"The ADB and the government of India signed a $100 million loan to help the state of Kerala in its drive to increase the employability of higher secondary and undergraduate students," ADB said in a statement.
The loan, to support Kerala's Additional Skill Acquisition Programme, will also provide state's youth with opportunities to improve their fluency in English language, IT skills, and learn market relevant in-demand vocational skills.
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"By offering 180 hours of foundation training in communication English and basic IT, and 200 to 500 hours of vocational training to high school and undergraduate students, after class and during vacations, ASAP will make them 'market ready' by the time they graduate," ADB's Country Director of India Resident Mission M Teresa Kho said in the statement.
The loan will benefit nearly 235,000 students in Kerala during 2014-2018, the release added.
Launched in 2012 by state government, ASAP aims to enhance employability of youths and improve their job prospects by complementing post-basic education with market-relevant vocational training and career counseling.
"The results-based lending (RBL) modality will incentivise results, and reduce transaction costs. This loan provides a replicable model for other states of India that are facing the problems of low youth employability and high unemployment," said Tarun Bajaj, Joint Secretary, Ministry of Finance.
Kerala faces high unemployment problem despite having the best education and health indicator in India, ADB said, adding that the state's "educated unemployment" rate at 7.4 per cent in 2011-12 was over 3 times the national average, it added.
ASAP has enrolled over 16,000 students and offers vocational training in 70 market relevant courses.
The Manila-based funding agency is providing the loan from ADB's Ordinary Capital Resources. The loan has a 20-year term including a grace period of five years, commitment charges of 0.15 per cent and interest rate based on LIBOR.
Kerala government will provide USD 47 million funds, out of the total RBL amount of USD 147 million.