Business Today

Skilling Juggernaut

India has embarked on the world's biggest skill development programme. Can this bridge the talent gap?
twitter-logoAnilesh S Mahajan | Print Edition: April 9, 2017
Skilling Juggernaut

When Shruti Malik drives past farmland being ploughed on the outskirts of Yamunanagar, Haryana, she has reason to feel proud. She knows one of the men on the tractors at work was once her student at IRIS Learning, the skilling institute she runs in the town, which has so far trained 2,400 young people in sugarcane cultivation, polyhouse farming and the use of different kinds of agricultural implements. After a month-long training stint at IRIS, Rakesh Sandhu bought a tractor with a loan from the Pradhan Mantri Mudra Yojna - a scheme to facilitate micro business ventures begun in 2016 - which he hires out (with himself as driver) for a fee to farmers around Yamunanagar who need their fields ploughed.

"After the training, my students command a premium," says Malik. "Many of them are in great demand in neighbouring districts as well." Malik herself quit her job with Sapient Nitro in Gurgaon within six months of joining to pursue her dream of becoming an entrepreneur. IRIS Learning, which she set up in 2015, is one of the 4,526 skilling centres in the country which partner with the National Skill Development Corporation (NSDC) - under the National Skills Qualification Framework - to combat India's gigantic skills shortage. Apart from agriculture-related skills, IRIS also provides training for prospective electricians, fitters, mobile phone repairers and more. "I don't regret my decision to give up my well-paying job at all," she says.

India's youthful demographic ensures it produces 10-12 million job seekers a year, but only 10 per cent of them are trained in some employable skill. The education most receive does not equip them to land jobs. In comparison, 96 per cent of similar job aspirants in South Korea, 80 per cent in Japan and 75 per cent in Germany, are trained. Yet India needs skilled labour much more than these other countries - the late management guru C.K. Prahalad had estimated in 2007 that the country would require a skilled workforce of 400 million by 2022, including 130 million for newly-created jobs. It is lack of skills rather than absence of employment opportunities that is responsible for the unemployment rate in the country being around five per cent. Also, according to the Economic Survey 2014/15, 92 per cent of all employment is in the unorganised sector. Economists have estimated that India's skills shortage constrains its gross domestic product (GDP) by as much as two percentage points.

To reconcile the situation, the government has embarked on a massive exercise, setting up a separate Ministry of Skill Development and Entrepreneurship (MSDE), with Rajiv Pratap Rudy in charge, and allocating it a budget of `6,000 crore over three years. The ministry has its task cut out - to convince more young people with limited means to attain specific skills rather than pursue graduation; to get companies to pay skilled entrants better than their unskilled counterparts; to convince companies to employ skilled aspirants rather than train their own; to combat lack of infrastructure, bureaucratic sloth and growing automation. But most of all, it has to anticipate demand and provide the right courses which lead to prompt employment.


Industrial Training Institutes (ITIs), run by the National Council for Vocational Training, now under the MSDE's purview, have been around for decades. There are 13,106 of them, both government and privately run, with a capacity to train 1.87 million aspirants a year in 127 different trades. But in practice, the ITIs run only two courses - that of fitter and electrician - which have any demand: they attract 1.1 million students a year. The remaining courses struggle to attract candidates. Indeed, many employers confided that most ITIs were in bad shape, with obsolete training equipment, outdated courses and uninterested teachers.


When Rajat Goel was setting up EyeQ in 2007 - a chain of eye-care centres in Tier-III/IV towns - he did not have much of a problem enlisting ophthalmologists. The problem arose while trying to recruit his support staff of operation managers, operation theatre technologists and hospital managers: employable ones were few and far between. "The courses required to train such people are either not available or obsolete," he says. Finally, in 2013, Goel decided to set up his own training institute for these particular skills at his eye hospital in Rohtak, Haryana, even though, for a company like his with a modest turnover of `45 crore, investing `2 crore in skilling alone was a risk. The step has proved unexpectedly successful, with 459 people having been trained by EyeQ so far, while the demand for such training has seen the company's turnover rise close to Rs 100 crore.

PRAMOD BHASIN Founder of Genpact, who runs Skill Academy, headquartered in Gurgaon.

"The availability of skilled labour determines the capacity of any business to take advantage of new opportunities," says Anil Chaudhry, Country President and Managing Director, Schneider Electric India. But it is precisely that which is lacking. To make up for it, like Goel, innumerable companies - from the smallest to the widely known - run their own in-house training programmes. "We are investing around `55 crore to train certified carpenters, retail store staffers, managers and more," says Juvenico Maetzu, CEO, IKEA India, which is set to open its first store in the country, in Hyderabad, later this year, and is investing `1,000 crore in the project. Small enterprises, however, find it difficult to afford such investment, more so because, as one industrialist, who prefers anonymity, says: "Within a year, people we train move out, getting more lucrative opportunities."


A recent EY report notes that though India produces six million graduates every year, most of them are not "industry ready" - cannot be employed immediately. EY's figures are frightening - the 'unprepared' include 93 per cent of MBAs, 80 per cent of engineering graduates, 83 per cent of hotel management graduates and 97 per cent of accounts graduates. "My cook recently asked me if I could employ his son in any of my factories," says R.V. Kanoria, Chairman and Managing Director, Kanoria Chemicals and Industries. "But the boy could not write a simple job application." To add to the problem, educated youth fail to realise how ill-equipped they are for the jobs they think are their due. The Employment and Unemployment Survey (EUS) 2016 notes that 58 per cent of unemployed graduates and 62 per cent of such post graduates said they were jobless because they were not being offered jobs worthy of their education. "It is a painful task to tell such people that graduation does not help to find jobs and they should acquire skills instead," says Rohit Nandan, former MSDE Secretary.

Maetzu, IKEA India's head, notes many of those he interviews for blue collar jobs, lack aspiration. "They ought to take pride in their work, which they don't," he says. "I began my career on the shop floor and gradually rose in the organisation." Yet Indian youth remain obsessed with graduation and white collar jobs. "My family wanted me to do a BA and get a good job," says Rajiv Kumar, a student at a Delhi ITI. "I came to ITI only because my close friend joined it and I wanted to be with him." Ikram Hussain, learning hairdressing at an upmarket Delhi salon, was already ambivalent about the profession. "I think I would have earned more and led a more respectable life had I done my graduation and got an office job," he says.

Those who know better, from Kanoria to Malik of IRIS, despair of this attitude. "The mindset needs to change," says Kanoria. "The world is changing, job profiles are changing." Malik notes that IRIS holds kaushal shivirs (skilling camps) every month to convince more young people to seek skills, but the conversion rate - between those attend the camps and those taking up courses - is barely 30 per cent. "Young people think only school dropouts should learn skills of the sort we teach," she adds. "We try hard to convince them it is not so."

Why not include some of the skills employers seek in the school curriculum itself? "We are working with governments in the states of Haryana, Himachal Pradesh and Kerala to make some vocational courses compulsory, on a pilot basis, from Classes VIII to X," says a Human Resource Development Ministry official. "The learning from this effort will be applied in other states." In Germany, for instance, basic courses in carpentry, knitting and electrical work, were introduced in schools in the 1990s. Other countries, including the US, the UK, China and South Korea, have followed suit. "It is the educational system we have that is responsible for the obsession with graduation," says Anirban Roy, founder of SEED, which works with corporate houses to impart skills.


But in the last few years, a concerted effort has been made. Nor is the MSDE working alone. Already, 21 other ministries have taken up the gauntlet of providing skill training, for which a staggering `17,273 crore has been budgeted this year. The textile ministry, for example, has programmes for training in traditional handloom, handicrafts, wool knitting and silk weaving, apart from courses in spinning, weaving and other aspects of garment manufacture. The rural development ministry, as also the ministry for minority affairs, are also supporting courses in handloom weaving and handicrafts. The civil aviation ministry is working with Boeing and Airbus to create a one-year course to make diploma holders employable in the aviation ministry. Others like the Tatas, BHEL, Alstom, GE, Siemens and Toshiba are also working with engineering colleges to make their course content more industry oriented.

Indeed, a Committee of Secretaries (CoS) is working on a plan to converge all these training efforts by ministries other than the MSDE. It has already shifted the training institutes run by the ministry of small and medium enterprises, the ministry of tourism and the ministry of north east region to the MSDE. "The convergence of all skill development schemes is critical to ensure a holistic, outcome oriented approach," Minister Rudy told Business Today. "It will not only enable consolidated and well-thought programmes, but also avoid overlap and minimise the chances of leakages." He wants a synergised skill implementation effort, with the ITI network strengthened further and modernised, the NSDC's own training centres - called Pradhan Mantri Kaushal Kendras - extended to every district headquarters. He is also keen that the sector skill councils (SSCs) be made more flexible and industry oriented. He even wants the All India Council for Technical Education (AICTE), which grants recognition to technical institutes - and is currently with the HRD ministry - under his ministry's ambit.

There are three aspects to the MSDE's skilling programme: creating a pool of labour with the skills modern industry needs, setting up finishing schools where white collar workers acquire the additional skills needed to be competent at their jobs and involving states more actively in the effort. Finance Minister Arun Jaitley has promised to provide funds to increase the number of Kaushal Kendras from 60 to 600, as well as to set up another 100 Indian International Skill Centres, which will train Indians to take up overseas jobs. Financial provision for these projects has been raised from `2,173 crore in the last financial year to `3,016 crore in 2017/18. Rudy is also working with the Central Board of Secondary Education (CBSE) to give ITI students the equivalent of a Class X or XII school leaving certificate and offer a parallel academic pathway after completing the ITI course.

There are also numerous skilling programmes being conducted by state governments. But the Centre now wants common norms, common qualifications and curriculum. The respective industry bodies have set up 46 SSCs and norms are being developed in partnership with them - from plumbing to finance to IT & ITES and including, beauty & wellness, construction, hospitality, retail, tailoring, accountancy, travel and tourism, soft skills and spoken English. These norms provide common definitions of training, placement, expected duration of courses and procedure to seek finance. "It makes sense to push skill development with a single concentrated force. The task is huge, and scope for failure is none," says Pramod Bhasin, founder of Genpact, who now, along with DLF's Pia Singh, run Skill Academy, headquartered in Gurgaon.

A consolidated skilling programme also helps skilling entrepreneurs. "We can then focus on skilling rather than diverting our energies towards compliance and chasing payments," says Mansi Agarwal of Mumbai-based UpSkill, which runs vocational training courses in Rajasthan and Gujarat. "At present, every ministry has its own targets and compliances. But thanks to the MSDE, common norms, qualifications and curriculums are being developed." But convergence doesn't come easy. "There is always turf conflict in government," says a department secretary. But others differ, insisting the glitches can be overcome. "The job is huge, so we need to avoid duplication, bring in some rationality," says a secretary from another ministry. "The turf war is passé; now the discussion is on who can provide the training better," says Nandan.

MANISH SABHARWAL Chairman, TeamLease (Photo: Nilotpal Baruah)

The functioning of the Pradhan Mantri Kaushal Vikas Yojana (PMVKY), under which the government provides short-term courses of all kinds, has already benefitted from being under a single ministry, the MSDE. Synergy will only help programmes currently under other ministers. "The institutes carrying out R&D, or providing higher professional qualifications in addition to skilling, will remain with the same ministry as before," adds Nandan.


"Most job aspirants don't lack the hard skills required to do a particular job, but the softer ones," says Agarwal of Upskill. "This includes self confidence, high standards of personal hygiene, a sense of discipline, an ability to adapt to the new world." She has found that as important as imparting knowledge related to a course is the job of teaching her students, for instance, how to use a western-style toilet, prevent body odour, wear ironed clothes and speak confidently.

Relevant skill training could also put the brakes on migration to big urban centres which are already overcrowded. "If you give people good working conditions in the place where they are based, opportunities to grow and inspirational jobs, they will not feel the need to migrate," says former CEO of NSDC, Dilip Chenoy. It is also important for industry to appreciate the skills aspirants bring with them, "There are still companies that prefer to hire unskilled labour and train it themselves," says R.C. Bhargava, Chairman, Maruti Suzuki India Ltd. "This allows them to get away with paying lower wages." There is also overall industry reluctance to hire, mainly due to the complex web of labour laws. Skill does not get the appreciation it deserves. "Leave aside industry, do we pay extra to an electrician for doing a job efficiently," says R.C.M. Reddy, CEO and Managing Director, IL&FS Education.

S. RAMADORAI Former Chairman, NSDC & NSDA (Photo: Rachit Goswami)

But at the same time, the shift of certain industries such as retail or beauty and wellness from the informal to the formal sector is helping skilled aspirants. "Mere skill development doesn't solve all problems. One needs to put one's heart and soul into the job," says Ajay Shriram, Chairman, DCM Shriram Group. He advocates more liberal labour laws and pins hope on the return of the investment cycle post the implementation of the Goods and Services Tax and other key reforms for employment to pick up.

Again, increasing automation is another looming threat for job seekers. "Smart factories are the in thing," says an industrialist, preferring anonymity. "Automation makes operations management efficient and also reduces the chances of defects in products." Many are looking at increasing their use of machines and robots in areas such as packing, fitting, welding, painting, and more. "Technology is changing every day," says Manish Sabharwal, Chairman and co-founder of recruiting company TeamLease. "SSCs need to be flexible in creating these job roles. New job seekers need to be ready to grab new opportunities."

In mid-2015, the National Democratic Alliance (NDA) government amended the Apprentices Act, 1961, to allow employers to fix hours of work and leave as per their discretion and provide apprenticeship training to non-engineering graduates and diploma holders as well. This has opened up employment for trainees in new trades, including IT-enabled services.

It was followed by the National Apprenticeship Promotion Scheme in September, by which the government promised to reimburse 25 per cent of the stipend paid to trainees to employers directly. "The idea was to encourage more on-job training," says Nandan.


The states have their own problems, which Rudy has to grapple with. A sub-committee of chief ministers decided that there should be state chapters of SSCs as well. These are being set up, but challenges remain. Five states - Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh and West Bengal - make for more than half the 239 million people projected to be added to India's population between 2009 and 2026. "Not only do these states score low on many development indicators, they lag on economic parameters as well compared to the southern and western states," says Ashok Varma, Partner at PricewaterhouseCoopers. Most of the jobs will be created in the better-off states, while most of the job aspirants will be in the less developed ones. Now that the BJP has won a massive mandate in Uttar Pradesh, the challenge for the new government would be to make the state a skills hub.

The NSDC has been asked to carry out a district-wise mapping of skills requirements and gaps. "We are also trying to understand the requirement of skills elsewhere in the world. Our candidates should be competent enough to seek a job anywhere," says Nandan.

SHRUTI MALIK, She runs a skilling institute, IRIS Learning, on the outskirts of Yamunanagar, Haryana

On October 17 last year, the MSDE revamped the flagship PMKVY scheme, linking payments to training partners with completion of training and achievement of a certain minimum placement (roughly 70 per cent). The new plan made it mandatory for training partners to track placements of students. "Once you start tracking your student for a year, you can understand where your course content may be going wrong," says R.C.M. Reddy of IL&FS Education. "This pushes skill centres to offer those courses which ensure job placement," says the head of another skill centre, preferring anonymity. According to official data till April 25, 2016, only 81,978 of the 1.76 million trained candidates were placed, while only 577,000 candidates have been certified since the launch of the scheme in July 2015. "Placements will improve if job creation improves," says Malik of IRIS. "The payment cycle from the MSDE has improved. We get 80 per cent of the payment by the time the student completes the course and the remaining only if we manage 70 per cent placement."

Indeed, the ministry bears the entire training cost under PMKVY, which varies from a minimum of `7,600 to a maximum of `20,000. Training of unarmed security guard, for instance, requiring 150-200 training hours, costs around `7,600; while that of a technician for the auto sector, which takes about 500 training hours, costs `20,000. Admission is open to youth from poor families with the minimum qualification of having passed Class X. Aspirants have to take a basic aptitude test to determine the interests and abilities. Course material and even practical training are all provided by the centre.


Another challenge is creating a pool of competent trainers. Rudy has tied up with the ministry of defence to rope in retired officers for the job, but agrees that more needs to be done. "Many of the sector skill councils have not achieved the standards required for trainers either," says Anita Rajan, Chief Operating Office, Tata Strive, the Tata Group's skilling initiative. "To even teach in school, people undergo formal training, but there is no such training for trainers here." Reddy of IL&FS Education sees a solution in technology. "We have standardised the course content, and through the internet we can stream it even to remote areas," he says.

In the meantime, ex-servicemen are being roped in to impart training, especially in electronics, signals and logistics. "We hired a few of the trainees and trained them further to be training partners," says Malik. Many corporate houses are also urging employees to undergo the trainers' programme. The centres at and near bigger cities still attract reasonably good trainers, but the challenge lies in providing them in the hinterland.


The ruling NDA is pursuing a skilling strategy which differs in some ways from that of the erstwhile United Progressive Alliance (UPA) government's. Between 2008 and 2012, the UPA government formed three bodies to further skill development: the Prime Minister's Office-led Council on Skill Development, the National Skill Development Coordination Board and the NSDC. Former TCS CEO S. Ramadorai was roped in with the rank of cabinet minister to assist the effort.

The NDA government has brought in the states too, with the MSDE given the responsibility to coordinate all efforts. In December 2015, NITI Aayog's Sub-Group of Chief Ministers, led by the then Punjab Chief Minister, Parkash Singh Badal, submitted its report asking for more knowledge sharing with states on programmes and experiences of skill administration. Seven sub-missions were set up which would work alongside the NSDC, the NSDA and Directorate of Training. "Every state has its own priority and preferences," one of the chief ministers pointed out.

Madhya Pradesh Chief Minister Shivraj Singh Chouhan told BT that he is taking skill development as a mission and has roped in Symbiosis Group of Institutes, Pune, to set up a skills university in the state. Similarly, Chief Minister of Jharkhand, Raghubar Das, roped in Singapore-based Institute of Technical Education to set up a skilling centre in the state. The two have very different plans. Chouhan is looking to cater to the demands of local industry, while Das is looking at opportunities across the world. "India has the potential to become a hub of skilled labour, and must leverage this demographic dividend," he told BT.

Meanwhile, Rudy has also got clearance to recruit a new cadre of officers for skill development alone. These officers will man most of the skill development-related activities at state and district levels. Similarly, states also have been asked to recruit dedicated provincial officers - a distinct step away from the UPA's strategy of working through private players. "During the UPA's tenure, skilling was like a start-up, but now it has transformed into a full-fledged scaled up project," Ramadorai told BT, a fortnight before he resigned his position.

However, in the UPA's tenure, many states, including Gujarat, then led by Narendra Modi, refused to follow the UPA model of skill development but devised their own. The Gujarat model included settings up of Kaushal Kendras at block level, after mapping local aspirations and business needs. Madhya Pradesh announced its own technical education and skill development policy in 2012, and other states like Tamil Nadu, Uttar Pradesh, Karnataka and Punjab followed suit. But coordination with the Centre - despite the National Skill Development Coordination Board, headed by the then Planning Commission Deputy Chairman Montek Singh Ahluwalia - remained a challenge.

Earlier autonomous, the NSDC and NSDA now have to work under Rudy's MSDE. There have been murmurs over the past year that government role in skill development has been increasing to the detriment of private players. The murmurs were especially loud when former NSDC CEO Dilip Chenoy and his COO Atul Bhatnagar abruptly resigned in October 2015. A Comptroller and Auditor General report was subsequently critical of NSDC's functioning under Chenoy and Bhatnagar, maintaining that while almost all the capital in NSDC came from the government's coffers, private parties held 49 per cent equity. "Rules were laid down before I took over and private parties adhered to them," says Chenoy, defending himself. Minister Rudy feels differently. "We can't let private players make bounty on the government exchequer," he says. "I feel there was some bungling somewhere."

Clearly, the Modi government is firing on all cylinders to skill India. If it succeeds in its mission, it will not only provide employment opportunities to the youth but also boost economic growth significantly.


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