this program 4.13 million people had been trained, but only 615,000 (15%) of them got a job.
These figures are the only ones that we can analyze here because they pertain, most of them, to short term training programs that can be assessed – the others will bear fruits after few more years. These limitations of the PMKVY may be explained from two points of view.
First, the policy makers were probably disappointed because they expected that a larger number of those who were trained through the PMKVY would create their company, and, in this case, would benefit from Micro-Units Development and Refinance Agency (MUDRA) loans and tie up, not only with the Make in India scheme, but also with another flagship program of Modi, Startup India. In fact, only 24% of the 615,000 who got a job started their business and out of them, only 10,000 applied for MUDRA loans – a drop in the ocean.
Second, the investments made in India are more capital intensive than labour intensive. For example, the share of manufacturing in India’s GDP is low relative to the average in low and middle-income countries and has not seen any increase since economic liberalization in 1991. Even within manufacturing, growth has often been highest and restricted to sectors that are relatively capital intensive, such as automobiles, machinery, chemicals or areas requiring special skills such as software, telecom, and pharmaceuticals.
This majorly stemmed not only from India’s insufficiently skilled labor, but also its complex land and labor laws. In order to boost investment in the manufacturing sector, the two major reforms that are to be immediately addressed are employment laws that make it nearly impossible to fire full time workers and real estate laws that impede the accrual of land to build large-scale factories. India needs to channelize its advantage of labor supply surplus to attract labor intensive manufacturing.
Third, and more importantly, India’s joblessness issue is not only due to skill problems, but also to the lack of appetite of industrialists and SMEs for recruiting. The decline of the investment rate is a clear indication that the demand is weak – hence huge idle capacities – and investing is not an easy thing to do anyway because of the limited access to credit that the accumulation of Non-Performing Assets (bad loans) has generated.
If one focuses only on the PMKVY, the results are even more disappointing. Responding to a question in the Rajya Sabha in March 2018, the then minister for skill development, Dharmendra Pradhan, said that in the framework of this program 4.13 million people had been trained, but only 615,000 (15%) of them got a job.
These figures are the only ones that we can analyze here because they pertain, most of them, to short term training programs that can be assessed – the others will bear fruits after few more years. These limitations of the PMKVY may be explained from two points of view.
First, the policy makers were probably disappointed because they expected that a larger number of those who were trained through the PMKVY would create their company, and, in this case, would benefit from Micro-Units Development and Refinance Agency (MUDRA) loans and tie up, not only with the Make in India scheme, but also with another flagship program of Modi, Startup India. In fact, only 24% of the 615,000 who got a job started their business and out of them, only 10,000 applied for MUDRA loans – a drop in the ocean.
Second, the investments made in India are more capital intensive than labour intensive. For example, the share of manufacturing in India’s GDP is low relative to the average in low and middle-income countries and has not seen any increase since economic liberalization in 1991. Even within manufacturing, growth has often been highest and restricted to sectors that are relatively capital intensive, such as automobiles, machinery, chemicals or areas requiring special skills such as software, telecom, and pharmaceuticals.
This majorly stemmed not only from India’s insufficiently skilled labor, but also its complex land and labor laws. In order to boost investment in the manufacturing sector, the two major reforms that are to be immediately addressed are employment laws that make it nearly impossible to fire full time workers and real estate laws that impede the accrual of land to build large-scale factories. India needs to channelize its advantage of labor supply surplus to attract labor intensive manufacturing.
Third, and more importantly, India’s joblessness issue is not only due to skill problems, but also to the lack of appetite of industrialists and SMEs for recruiting. The decline of the investment rate is a clear indication that the demand is weak – hence huge idle capacities – and investing is not an easy thing to do anyway because of the limited access to credit that the accumulation of Non-Performing Assets (bad loans) has generated.
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