Skill development on a mass scale will enable the 'Make in India' initiative of the government succeed and revive the manufacturing sector to create more jobs, says the economic survey for 20014-15.
"As manufacturing is skill intensive, growth should balance the advantage of low-skilled workforce with skill development to boost productivity and create more jobs," highlighted the survey, tabled in the Lok Sabha by union Finance Minister Arun Jaitley Friday.
Observing that the Indian manufacturing productivity lagged behind other countries, the survey found that states had declining share of manufacturing in their gross domestic product (SGDP) and advocated that they "should utilise their resources to train unskilled labour into a strong skilled workforce and deploy them in the manufacturing sector for higher productivity".
Identifying distortions in labour, capital and land markets as the cause for the non-development of manufacturing as growth engine, it said specialisation was not in line with the country's advantage in unskilled labour.
"Manufacturing should be expanded to take advantage of the abundant unskilled labour, as the future trajectory of the country's development depends on Make in India and 'skilling India' initiatives," it noted.
Admitting that skill development and employment were major challenges, the survey noted that the as share of the skilled workforce was a mere two percent, need for the manufacturing sector was a whopping 120 million in fiscal 2013-14.
"Dearth of formal vocational education, inadequate skill training capacity, negative perception towards skilling and lack of industry ready skills even in professional courses are the major cause of poor skill levels of the workforce," a labour bureau report said.
The survey also revealed that the compound annual employment growth rate decelerated to 0.5 percent during 2004-05 to 2011-12 from 2.8 percent during 1999-2000 to 2004-05.
The central government has set up the department of skill development and entrepreneurship this fiscal to create skilled workforce across the country in partnership with state governments through the National Skill Development Corporation.
The survey also called for revival of public investment to improve investment climate and reduce the backlog of stalled projects.
"Revival of public investment in short-term will act as an engine of growth in the infrastructure sector, as it cannot be a substitute for private investment," it said.
