'Firms hiring from Spain, Italy': Economist Shamika Ravi warns of widening skill gap among graduates

India is facing a widening disconnect between education and employability, economist and Prime Minister's Economic Advisory Council (PMEAC) member Dr Shamika Ravi said, warning that the country's most educated youth are also among the most unemployed. 

Speaking at Chanakya University's Foundation Day 2025, Dr Ravi said India's "graduate unemployment" is now five times higher than among those with only school-level education.

"Amongst the youth, meaning people under 30, the most educated segment in our society are nearly five times likely to be sitting at home than our youth who have a school education. This puts the entire paradigm of 'study hard so you will get a good job' on its head," she said.

Dr Ravi pointed out that despite high unemployment among graduates, industries are struggling to find skilled talent. "We are also seeing industry survey after industry survey, which tells us that the biggest constraint to growth of existing firms or establishment of new firms is no longer capital. Firms do have the capital. They are able to raise the finances. The biggest constraint is skilled manpower," the noted economist said.

'Recruiting mid-management from Spain and Italy'

Sharing the findings of a study conducted in Tamil Nadu's industrial belt, Dr Ravi said the shortage of experienced professionals has reached such levels that companies are hiring overseas. "We did a survey in the industrial belt of Tamil Nadu and you know where they are recruiting their mid-management from because we just don't have people with work experience of 15 to 20 years. We are recruiting people from Spain and Italy. That's the kind of skill gap," she said.

The Prime Minister's advisor further said that India's education model has historically focused on producing degrees rather than skills. "Historically, we have been giving out degrees, but the industry and the market and a growing economy like India needs skills. We cannot afford to have gaps where the education system continues the way it has historically been, giving out degrees - and markets continue to suffer because we just can’t find skilled people," she noted.

'Graduate unemployment' and the R&D challenge

The economist added that India's manufacturing sector had to be revived after years of misplaced policy focus on shifting directly from agriculture to services. "Manufacturing has had to be resuscitated in this country after fundamentally believing that we will make a transformation from agriculture to service. We don’t need manufacturing. So there’s been a lot of policy correction there," she said.

On research and innovation, Dr Ravi said India has only recently started investing significantly in R&D through initiatives such as the Rs 1 lakh crore Anusandhan National Research Foundation (ANRF) over the next five years. However, she cautioned that the challenge was not funding but alignment.

"My biggest concern is not money. My biggest concern [is that] we will not be able to spend that money because we are not going to get sufficient alignment from my own community, which is the academic community," she said.

Dr Ravi urged universities to play a larger role in the national mission for a developed India. "Aspirationally, ambition-wise, Viksit Bharat needs universities and our centres of excellence to align themselves with this whole agenda and mission of nation-building. That’s what leads you to the purpose."