Is India ready to cash in on its demographic dividend?
A demographic dividend is a once-in-a-lifetime opportunity for a nation and can either make or mar its citizens’ present and future. When the share of the working-age population is on a rising curve while the share of dependents (those under the age of 15 and over 60) is falling, it enables workers to save (hence savings share in GDP rises) and invest. Thus, ceteris paribus, the growth rate rises. But for this dynamic to be in place, the working-age population should earn more than what their parents were earning. For that they must be in jobs more productive than agriculture, and agriculture itself must become more productive. These jobs require more skills and higher levels of education, both of which are demonstrably lacking in our population. This is the most important reason for why India’s potential dividend risks becoming a nightmare.
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Providing vocational training
Just over half of our workforce of 470 million is either illiterate or has not completed primary education. National Sample Survey estimates that only 10 per cent of the workforce has any vocational training, formal or informal. But has public action and private initiative in these areas in the last decade reflected the extent of the problem and the urgency in tackling it? The demographic dividend will last only another 25 years or so.
In his address to the nation on Independence Day in 2007, former Prime Minister Manmohan Singh stated, “The vast majority of our youth seek skilled employment after schooling. We will soon launch a Mission on Vocational Education and Skill Development through which we will open 1,600 new industrial training institutes (ITIs) and polytechnics, 10,000 new vocational schools and 50,000 new Skill Development Centres. We will ensure that annually over 100 lakh students get vocational training, which is a fourfold increase from today’s level.” The tragedy is that almost none of this has happened. The only good news is that the National Skill Development Corporation (NSDC), which was created as a private-public partnership in 2010, has trained a million people, as it incubated hundreds of private vocational training providers.
The number of private ITIs did increase from 2,000 to about 10,000 in 2013, but in India when capacity expands at this pace, quality is the first casualty. The government has limited capacity to regulate private ITIs; hence industry continues to complain about the quality of its trainees. These were the only two major developments on the ground that happened during the 11th Five Year Plan (2007-12) (which recognised for the first time since Five Year Plans were introduced that a problem of skills existed), and since. In fact, the government grossly exaggerated that 500 million persons needed to be given vocational training by 2022; the total workforce itself is unlikely to exceed 550 million in that year. It then went about allocating that number to Ministries and the NSDC (100 million to the Labour Ministry, 50 million to the Ministry of Human Resource Development, 200 million to the rest of the Ministries and 150 million to the NSDC) to go and train. The 500 million target of the government implied that 50 million people would be trained every year, but even now the total capacity of all institutions, both private and public, to train does not exceed five million per annum. Even the more reasonable target of 200 million people to be given vocational training, that we have estimated, would be terribly ambitious, given that it means training 20 million each year till 2022. Achieving this requires a paradigm shift from a government-driven approach to a private sector-driven one and from relying mainly on discrete vocational training providers to a secondary school-based system. The most successful vocational education training systems in the world (Germany and China) rely on this approach.
In late 2009, there were 1,66,000 schools with classes 9 and 10 (secondary level) and 57,000 with classes 11 and 12 (senior secondary level). Barely 3 per cent of the latter had any vocational education. Thanks to a task force of the MHRD, the government accepted the proposal to introduce vocational education for the first time in class 9 too. For four decades, vocational education was available only in classes 11 and 12. No industry participation, little practical training, and poorly qualified instructors ensured that only 3 per cent of students from the senior secondary level were in vocational education. In any case, those who graduated never got a job in their trade, and could not gain admission into polytechnics either. So, vocational education was a dead-end. It is no wonder that it has always been seen as a secondary option by parents and children. But the majority who pursued a general academic education were not very employable either. It is hardly surprising that demand for secondary education was low; even today, secondary level education enrolment is only 63 per cent and at the senior secondary level, it is 36 per cent (as of 2010) — way below Chinese levels.
Besides, around one-third of the institutions with secondary sections are very small, having an enrolment of 80 or less in classes 9 and 10. In classes 11 and 12, 32.2 per cent of these institutions have an enrolment of 81-160. They are underutilised. The infrastructure of these institutions needs to be used for vocational education, with participation from local industry. But because of the struggles between the MHRD and the Labour Ministry between 2011 and 2013, the National Skills Qualification Framework, the basis of this reform, could barely be implemented. It is being rolled out slowly now. Recent government interventions have been too timid.
The case of China
The reason why in China half of all children completing nine years of compulsory schooling enter vocational education at the senior secondary level is that they emerge highly employable after three years, of which one year is spent in practical training in industry (unheard of in India). China is a manufacturing superpower because it has human resources to staff semi-skilled and skilled tasks at the lower and middle levels. ‘Make in India’ cannot succeed without the base of the vocational education training system in the country being widened well beyond the limited number of private providers and ITIs who populate this space. But for this to happen, our new government has to use its goodwill with industry, that has backed it to the hilt so far, to expand the objective of ‘Make in India’ to ‘Skill India.’ Employers complain bitterly about the quality of vocational education training graduates in India — whether from secondary schools, ITIs, polytechnics or engineering colleges.
But ironically only 16 per cent of Indian firms carry out any in-firm training themselves, as against 80 per cent of Chinese firms. Most of the 16 per cent are large firms (often foreign ones); the majority of firms are micro, small and medium size and do little training that is informal or no training. Our surveys have shown that these firms have even avoided participating in the government’s apprenticeship scheme since 1961.
Industry, whether in services, manufacturing or construction, will have to offer its staff as instructors. It will have to offer internships, participate in curriculum redesign to suit its needs and participate in assessments of competencies based on national occupation standards. Some of this work has begun (with FICCI/CII and some firms taking the lead), but ‘Make in India’ risks remaining a slogan if we are not able to rapidly upscale the number of people who should acquire technical and soft skills, from about 5 million to 20 million a year, to make them industry-ready. Demographic dividend cannot be harnessed without faster non-agricultural job creation for skilled youth.
(Santosh Mehrotra is professor, Jawaharlal Nehru University, and the author/editor of India’s Skills Challenge.)