The Skills India Needs

Context: India needs decentralized design and implementation of skill programmes in line with the constitutional mandate for a concurrent list subject.

India’s Skilling Programmes and Initiatives

• Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 3.0: is a short duration national skilling programme. 
• National Skill Development Corporation (NSDC): is a public-private partnership supporting early-stage skill training institutions with soft loans and grants. (Courses certified by Sector Skills Council (SSC))
• Industrial Training Institutes (ITIs): the backbone of the present skilling system; 14,000 ITIs across the country, and over 80% of these are private.
• National Council for Vocational Education and Training will be a regulator for this field.

Rationale for state intervention in Skilling System:

• To prevent market failure due to positive externalities: Firms worry that the employees would leave, so some of the gains of her increased skills would go to future employers.
• Difficulties of finance: Individuals face asymmetric information and lack confidence that spending money on skilling will generate a useful impact on their labour market prospects.

Concerns and Problem in India’s Skilling System

• Executive centralization: (of design, policy or skills programmes) ITI students are certified through executive bodies and not statutory regulators like University Grants Commission (UGC).
• Limited state capacity: Government ITIs have average quality labs and equipment, and high vacancies and the least accountable and least motivated staff.
• Inefficiency of private sector: average private ITI has less resources and delivers inferior results to the average government ITI.

Way Forward: Ensure State intervention in Skilling System

• Organize and separate State intervention- into the following sets
  • State production, i.e. government-run skilling programmes for individuals.
  • State financing, i.e. private persons run skilling programmes, and the government contributes some part of the fees.
  • State regulation, i.e. state, uses its power to intervene in the way private persons build skilling businesses.
• Skilling programmes should not be defined around the formal and large scale employers only: 
  • For e.g., while the bulk of the Indian workforce is in firms with below ten workers if a person gains skills and becomes self-employed, that is a perfectly good outcome for society.
• Building strong connections with employers: There is learning by doing, rather than learning in a classroom. Hence, everything should have a strong connection with employers.