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EDITORIAL ANALYSIS–The problem of skilling India

The Editorial covers GS paper3 [Indian Economy]

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Introduction

  • Prime Minister in his recent Independence Day speech, said, “We need to worry about population explosion”.
  • So far, India’s demographic dividend with the country’s population was seen as an asset. 
  • Demography brings a dividend only if the youth is trained properly. Without proper training, the country gets massive joblessness.

What is the significance?

  • A minimum of 8 million new job seekers enters the job market every year. 
  • In 2017, only 5.5 million jobs had been created.
  • The unemployment rate is the highest in 45 years today.
    • The unemployment rate reaching 34% among the 20-24-year-olds in the first quarter of 2019.
    • It was 37.9% in urban areas according to the CMIE. 
  • According to the 2018 Periodic Labour Force Survey (PLFS), the unemployment rate among the urban 15-29-year-olds was 23.7%. 

What are the reasons behind?

  • only 7% of the people surveyed in the PLFS declared any formal or informal training.
  • According to a recent survey, 48% of Indian employers reported difficulties filling job vacancies due to talent shortage. 
  • In the IT sector, 1,40,000 skilled techies could not be recruited in 2018 despite the employers’ efforts – out of the 5,00,000 job offers that had been made that year. 
  • As per the CMIE reports, the more educated Indians are, the more likely they are to remain unemployed too. 
  • The last PLFS for 2018 revealed that 33% of the formally trained 15-29-year-olds were jobless.

What are the government schemes?

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  • The objective of the programme is “to train a minimum of 300 million skilled people by the year 2022”. 
  • In 2014, the government created a Ministry of Skill Development and Entrepreneurship to harmonise training processes, assessments, certification and outcomes. 
  • The Executive Committee monitoring the mission has representatives of nine ministries including agriculture, information technology, human resources development.
  • The governing council announced the setting up of 1,500 new ITIs and 50,000 Skill Development Centres.
  • Govt saw “Skill India” as a plan complementary to “Make in India”.
  • There was the creation of more courses and institutes of vocational training.
  • It integrated vocational training classes linked to the local economy with formal education from class nine onwards in at least 25% of the schools and higher education bodies. 
  • Its PPP character: Companies were requested to earmark 2% of their payroll bill for skill development initiatives. 
  • ITIs were supposed to tie up with the industry in the relevant trades to improve placement opportunities for candidates.
  • Under the Pradhan Mantri Kaushal Vikas Yojana, training fees were paid by the government. 
  • Its main tool was the “short-term training”, which could last between 150 and 300 hours, and included placement assistance by Training Partners upon successful completion of their assessment by the candidates.

What are the challenges faced?

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  • The target of this 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 2018. 
  • Mismanagement of funds as they were either not spent sufficiently quickly because of a lack of candidates; or too little was spent. 
  • The money problem is evident from the PLF Survey mentioned above which showed that, in 2018, only 16% of the youth who had received formal training was funded by the government.
  • Those who have been trained don’t find jobs. 
  • The number of those who have benefited from the Skill India scheme has increased, from 3,50,000 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%. 
  • Under PMKVY, 4.13 million people had been trained, but only 15% of them got a job.
  • The training was not good enough – and this is why the employability rate remains very low. 
  • While the government expected that some of the PMKVY-trainees would create their own enterprise, only 24% of them started their business. 
  • Out of them, only 10,000 applied for MUDRA loans. 
  • India’s joblessness issue is not only a skills problem, it represents 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.
  • Investment remains a challenge because of limited access to credit due to pile up of NPAs.

Conclusion

  • Skill India will not be enough to create jobs if the slowdown continues. 
  • Skill India will not be enough if government expenditures in education remain low. 
  • Allocation for school education has declined from 2.81% of the budget in 2013-14 to 2.05% in 2018-19.

Source: The Indian Express.