Financing employment and skill development is the first baby step in the direction of Viksit Bharat
Sajjad Bazaz
India has rolled out its first budget containing massive financial layouts for job creation and skill development initiatives to pursue the Viksit Bharat plan. As envisaged in the plan, India will earn the developed country status by the year 2047. Before deliberating upon the first budget layouts for the Viksit Bharat plan, lets understand when a country is considered developed.
The main benchmark to determine the level of development of an economy is per capita income. It roughly shows how much a citizen of that country is likely to earn in a year. The per capita income together with level of industrialization, the general standard of living and technological infrastructure determine if a country is developed or not. Besides, the human development index, which measures several parameters of non-economic factors like quality of education, health and literacy, is also taken into account to categorize a country as developed or developing. However, high per capita income alone does not guarantee a developed country status to a country, if its human development index is not matching the benchmarks envisaged for categorizing a country as developed.
Now let’s deliberate upon the budget and what exactly it contains for the Viksit Bharat plan. To begin with, a snippet of Prime Minister Narendra Modi’s address to the nation on last year’s (77th) Independence Day. He said India will be a developed country (Viksit Bharat) by 2047. He also stated that India, currently enjoying the fifth largest economy status, would become the third-largest economy during his third term.
Now being elected Prime Minister of the country consecutively for the third time, Modi’s ambitious Viksit Bharat plan has officially found its roots in the Union Budget 2024-2025, prioritizing skilling and massive thrust on job creation. The government unveiled a robust package to bolster employment and skill development, targeting 4.1 crore youth over five years. This includes three Employment-Linked Incentive Schemes to enhance job creation and support employees and employers. This never-seen-before job creation programme has been allocated a support of Rs.2 lakh crore. Besides, a significant portion of the budget, Rs.1.48 crore, has been allocated for skilling initiatives, to train 20 lakh youth and upgrade 1,000 Industrial Training Institutes (ITIs) over the next five years. Even small businesses have found massive financial support in the budget as Mudra loan limits have been increased to Rs.20 lakh from Rs.10 lakh.
If we look at India’s current economic scenario we find unemployment and lack of skilled workforce as major impediments to the economic growth of the country. According to the latest data from the Centre for Monitoring Indian Economy (CMIE), the unemployment rate in India stood at 9.2 percent in June 2024, a sharp increase from 7 percent in May 2024. CMIE’s Consumer Pyramids Household Survey shows that female unemployment reached 18.5 percent, exceeding the national average, in June 2024. This is up from 15.1 percent in the same period last year. At the same time, male unemployment stood at 7.8 percent, slightly higher than 7.7 percent in June 2023. The rural unemployment rate rose to 9.3 percent in June from 6.3 percent in May. The urban unemployment rate climbed from 8.6 percent to 8.9 percent.
Meanwhile, a World Bank data shows India’s per capita income around $2,400. A country is tagged with developed status having $12,000 to $15,000 per capita income. However, a section of economists consider a country to be developed if its per capita income is above $25,000 or $30,000. Here it is pertinent to mention that a country having high per capita income doesn’t qualify for a developed nation status if it is confronted with vast income inequalities and a lack of educational opportunities for its citizens.The impact of rising unemployment rate on the economy has serious consequences as it hugely influences spending, growth, and job opportunities. It hinders economic progress and can even trigger social unrest.
In the given scenario, achieving the target of becoming a developed nation is a surmountable task and laying the foundation of Viksit Bharat 2047 in the Union Budget 2024-25 prioritizing skilling and employment is a move in the right direction if implemented well. Skilling equips the workforce with the necessary competencies to meet industry demands, fostering innovation and productivity. While employment not only ensures economic stability but also empowers individuals, enhancing their quality of life and contributing to overall societal progress.
India has a unique advantage in terms of demographics with more than 60% of its population young. So there is a vast opportunity to harness this demographic dividend by nurturing a workforce that is equipped with employable skills and prepared to meet the needs of the industry. Precisely, it is the employability that needs to be enhanced.
Notably, skill needs to be understood in its actual form. There are new things that one learns every day at the workplace. However, picking up experience and actively seeking new skills are two different things. The most successful people understand that achieving career goals relies on being proactive to build and grow their skills.
In the current market scenario where technicalities matter, the experts are rightly pinning persistently high unemployment on unemployed youths’ inadequate skills. Over a period of last two decades, we have witnessed a widening mismatch between job openings and the skills of those looking for job. So, as explained in economics jargon, we have a problem of “structural unemployment,” and not the “cyclical unemployment” caused by a downturn in the business cycle.
Lets discuss the skill scenario in the context of the J&K region.
Basically there are some major areas in our economy where huge potential has remained unexplored and a skilled work force is required to bring those fortunes into our economy. Some time back a group of unemployed youth was enthusiastic to take the route of Sher-i-Kashmir Employment Welfare Programme for Youth (SKEWPY) for entrepreneurship in gem and jewellery. A local consultant of international repute in Gemmology had drafted their project, which was approved and even bank loan sanctioned for the venture.
But the group lost their enthusiasm midway of achieving their dream for being unskilled to handle the venture. They lacked technical knowhow to handle the machinery required to cut and shape up the raw stones. Even as they were given some training regarding the venture, it was only the theoretical part of their venture. Before making the venture operational, they needed technical training of a few weeks so that they would know how to operate the machinery which they had to procure out of the bank loan.
For technical training, they were supposed to go outside the state and involved expenditure. The scheme had no option to fund their training and the group was asked to bear the expenditure out of their own pocket. Since they didn’t have money to meet the training needs, their project despite having viability and scope died its own death.
The above described situation is just a simple example of our skill deficit economy. So, it is this lack of skilled work force which has led to a problem of employability.
In a skill deficit economy like ours, even an MBA type of qualification is a problem. For example, an MBA pass out opts for setting up a handicraft venture. He is fit to handle the unit but not the craft enterprise. Thus, he lacks the skill to run such a type of enterprise successfully.
So, there is a need to guide the unemployed youth to develop skills to match the job market requirements. Or we can say major skill upgradation is essential to fulfill the needs of the market. Specific sectoral training programmes can be carved out for unemployed youth to get them into a particular job. Once our youth are skilled, we can reap the benefit of the available resources and will ultimately solve the problem of employability.
However, we should not ignore the role of our educational institutions, particularly the highest seats of learning. It is overdue to introduce economic specific courses or realign certain courses according to the market needs. Most of our academic courses often emphasize theoretical concepts at the expense of practical skills. And the present-day vocational training industry lacks the bandwidth to handle demand in this area. We don’t have enough vocational training institutions to meet the current need for critical skills development. In addition, many of today’s job-oriented programmes don’t make the grade when it comes to quality of instruction or industry linkage.
To be precise, in such a skill-deficit scenario, there is a need to capture the real picture with an aim to facilitate skilling every youth to bridge the gap between employment opportunities and skilled but unemployed youth. And, lastly, our economic policy has to be based on what our resources are. This means to align our economic policy to the structure of our domestic economy.
Meanwhile, it shouldn’t be construed that skill deficit is the exclusive reason behind the burgeoning unemployment scenario. There’s also a jobs deficit across the economy as the jobs created in various economic sectors have simply been inadequate to put the unemployed to work.
(The author is a veteran journalist/columnist. He is former Head of Corporate Communication & CSR and Internal Communication & Knowledge Management Departments of J&K Bank)
