The Hindu Business Line : Building skills

The National Skill Development Corporation (NSDC), which is expected to commence operations from September 1, could not have been set up a day too soon. Faced with an acute skills shortage, the private sector is willing to hold 51 per cent stake in the NSDC. While the Union Budget 2008-09 has set aside an initial corpus of Rs 1,000 crore for this purpose, the sum is expected to swell to Rs 15,000 crore in a few years, with contributions from the government, private and mul tilateral agencies. A huge investment in this area is crucial to lifting the productivity of India’s 460-million work-force, 92 per cent of which are unskilled hands in the unorganised sector. The reasons for the skills shortage are not hard to understand: 57 per cent of male workers in the unorganised sector in rural India and 41 per cent in urban India are educated up to no more than the primary level; in the case of unorganised female workers, the ratios are 77 and 64 per cent in rural and urban India, respectively. India’s so-called demographic dividend vis-À-vis the rest of the world will come a cropper in the absence of an attempt to improve skills and education levels.

While the Tenth Plan, with its concerted focus on elementary education, managed to achieve an improvement in enrolment levels, the drop-out rate at the primary stage is still above 30 per cent. In a departure from earlier Budgets, the Union Budget 2008-09 lays more stress on secondary and higher education with a view to addressing the lack of skilled hands in the organised sector. While there can be no arguing against the need for more institutes of excellence and upgradation of Industrial Training Institutes, this should not be at the cost of outlays for elementary education. In order to lift all boats, education needs a larger budget. The combined outlays of the States and the Centre on education as a percentage of gross domestic product has fallen from 3.2 per cent in 2000-01 to 2.84 per cent last year.

Higher outlays should, however, be accompanied by clear long-term goals, of which there is little evidence in the National Skills Development Policy. The share of the workforce in agriculture, industry and services is 60 per cent, 12 per cent and 28 per cent, respectively. The policy has nothing to say on what these proportions should be over the next 15 years to improve labour productivity in all sectors. Hence, there is not even a ballpark figure on the number of people that should be trained and moved out of agriculture and traditional services to industry and modern services within a time period. To begin with, the NSDC should address these gaping holes in the policy framework.

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