The Hindu Business Line : Wages of skill shortage

It is indeed ironical that searing growth should throw up problems in the Indian economy of a kind that could stall the momentum. Some of these problems, under the general rubric of supply constraints, have tended to surface through the painful process of rising inflation and poor infrastructure, for instance. A similar problem is now evident in the shortage of skilled manpower in various sectors. Five years ago, the nation was bemoaning lack of jobs for qualified youth; now the tables have turned and a thrumming economy is suddenly searching for skilled labour.

This dilemma in the most populous, after China, but youthful country, blessed with arguably one of the best higher education systems in the developing world was thrown into sharp relief by the National Manufacturing Competitiveness Council chairman, Dr V. Krishnamurthy. The nation, he said, needs 25 lakh skilled workers each year if it has to sustain its growth momentum. Of the 100 lakh students that pass out of school, only seven lakh can be trained by the government at its Industrial Training Institutes (ITIs). That is a little less than a third of industry's requirements. Since each ITI can train only a couple of hundred students each year there is, it would seem, an obvious need to increase the number of ITIs across the country. But equally important is ensuring that a larger number of students become eligible for entry into such training centres. According to Dr Krishnamurthy, about 55 per cent of the population has not cleared Standard VIII. Clearly this is a wretched state of affairs and tells the world much more about India's development status than any racing GDP growth rate can. For decades policymakers have tended to ignore warnings of the abysmal state of primary and secondary education, their attention riveted on the specialist institutions that had, rightly, gained world acceptance. But education is like a river and if it is clogged upstream, the consequences are fairly obvious downstream. The economy will sooner than later pay the price for this neglect as growing demand for skills finds outlets elsewhere in the globalised market place.

Leave alone foreign, even Indian companies will find that incremental skilled pool elsewhere. The first signs are already upon us with a few IT companies locating some activities in the newly emerging economies such as the Philippines, and even in North Africa. But that is a long-term solution; right now the government run-ITIs have yet to move beyond the smokestack industry phase to suit the needs of the modern economy. To this extent, entrusting the revamp to the private sector may help stave off what threatens to become the biggest deterrent to growth.

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