To overcome this, the Institute of Applied Manpower Research, an autonomous institute under the Planning Commission, has suggested a levy on the private sector as done in countries like Germany and Brazil
Schemes introduced to assist skill development in the country have not brought any change at the ground level. The primary reason, according to analysts, is the temporary and ineffective nature of the financing pattern being used in such schemes and the limited participation of the corporate sector in skill development initiatives. To overcome this, the Institute of Applied Manpower Research (IAMR), an autonomous institute under the Planning Commission, has suggested a levy on the private sector as done in countries like Germany and Brazil.
The levy could act as a regular source of funding for skill development initiatives in the country. Experts criticise the current fund utilisation and allocation to various training centres like Industrial Training Institutes (ITIs) and other vocational training institutes.
About 80 per cent of the funds are utilised for payment of salaries of teachers, while no significant funds are directed to improve the quality or maintain the infrastructure. Moreover, ITIs have no incentives to mobilise resources on their own because the formula for getting grants is based on income minus expenditure instead of being performance based. The overall absorption capacity of training centres in India is around 40 per cent.
Moreover, such organisations do not have any autonomy which in turn leads to limited private participation in adoption of ITIs and Industrial Training Centres (ITCs). Furthermore, issues like uneven geographical distribution of training centres and outdated curricula which do not add to the employability of beneficiaries continue to dog skill development efforts.
“The financing of skill development in India definitely needs to be looked into by the policy makers. The participation of the private sector, which will need the skills one seeks to develop, is extremely limited till now and the utilisation of state funds is not encouraging,” said IAMR Director General Santosh Mehrotra.
The World Bank had pointed out that public funding for training in India is ad hoc in nature and does not have any transparent funding formula. The new initiatives of skill development also do not specify the basis on which the amount of allocation is decided upon. In addition, allocation of resources by the state governments depends on availability after meeting needs of the priority sector.
Taking the argument forward, Mehrotra says that the effective conduct of vocational training institutes depends not only on adequate finances but also regular availability of finances in a specified time. Currently, student fees are retained by the respective state governments and training providers have no incentive to meet labour market needs. “This is the common failing of supply-driven models of vocational training,” says an IAMR paper on skill development in India.
The need for autonomy and more representation of private organisations are reiterated by organisations like the World Bank, International Labour Organisation (ILO) and IAMR.
India, as an emerging economy, has been credited with its demographic dividend as the ratio of dependent population is decreasing and the share of working age population has been increasing and is expected to continue for the next two decades. Currently, barely a tenth of the 459 million large workforce has received any kind of formal or informal training.
The Skill Development Mission in India was created in 2007, with a three-tier structure — a Prime Minister’s Skill Development Council; Skill Development Board chaired by Planning Commission Deputy Chairman Montek Singh Ahluwalia and a public-private partnership based National Skill Development Corporation (NSDC) with a 51 per cent equity owned by the private sector, the rest by the central government.
Though the framework for developing skill in the country seems to be in place, the coverage of vocational training in India remains extremely small. According to Planning Commission estimates, the gross enrolment ratio at the secondary level is only 57 per cent, of which only 3 per cent are enrolled in the vocational stream.
