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Impact of Higher Technical Education and Skill Development on Employment Generation and Economic Development: Focus on India

Technological change
Dr. A.N. Sarkar
Ex-Senior Professor (International Business) & Dean (Research), Asia-Pacific Institute of
Management, New Delhi

Technological change drives long-term economic growth, productivity and improvement in living standards. At the same time, the emergence and diffusion of new ideas, products and production techniques throughout the economy entails a process of “creative destruction”. New technologies destroy jobs in some industries, especially among the low-skilled, while creating jobs which are often in different industries and require different skills. Historically, this process has led to net job creation, as new industries replace old ones and workers adapt their skills to changing and expanding demand. Today’s rapid technological change coupled with the extensive restructuring underway in the emerging economies, such as India, leads some to associate technology with unemployment and social distress. However, technology per se is not the culprit. Its economy-wide employment impact is likely to be positive provided that the mechanisms for translating technology into jobs are not impaired by deficiencies in training and innovation systems and rigidities in product, labour and financial markets. To realise the full potential of technological change in improving economy-wide productivity, growth and job creation, governments need to make innovation and technology diffusion policies an integral part of overall economic policy.

The paper reviews, takes a stock and attempts to assess the impact of Higher Education and Skill Development initiatives by different players on Employment generation and Economic development.

India, with a population of more than one billion and a workforce of 500 million, has maintained a remarkable gross domestic product (GDP) growth rate of around 9% during the last four years. The unprecedented economic growth accompanied by widespread urbanization along with foreign direct investment has fueled a demand for skilled workers in India. A severe shortage of skills is apparent in the organized and unorganized sectors of the country’s economy. The task of workforce development in India faces the changing realities of globalization and competitiveness, on one hand, and the need for inclusive growth on the other. The low literacy rate and lack of skill training of the vast majority of the Indian populace poses a major hurdle for its journey towards a knowledge economy. Therefore, policies to ensure higher quality education and the expansion of vocational education and skill training for the poor and underprivileged are needed in order to produce a new generation of educated and skilled employees who are flexible, analytical, and can serve as driving forces for innovation and growth.

India does, however, enjoy the demographic advantage of an increasing young population, in comparison to the aging societies in most advanced countries. Nearly 12 million youth join the workforce every year. In order for India to exploit this demographic advantage in the future, there is a need to create a model to impart vocational education and training that is flexible, sustainable, inclusive, and creative. The challenge therefore facing the country is how to train and equip this young population with ways and means of gaining productive and meaningful employment.

1.0. State of Technical Education Systems in India

India’s higher education system is the world’s third largest in terms of students, next to China and the United States. Since Independence, the Technical Education System in our country has grown into a fairly large-sized system, offering opportunities for education and training in a wide variety of trades and disciplines at certificate, diploma, degree, postgraduate degree and doctoral levels in institutions located throughout the country. The overall scenario of higher education in India does not match with the global Quality standards. Hence, there is enough justification for an increased assessment of the Quality of the country’s educational institutions. In order to maintain the standard of technical education, The All India Council for Technical Education (AICTE) was set up in 1945. AICTE is responsible for the planning, formulation and maintenance of norms and standards, quality assurance through accreditation, funding in priority areas, monitoring and evaluation, maintaining parity of certification and awards and ensuring coordinated and integrated development and management of technical education in the country.

Technical education contributes a major share to the overall education system and plays a vital role in the social and economic development of our nation. In India, technical education is imparted at various levels such as: craftsmanship, diploma, degree, post-graduate and research in specialized fields, catering to various aspects of technological development and economic progress. The provisions AICTE Act, “Technical Education” means programs of education, research and training in the following fields: Engineering and Technology; Architecture; Town planning& Management; Pharmacy and Applied Arts and crafts; Such other programmes or areas as the Central Govt. may declare in consultation with the council by a gazette notification As per the statistics posed by department of Higher Education, Govt. of India, around 18,000 institutions are functioning in the country with approx 5.00 lakh teachers employed under various streams. Many technical institutions are globally acclaimed for the standards and quality they deliver but it is a matter of concern that none among the 621 Universities in the country features among the first 200 in the world.

The overall scenario of Higher Education in India does not match the global standards. It drives enough justification for an increased and tightened assessment of the quality of the higher education institutions in the country. Mere investments in libraries, ICT, laboratories and state-of the-art infrastructure makes the system face hardship in delivering cutting edge research. The 9% growth rate achieved consecutively during the past 5 years has uplifted India as one among the most promising economies in the world and higher education had played a vital role in helping our country to achieve the same. The number of Engineering Colleges at the dawn of independence in 1947 was 44 with an intake of 2500. In the early eighties, Governments allowed private participation in the setting up of technical institutions on self financing basis. Following the same, a large number of privately managed institutions were established in the past 25 years and the growth of technical institutions countrywide with a detailed split up among the States from 1980-2012 is shown in Table 1.

The compound annual growth rate of institutions during the 61 year period is 6.7% excluding the IIT’s and NIT’s and the percentage increase in the number of engineering institutions between 1995 to 2005 is 298.66%. The sanctioned intake has increased from 2940 in 1947 to 7.8 lakhs in 2008 to 11 lakhs in 2012 (http://www.iracst.org/ijrmt/papers/vol4no12014/3vol4no1.pdf). NASSCOM had reported in its recent studies that hardly 26% of the present day graduates are employable and the rest have to make up the deficiencies through rigorous trainings through finishing schools. The current technical workforce development system in India is provided by three categories of institutions:

  • The Vocational Education and Training System at the certificate level being offered by the Industrial Training Institutes (ITI) and also at the 10+ school level;
  • The Technician Education System comprising polytechnics offering diplomas in engineering and technology; and
  • The Technical Education System comprising institutions offering degrees and higher qualifications in engineering and technology.

Certificate level programmes form the first level of technical education in India. These programmes are designed to train craftspeople who can work as skilled workers in industry. This training is generally of two years duration after eight to ten years of schooling and is offered in ITIs. There is also a parallel scheme of vocational education offered in schools after ten years of schooling designed to cover functional areas in the service and infrastructural sectors. The next level of technical education is the diploma level training offered in polytechnics. These programmes are generally of three years duration after ten years of schooling. However, a good number of students enter following 12 years of schooling. Diploma holders have so far functioned only at the supervisory level in industry. The third level of technical education is the degree level, which is of four years duration after 12 years of schooling. It produces engineers who perform functions such as planning, design, production, and management.

Postgraduate programmes leading to masters degrees are also offered by some of the engineering colleges and universities and the IITs. Masters degree programs are of two years duration. Students need to qualify in the Graduate Aptitude Test in Engineering (GATE) examination for entrance into a masters degree programs after completing the undergraduate course. Opportunities for obtaining doctoral degrees are also offered by these institutions. Figure 1 depicts the flow path of India’s technical education system. As the Figure 1 shows, there is no opportunity for lateral entry into polytechnics from the ITIs and though the opportunity exists, few ITI graduates return for higher education to polytechnics due to the long duration of their programs.

Studies on the job functions of the above categories of technical labor indicate that they need to develop a set of capabilities essential for building excellence in their respective areas of work. The capabilities are given in Table 2.

Engineering education is one among the premier measures of any developing country as it has to play a vital role in producing good engineers for the development of the nation in all aspects. The prospects and development in the higher education sector in India needs a critical examination in a rapidly globalizing world. There is an urgent need to work for the development of the technical educational sector to meet the need of the emerging opportunities, increasing younger generation population and challenges of the 21st century. The decisions that are going to be implemented are likely to hold the key to India’s future as a center of knowledge production. We need higher and technically educated people who are skilled and who can drive our economy forward. If India could provide skilled people to the outside world, then we could transfer our country from a developing nation to a developed nation in a short span (http://www.iracst.org/ijrmt/papers/vol4no12014/3vol4no1.pdf).

Knowledge-based Economies raise New Policy challenges

The report Technology, Productivity and Job Creation – Best Policy Practices assesses innovation and technology diffusion policies, identifies “best policy practices” and makes country-specific recommendations. It presents evidence on the extent to which new technologies are transforming the structure of OECD economies and enhancing their ability to grow and create wealth and jobs. Economic activity is becoming increasingly knowledge-based: jobs are shifting from low to high-skilled workers; productivity and employment growth depend on the conditions for economy-wide diffusion of new products and processes. While aggregate productivity and employment growth remain modest in most countries, those firms that combine technological change, organisational change and up-skilling display strong economic performance. With globalisation, the innovation and production systems of different countries are becoming increasingly interdependent; opening up new opportunities while at the same time accentuating the need for restructuring and adaptation. Countries differ with respect to where they stand in this process of structural adjustment, because of different starting points, technological and industrial specialisations, institutions, policies and attitudes to change.

Technology Policy to be viewed as an integral part of the broader Structural Policy Agenda

While a number of countries have undertaken impressive reforms in innovation and technology diffusion policies, current approaches are insufficiently adapted to the characteristics and problems of knowledge-based economies, and the potential contribution of technology to growth and employment remains largely untapped. Technology policies continue to be piecemeal, with insufficient consideration given to linkages within national innovation systems and to the broader structural reform agenda. To be effective, they need to operate in a stable macroeconomic environment and complement broader reforms. In an increasingly integrated world economy, product market reforms enable more rapid diffusion of technology and information, and strengthen incentives for firms to innovate and adapt goods and services to changing consumer needs. Reforms to financial markets facilitate the allocation of capital to new technology-based entrepreneurial initiatives. Labour-market reforms, combined with measures favouring up-skilling and lifelong learning, contribute to further innovation, facilitate the use of advanced technologies, and allow technical change to translate into more jobs.

Ensure the conditions for Technical progress to contribute to Job creation

Technology policies must not aim at direct employment goals at the expense of productivity and competitiveness; nevertheless, a number of OECD countries are in need of policy adjustment in order to strengthen job outcomes. Efforts should also be made in reducing the potential mismatch between the skills in supply and those in demand, while ensuring complementarities between technology and human capital policies is one area for reform. Technology policy can also help improve the conditions for the creation and growth of new technology-based firms (NTBFs), which contribute directly to job creation, but even more importantly, create and diffuse new goods and services, thereby instilling a culture of innovation, encouraging investments in skills and improving economy-wide dynamic allocative efficiency. Policy measures in this respect involve fostering greater managerial and innovation capabilities, removing regulatory, information and financing obstacles and promoting technological entrepreneurship. More broadly, an important role for policy is to help create an environment conducive to the articulation of demand and jobs, including in new growth sectors such as Internet-based services or environmental goods and services.

Management of Vocational Education and Training (VET)

Vocational Education and Training in India is multi-sectoral. Each governmental ministry/department at the central as well as state levels is responsible for workforce development in its own sector. While some offer formal or non-formal7 courses, others draw from the general pool of educated and trained workers. VET has been a concurrent subject of governments at both the central and state levels since the 1976s. The Ministry of Human Resource Development (MHRD) and the Ministry of Labour and Employment (MoLE) are the main central government agencies involved in the funding and management of the VET programs. At the national level, the Directorate General of Employment and Training (DGET) under the Ministry of Labour and Employment is the nodal agency for formulation of trade policies, laying down standards, making grants of affiliation to institutes, monitoring training programs, testing and certification, and other matters connected to the fields of vocational education and training and providing employment services. However, the day-to-day administration rests with the respective state governments and union territory administrations.

The national government is advised by two tripartite bodies, the National Council for Vocational Training (NCVT) and Central Apprenticeship Council, for the purpose of laying down the policies and training standards, trade testing and certification. The introduction of new trades and deletion of obsolete trades are also done with the recommendation of these councils. State Councils for Vocational Training (SCVTs) have been constituted at the state levels by the respective governments.

The All India Trade Test for trade apprentices is given by the National Council of Vocational Training (NCVT) twice a year and a National Apprenticeship Certificate is awarded to those who pass. This certificate is recognized for employment under government/semi-government departments/organizations. In addition to MHRD and MoLE, various VET programs and schemes are carried out under other central ministries as well as the state governments and union territory governments. Presently there are 17 ministries involved in such activities at various levels.

Various VET Programmes/Schemes

Vocational education and training in India can be broadly categorized into vocational education, vocational training, apprenticeship training, tertiary education and training and continuing vocational educational and training. The main providers of VET in the country are some higher secondary schools, VET institutions, ITIs/ITCs, community polytechnics, Jan Shikshan Sansthans, National Institute of Open Schooling (NIOS), and the Indira Gandhi National Open University (IGNOU). A number of other programmes, schemes, and courses for vocational education and training, as cited by the All India Consultation Meeting on Vocational Education and Training (2007), are offered by 17 different ministries at the central and state levels. Some of the important schemes and programs of vocational education and training currently carried out by the various ministries are summarized below in Table 3.

Data collected and compiled from various sources: NA=Not Available; VEP=Vocational Education Programme; Vocational Training Programme=VTP; STP=Skill Training Programme;

ATS=Apprenticeship Training Scheme; Accredited Vocational Centers; KVIC=Khadi and Village Industries Commission; UGC=University Grants Commission.

Table 4 shows the Status of Training Programs under Ministry of Small Scale and Agro and Rural Industries

Structure and Systems of Technical Higher Education in India

In the Indian system, the completion of the senior secondary examination is the stage from where

higher education begins (ten years of primary and secondary education plus two years of higher secondary education). The first degree, the bachelors’ degree is obtained after three years of study in the case of science and liberal arts and four years in the case of engineering and technology. The master’s degree programme was of two year’s duration earlier but is currently of one and a half year duration. The research degree (Ph.D.) takes variable time but can be completed in three years. In addition to degree courses in engineering and technology a number of discipline-oriented and certificate courses are also available. Their range is wide, some being undergraduate diploma courses and others postgraduate courses with duration of one to three years.

The System of Governance of Technical Education

Education is a concurrent subject under the purview of the Central Government as well as the State Government. In addition, statutory bodies like (AICTE) and the University Grants Commission (UGC) have their empowerment by the Acts of Parliament to regulate higher education. Professional Bodies such as the Council of Architecture, Pharmacy Council of India and the Institution of Engineers (India) have their roles, some of which are well defined and some others not so. The universities and deemed-to-be universities exercise various controls arising out of their statutes. The Bureau of Technical Education (BTE) in the Ministry of Human Resource Development provides grants to centrally funded institutions such as the Indian Institutes of Technology (IITs), Indian Institutes of Management (IIMs), School of Planning and Architecture (SPA), New Delhi, Technical Teachers Training Institutes (TTTIs), Indian School of Mines (ISM), Dhanbad, and Indian Institutes of Information Technology (IIITs). BTE processes the programmes of these centrally funded institutions, monitors and evaluates them. UGC allocates and disburses funds to the central universities and has the mandate with reference to norms and standards of education in the universities.

AICTE was originally constituted as an advisory body in 1945 for all matters relating to technical education. Although AICTE had no statutory power, it played an important role in the development of technical education in India. In the late nineteen fifties, early sixties and eighties there was a large-scale expansion of technical education. Whereas the earlier growth occurred with the approval of AICTE and the Government of India, the expansion of eighties was brought about primarily in the self financing sector without the approval of AICTE and the Government of India, and was localized in four States Ñ Karnataka, Maharashtra, Andhra Pradesh and Tamil Nadu. It was in this period that the National Policy on Education (NEP) (1986) envisaged that AICTE be made a statutory body and be vested with the authority for planning, formulation, and maintenance of norms and standards. Even as early as 1964, the Education Commission under the chairmanship of D. S. Kothari had made similar recommendation for proper administration of technical education. AICTE was made a statutory body in 1987, by an act of Parliament, for appropriate planning and coordinated development of the technical education system throughout the country. AICTE functions through its various statutory bodies to comply with the mandate provided by the Act.

Expansion of Technical Education in India

When India attained Independence in 1947, there were only 38 degree-level and 52 diploma-level engineering/technical institutions with a total intake of 2,500 and 3,670 students, respectively. To carry out development plans, the country required expansion of the system of technical education, especially to provide human power for industries and technical services. The Central and State Governments provided funds to increase the technical education facilities in the 1950s and early 1960s which resulted in the establishment of a large number of Government and Government-aided private institutions in the country (Table 5). The Government also adopted a policy of heavily subsidizing the technical institutions to attract meritorious students. The aided institutions received 50 to 70% of the capital cost and 80 to 90% of the recurring cost.

Need for a Sound Technical Education Policy

The National Education Policy (NEP) of 1986 addressed to the issues of engineering and technical education in the private sector in a different context. The 1980Õs saw a phenomenal growth of technical institutions in four states. This sudden increase of technical education, like in adiabatic expansion of a thermodynamic process, resulted in cooling of quality. To arrest the decline in the degree of excellence, as envisaged in NEP, AICTE was made a statutory authority. This response was largely conditioned by the imperatives of damage control rather than the need of control to ensure high norms and standards. Through the years, AICTE has become more effective in fulfilling its mandate flowing from the AICTE Act of 1987. The Act was born in a milieu of distrust of the private sector in the area of technical education. The atmosphere has changed and the private sector has to be encouraged in every way to invest in technical institutions to provide high-quality education. The existing system is a mix of what was designed and what has evolved, both of which need a critical appraisal and review. A new policy initiative is needed which would take into account the inescapable role of the private sector, the emerging technologies, the new modes of knowledge delivery in an electronic environment, the role of Governments and universities, the system of regulations and controls, the market pressure of foreign agencies which are making inroads in the Indian education system, networking of education and research, distance education, the system of accreditation and its international interface and the promotion of excellence and its sustenance. India urgently needs a coordinated blueprint for technical education, research and development encompassing Governments, private sectors, and research and academic institutions, consistent with the industrial, technological and economic future of the country.

India is on the cusp of a demographic opportunity. It is today one of the youngest nations in the world with more than 62% of the population in the working age group (15-59 years), and more than 54% of the total population below 25 years of age. The country’s population pyramid is expected to “bulge” across the 15–59 age groups over the next decade. It is further estimated that the average age of the population in India by 2020 will be 29 years as against 40 years in USA, 46 years in Europe and 47 years in Japan. In fact, in next 20 years the labor force in the industrialized world will decline by 4%, while in India it will increase by 32%. This poses both a challenge and an opportunity. To reap this demographic dividend which is expected to last for next 25 years, India needs to equip its workforce with employable skills and knowledge so that the youth can participate productively to make India a developed economy.

The country presently faces a dual challenge of severe paucity of highly-trained, quality labor, as well as non-employability of large sections of the educated workforce that possess little or no job skills. Ministry for Skill Development and Entrepreneurship (Department of Skill Development and Entrepreneurship created in July 2014) has been set up in November 2014 to give fresh impetus to the Skill India agenda and impart employable skills to its growing workforce over the next few decades. Apart from meeting its own demand, India has the potential to provide skilled workforce to fill the expected shortfall in the ageing developed world.

As India moves progressively towards becoming a global knowledge economy, it must meet the rising aspirations of its youth. This can be partially achieved through focus on advancement of skills that are relevant to the emerging economic environment. The challenge pertains not only to a huge quantitative expansion of the facilities for skill training, but also to the much more important task of raising their quality. Skill development, however, cannot be viewed in isolation. Skills are fundamental to, but not sufficient for, gaining decent jobs. Improved productivity through skill development must be complemented by economic growth and employment opportunities. Skills need to be an integral part of employment and economic growth strategies. Coordination with other national macroeconomic policies and strategies is therefore critical.

It is estimated that during the seven-year period of 2005-2012, only 2.7 million net additional jobs were created in the country. Thus, another key aspect that needs to complement a successful skill strategy is entrepreneurship, which can be a key source of employment generation and economic development in India. Given the changed landscape in the country, entrepreneurship opportunities have emerged as an important source of meeting the aspirations of the youth. An all-inclusive approach to strengthen the entrepreneurship development scenario in the country, that boosts competent and globally competitive entrepreneurs, needs to be encouraged.

Recognizing the imperative need for skill development, National Skill Development Policy was formulated in 2009. Given the paradigm shift in the skilling ecosystem in the country and the experience gained through implementation of various skill development programmes in the country, there is an imminent need to revisit the existing policy. Moreover, the National Skill Development Policy provides for review every five years to appropriately take account of progress in implementation and emerging trends in the national and international environment.

National Skill Development and Entrepreneurship policy of 2015 supersedes the policy of 2009. The objective of this policy is to meet the challenge of skilling at scale with speed, standard (quality) and sustainability. It aims to provide an umbrella framework to all skilling activities being carried out within the country, to align them to common standards and link skilling with demand centres. In addition to laying down the objectives and expected outcomes, the policy also identifies the various institutional frameworks which will be the vehicles to reach the expected outcomes. Skills development is the shared responsibility of government, employers and individual workers, with NGOs, community based organizations, private training organizations and other stakeholders playing a critical role. The policy links skills development to improved employability and productivity to pave the way forward for inclusive growth in the country. The skill strategy is complemented by specific efforts to promote Entrepreneurship to create enough opportunities for skilled workforce.

Skill Development and Entrepreneurship Landscape

Skills and knowledge are the driving forces of economic growth and social development for any country. Countries with higher levels and better standards of skills adjust more effectively to the challenges and opportunities in the domestic and international job market. In India, we have awoken rather late to the skills need and challenge. The first attempt to pro-actively promote skill development in the country was made with the National Policy on Skill Development 2009. Consequently, over the last five years, India has made some progress towards developing the assets to drive skills training at scale. Notably, the establishment of the National Skills Development Corporation (NSDC) in 2009 to promote private sector participation via short duration courses has tied up with more than 187 training providers, many of whom have started scaling up their operations. They also supported and incubated 31 Sector Skills Councils (SSCs) that is intended to facilitate the much needed participation and ownership of the industry to ensure needs-based training programmes. The National Skills Development Agency (NSDA) is working with the State governments to rejuvenate and synergise skilling efforts in the State. The National Skills Qualification Framework (NSQF) has been anchored at NSDA and efforts have been initiated to align all skilling and education outcomes with the competency based NSQF levels. These efforts build on the legacy vocational training infrastructure: close to 12,000 Industrial Training Institutes and 3,200 polytechnics. The country, however, has a big challenge ahead as it is estimated that only 2.3%  of the total workforce in India has undergone formal skill training as compared to 68% in UK, 75% in Germany, 52% in USA, 80% in Japan and 96% in South Korea. While the debate on the exact quantum of the challenge continues, there is no disputing the fact that the range is of massive proportions.

On demand side, a skill gap study has been conducted by National Skill development Cooperation in 2014, which indicates that there is an additional net requirement of 11.92 crore skilled manpower in twenty four key sectors by 2022. On supply side, analysis based on results of 66th and 68th round of NSSO can be seen at Appendix-I. It is observed that today the total workforce in the country is estimated at 48.74 crore, of which approximately 51% is in the non-farm sector. Of these 24.9 crore non-farm workers, a maximum of 10% would be formally trained and skilled (4.69% is based on 2011-12 NSSO survey and is including both farm and non- farm). Approximately 22.4 crore would be either skilled through non formal channels or unskilled. Out of these, it is estimated that approximately, 15.7 crore would be in the age group 15-45 years. This workforce will need to be mapped with recognition of existing skills and then provided with necessary up-skilling or re-skilling for increasing productivity and providing a livelihood pathway. Similarly, in farm sector, this figure works out to be 15 crore. In addition, the number of people who enter the work force age group every year is estimated to be 2.6 crore. Assuming an average labour participation rate of 65% (both male and female), at least 1.70 crore will enter the workforce and all of these need to acquire skills.

The global economy is undergoing structural transformation: there will be need for a workforce of 3.3 billion by 2020, increasingly in the services and capital intensive-manufacturing sectors. The phenomena is also expected to play out in India – by 2020, 90% of India’s GDP and 75% of employment is expected to be contributed by the services and manufacturing sectors. Technological advancement will make several jobs redundant while also creating new job roles. This structural shift in employment will increase demand for sophisticated workers, innovators, and thinkers who can thrive in a globally-connected and dynamic economy. India, with its large workforce and increasing pool of higher education graduates, is strategically positioned to reap the benefits of this shift. However, the ‘demographic divided’ will be squandered unless India is able to create a “globally relevant and competitive” higher education system that serves the requirements of both the domestic as well as global economy.

While we may acknowledge that the Government has proposed and is also taking several measures to improve the system on the above aspects, there are some steps it could take to make the Indian higher education system a role model for other emerging systems. Institutions, on their part, would need to adopt a transformative and innovative approach across all levers of higher education: from curricula and pedagogy to the use of technology to partnerships, governance and funding, to become globally relevant and competitive.

Draft National Policy for Skill Development and Entrepreneurship 2015

The objective of the Policy is to meet the challenge of skilling at scale with speed, standard (quality) and sustainability. It aims to provide an umbrella framework to all skilling activities being carried out within the country, to align them to common standards and link skilling with demand centres. The Policy lists out ten major directions for the Skill Development Framework, including increasing the capacity, synergy among existing schemes, global partnerships and inclusivity. It seeks to address the lacunae in Entrepreneurship by steps like streamlining entrepreneurship in education system, inventing business through mentorship, fostering social entrepreneurship, promoting inclusivity, improving the ease of doing business and providing access to finance. It also mentions the possibility of the launch of the National Mission for Skill Development &Entrepreneurship in next six months. The policy encourages companies to spend at least 25% of Corporate Social Responsibility (CSR) funds on skill development, seeks to introduce fee paying model along with Skill Vouchers, and set up a Credit Guarantee fund for Skill Development. A ‘Project Implementation Unit’ (PIU) is also proposed to be set up to review the implementation and progress of the various initiatives under this policy.

‘Make in India’ Initiative and Challenges before Higher Education Policy

India is in throes of reviving its high growth trajectory through Make-in-India campaign. The thrust is to realize National Manufacturing Policy (NMP), bolster Public Private Partnership (PPP), and improve inflow of Foreign Direct Investment (FDI). Higher education policy has therefore become a critical link in this campaign as it would upscale Human Development Index (HDI) and improves employment opportunity of around 10 million additional workforces who seek jobs every year. This paper takes an overview of the policy so far, recommendation of high power committees to improve private industry participation and foreign collaboration and strongly advocates the need to increase government’s commitment towards allocation to education, increase thrust on research and development, Improve Total Factor Productivity (TFP) and to abdicate the ideological slug fest in order to realize the immense potential that a high global connect provides.

Fulfilling the ‘Make In India’ Vision

The Government of India, knowing the importance of the sector to the country’s industrial development, has taken a number of steps to further encourage investment and improve the economy.”Make in India” 4mission is one such long term initiative which will help to realize the dream of transforming India into a „manufacturing hub”. The prime minister’s call for “zero defect and zero effect” manufacturing resonates well with our industry as we grow and produce for the world with concern for the environment. The Government in the last few months has taken a lot of steps in this direction. Major ones being (Figure 2):

‘Make in India’ Impact on Indian Economy

Indian economy is classified in three sectors — Agriculture and allied, Industry and Services. Agriculture sector includes Agriculture (Agriculture proper & Livestock), Forestry & Logging, Fishing and related activities. Industry includes ‘Mining & quarrying’, Manufacturing (Registered & Unregistered), Electricity, Gas, Water supply, and Construction. Services sector includes ‘Trade, hotels, transport, communication and services related to broadcasting’, ‘Financial, real estate & prof servs’, ‘Public Administration, defence and other services’. Services sector is the largest sector of India. Gross Value Added (GVA) at current prices for Services sector is estimated at 73.79 lakh crore INR in 2016-17. Services sector accounts for 53.66% of total India’s GVA of 137.51 lakh crore Indian rupees. With GVA of Rs. 39.90 lakh crore, Industry sector contributes 29.02%. While, Agriculture and allied sector shares 17.32% and GVA is around of 23.82 lakh crore INR (Sector-wise contribution of GDP of India: http://statisticstimes.com/economy/sectorwise-gdp-contribution-of-india.php).

The National level initiative such as ‘Make in India’ will help create a policy framework to ease foreign investment, ease of business and management of intellectual property. This will, in turn, help industries to establish their manufacturing bases in India. Furthermore, this will help create employment opportunities in India. Industries will tend to develop a support ecosystem around them, thus empowering small businesses. Exports from such industries will help in contributing to our foreign exchange reserve. Most importantly, such an initiative helps bring critical knowledge about manufacturing and production into the Indian population.

Now, this initiative has a great impact on the economy of our country. Obviously, if the big companies will setup their branches here, it will directly affect the GDP of India. The supreme objectives of ‘Make in India’ are as follow: The main focus of ‘Make in India’ Campaign is mainly on 25 prime sectors. Almost every sector is capital-intensive and demands a lot of skill. So, with the more and more investment in these sectors, the main focus will be on increasing employment and the use of advanced technology. For the ‘Make in India’ campaign, the government of India has identified 25 priority sectors (Table 6) that shall be promoted adequately (https://www.mapsofindia.com/government-of-india/make-in-india.html). These are the sectors where likelihood of FDI (foreign direct investment) is the highest and investment shall be promoted by the Government of India.

‘Make in India’ will help to achieve this goal but it comes with its own set of challenges. Manufacturing is capital and resources intensive sector which will require conducive environment for business. Labour issues will be major hurdle which the Government is trying to handle through labour reforms. Besides this, a major push is required to upgrade infrastructure of country. Govt has also set up 10,000 crore start up fund to encourage entrepreneurship. Basically objective is to create ecosystem of small industries in periphery of manufacturing hub similar to Maruti model. Government will provide all the approvals under Make in India initiate in a time bound manner through single online portal.

The NDA government’s ‘Make in India’ campaign had till early October, 2016 attracted INR 2000 crore worth investment proposals. The campaign has, despite this, found its fair share of critics. The topmost of these criticisms is leveled against the incumbent government. It has been felt that the government does not walk its talk – labour reforms and policy reforms which are fundamental for the success of the ‘Make in India’ campaign have not yet been implemented. A number of layoffs in companies such as Nokia India cast long shadows over the campaign. A number of technology based companies have not been enthused by the campaign launch and have professed to continue getting their components manufactured by China.

For the ‘Make in India’ campaign, the government of India has identified 25 priority sectors hat shall be promoted adequately. These are the sectors where likelihood of FDI (Foreign Direct Investment) is the highest and investment shall be promoted by the government of India. It is aimed the development of these sectors would ensure that the world shall readily come to Asia, particularly to India where the availability of both democratic conditions and manufacturing superiority made it the best destinations, especially when combined with the effective governance intended by his administration.

Vocational and Technical Education (VTE)

Vocational and Technical Education (VTE) plays a vital role in a society’s economic growth and social development. The Perkins Act defines vocational and technical education as organized educational programs offering sequences of courses directly related to preparing individuals for paid or unpaid employment in current or emerging occupations requiring other than a baccalaureate or advanced degree. Programs include competency-based applied learning which contributes to an individual’s academic knowledge, higher-order reasoning, problem solving skills, and the occupational-specific skills necessary for economic independence as a productive and contributing member of society. The mandate for vocational and technical education is manifold in the following six challenges. First, the vocational and technical education system should deliver both foundation and specialist skills to individuals, enabling them to find employment or launch their own business and to work productively and adapt to different technologies, tasks and conditions. The ultimate economic objective of education and training is improved personal and social productivity. Second, vocational and technical education is often an instrument for structural change.

Large numbers of workers may need to leave jobs that are no longer in demand, move to new jobs that will be created, or learn to perform old jobs in new ways with different technologies. Vocational education and training systems, along with other agencies that provide a safety net and assistance in finding new employment, play an important role in retraining redundant workers and help reduce the social cost of change. Education and training systems are also increasingly involved in continuing retraining and upgrading programs for employees at all levels. Third, education helps people for their lives and for earning a living. There is always a need to equalize opportunities that people have to earn their living with the acquisition of skills. VTE appears to be an important factor in solving earning disparities. One technique for estimating equality of training opportunities is to compare public spending on VTE per individual in various groups, such as rural and urban residents, male and female workers, or younger and older workers. Fourth, VTE can be viewed as a tool for achieving national economic and social objectives, such as encouraging regional development and supporting priority industrial sectors, expanding exports, attracting foreign investments, and raising wages (https://theses.lib.vt.edu/theses/available/etd-04252003-153149/unrestricted/final.pdf).

This policy aims to change the economic and social situation through training. Fifth, in addition to the economic benefits, VTE can generate massive social benefits (externalities), such as crime reduction, health improvement and better social cohesion, which accrue to society as a whole rather than to individuals. Although these broad externalities are very difficult to quantify, they are thought to be significant. In this regard, it is becoming increasingly common to see VTE as an important avenue for the socialization of young people. There is a recognized need for a minimum vocational qualification level for each adult, including early school leavers, to enable them to function adequately in the labor market and in society. And sixth, VTE can have benefits not directly connected with employment. Vocational skills and knowledge enable people to provide services, such as medical care or car and house maintenance, to their families and neighbors, thus reduce their expenses on such services. The implementation of vocational and technical education programs has become one of the most important strategies of educational development in both developed and developing countries. For those countries already possessing VTE programs, a major reason for educational reforms have been to enhance economic and social conditions within those countries.

Skill Development Ecosystem in India

Skill development is critical for economic growth and social development. The demographic transition of India makes it imperative to ensure employment opportunities for more than 12 million youths entering working age annually. It is estimated that during the seven-year period of 2005-2012, only 2.7 million net additional jobs were created in the country. To enable employment ready workforce in the future, the youth need to be equipped with necessary skills and education. The country presently faces a dual challenge of severe paucity of highly-trained, quality labour, as well as non-employability of large sections of the educated workforce that possess little or no job skills. The skill development issue in India is thus pertinent both at the demand and supply level. To meet the demand side challenge, consistent efforts are being made towards expansion of economic activities and creation of large employment opportunities. On the supply side, a simple look at the projected youth population provides a fair reason to believe that India has the strength to cater to this demand. However, the employability quotient is questionable and remains a major area of concern.

Already huge gaps exist between the industry requirements and the level of skills of workers due to varied reasons including inadequate training infrastructures, inappropriate mix of skills and education, outdated curricula, limited industry interfaces, limited standards, etc. The skill development ecosystem in India is skewed towards a formal education system with limited vocational training. While the vocational training is in a dismal state both qualitatively and quantitatively, the higher education system itself is grappling with issues related to scale and quality. Moreover, there is a disconnect between the formal education system and work requirements, compounding the challenges related to the skill gap. A concerted action is thus required on the supply side to ensure sustained employability of the Indian youth. Extensive efforts to skill the workforce are required, both in quantity and quality. Transforming the skill development ecosystem and making it responsive to needs of both industry and citizens 4 requires a scalable, efficient and comprehensive vocational training ecosystem to meet future requirements. There is a need to assess the traditional approach of skill development delivery in India in light of the successful models and best practices in other economies. The learning can be imbibed and custom adopted to address the skill development challenges of India. This is one of the key objectives of the study presented. The skill development ecosystem in India is complex, large and diverse, providing varied levels of skills across an extremely heterogeneous population. Skill development in India can be broadly segmented into Education and Vocational Training. The Figure 3 below presents the broad framework of Skill Development in India (http://www.kas.de/wf/doc/kas_42848-1522-2-30.pdf?151016072126).

Elementary, secondary and higher education is governed by the Ministry of Human Resource Development. University and Higher Education caters to all college education (Arts, Science, Commerce, etc.), while engineering education, polytechnics, etc. fall under Technical Education. University Grants Commission (UGC) is the nodal body governing funds, grants and setting standards for teaching, examination and research in Universities, and the All India Council for Technical Education (AICTE) is the regulatory body for Technical Education in India.

Skills in India are acquired through both formal and informal channels. Formal vocational training is imparted in both public and private sector. Some of the major channels of formal vocation training include the government-run Industrial Training Institutes (ITIs), privately operated Industrial Training Centres (ITCs), vocational schools, specialized institutes for technical training, and apprenticeship training by the industry. The private sector participation has been on a rise lately, but the sector continues to be dominated by the public sector. Informal training on the other hand refers to experiential skills acquired on the job. At the central level, the nodal institution for vocational training is the Director General of Employment & Training (DGET) under the Ministry of Labour and Employment. The DGET is responsible for formulating policies, establishing standards, granting affiliation, trade testing and certification, and matters connected to vocational training and providing employment services. The National Skill Development Council (NSDC) – now a part of the newly created Ministry of Skill Development and Entrepreneurship – was initially set up under the Ministry of Finance to provide viability gap funding and promote private skill initiative.

The National Skill Policy

The National Policy on Skill Development was first formulated in 2009 to create a skills ecosystem in India. It acts as a guide to formulate strategies by addressing the different challenges in skill development. The objective is to empower the workforce with the required skills, knowledge and qualifications to make the Indian workforce globally competitive. The government has introduced a National Policy on Skill Development and Entrepreneurship, 2015. The policy aims to provide an umbrella framework to all skill related activities carried out within the country, to align them to common standards and link skill activities with demand centres. In addition to laying down the objectives and expected outcomes, it aims at identifying various institutional frameworks which can act as the vehicle to reach the expected outcomes. The new skills policy also provides details on how skill development efforts across the country can be aligned within the existing institutional arrangements.

The National Skills Qualification Framework

The National Skills Qualifications Framework (NSQF), notified on 27th December 2013, is a competency-based framework that organizes all qualifications according to a series of levels of knowledge, skills and aptitude. Presently, more than 100 countries have, or are in the process of developing national qualification frameworks. Under NSQF, the learner can acquire the certification for competency needed at any level through formal, non-formal or informal learning. The NSQF is anchored at the National Skill Development Agency (NSDA) and is being implemented through the National Skills Qualifications Committee (NSQC) which comprises of all key stakeholders. Specific outcomes expected from implementation of NSQF are: Mobility between vocational and general education by harmonization of degrees with NSQF;

Recognition of Prior Learning (RPL), allowing transition from non-formal to organized job market; Standardised, consistent, nationally acceptable outcomes of training across the country through a national quality assurance framework; Global mobility of skilled workforce from India, through international equivalence of NSQF; Mapping of progression pathways within sectors and cross-sectorally; Approval of National Occupational Standards (NOS)/ Qualification Packs (QPs) as national standards for skill training. As of 31st March 2015, across 28 sectors, standards for 1319 job roles pegged at NSQF levels 1 to 8 have been defined by the Sector Skill Councils (SSCs). Fourteen SSCs have covered development of 80% of entry level workforce QPs. The NSQF provides for a five year implementation schedule and at the end of the fifth year (2018), it shall be mandatory for all training/educational programmes/courses to be NSQF compliant, and all training and educational institutions shall define eligibility criteria for admission to various courses in terms of NSQF levels. The system of multi-entry and multi-exit will enable students to acquire some skills after finishing compulsory general schooling, then enter the labour market and gain some work experience and return to the vocational education and training system to continue their vocational education/training. It would be particularly beneficial for relatively poor students, since it would enable them to continue in either the vocational education stream of the secondary system or the ITI system, rather than dropping out from the educational or vocational training space altogether. Nodal bodies for Skill Development in India Ministry of Skill Development and Entrepreneurship The creation of the first-ever separate Ministry of Skill Development and Entrepreneurship was announced by Prime Minister Narendra Modi in June 2014. It is conceived to encompass all other ministries to work in a unified way, set common standards, as well as coordinate and streamline the functioning of different organisations working for skill development.

The Ministry of Skill Development and Entrepreneurship is entrusted to make broad policies for all other ministries’ skill development initiatives and National Skill Development Corporation (NSDC). Mapping and certifying skills, market research and designing curriculum, encouraging education in entrepreneurship, make policies for boosting soft skills and computer education to bridge the demand and supply gaps are among the other goals (Figure 4).

National Policy level Skill Development Agencies

Among the various National Policy level Skill development Agencies MHRD and NSDC are the prime ones.


The Ministry of Human Resource and Development (MHRD) governs the polytechnic institutions offering diploma level courses under various disciplines such as engineering and technology, pharmacy, architecture, applied arts and crafts and hotel management. MHRD is also involved in the scheme of Apprenticeship Training. Apart from this, MHRD has also introduced vocational education from class IX onwards, and provides financial assistance for engaging with industry/SSCs for assessment, certification and training. Central Ministries There are 21 Ministries under the central government who are also working for the purpose of skill development. There are two approaches that these Ministries have: one approach is setting up training centres of their own for specific sectors like (adopted by Ministry of Labour & Employment, Ministry of Agriculture, Ministry of Health & Family Welfare, etc.).


The National Skill Development Corporation India (NSDC) is a public private partnership organisation (now under the Ministry of Skill Development and Entrepreneurship) that was incorporated in 2009 under the National Skill Policy. Its main aim is to provide viability gap funding to private sector in order to scale up training capacity. The NSDC has tied up with more than 187 training providers, many of whom have started scaling up their operations. The NSDC has also been entrusted to set up SSCs ensuring right representation of employers and to extend financial support to operationalise them. It also undertakes research initiatives, pilot projects, and skill gap studies to create a knowledge base for the sector. They have supported and incubated 31 SSCs that is intended to facilitate the much needed participation and ownership of the industry to ensure needs-based training programmes. The National Skills Development Agency (NSDA) is working with the State governments to rejuvenate and synergise skilling efforts in the State. The National Skills Qualification Framework (NSQF) has been anchored at NSDA and efforts have been initiated to align all skilling and education outcomes with the competency based NSQF levels.

Industrial Training Institutes for Skill Development

The DGET which governs Industrial Training Institutions (ITIs) has recently been aligned with Ministry of Skill Development and Entrepreneurship. There are more than 10,000 ITIs with a capacity of approximately 1.5 million seats. The DGET also governs RVTIs (Regional Vocational Training Institutions) and ATIs (Advance Training Institutions) focusing on specialized and high-end skill sets and trainers courses. Three major skill development schemes of the DGET that are being implemented through government ITIs and private ITCs include the Craftsmen Training Scheme, the Apprenticeship Training Scheme, and the Modular Employability Scheme.

Craftsmen Training Scheme: The scheme is being run in over 10,000 institutes with a seating capacity of about 1.3 million. The training is available for about 116 trades and the course generally has duration of 2 years.

Apprenticeship Training Scheme: As mentioned earlier, around 27,000 establishments are providing apprenticeship training to 211,632 youths (for 2013-14). The training usually varies between 6 months to 4 years. The minimum educational qualification is different for different trades. For some trades, educational qualification is SSC passed or equivalent, whereas for some it is two classes below SSC. There is provision of Apprenticeship Training for ex-ITI students based on a biannual national level test.

Modular Employable Skills: The programme was initiated in 2007 with the objective of expanding the outreach of the training facilities to school dropouts and in recognition of need for prior learning of workers in the unorganized sector. The target workers include those who have left school after 5th or 6th grade or have acquired on-job-training but do not have formal certification. Under this scheme, short duration courses are provided to prospective trainees using both government and private infrastructure. 1,402 modules covering more than 60 sectors have been developed, 36 Assessing Bodies empanelled for conducting assessment, 6,951 Vocational Training Providers (VTPs) registered and more than 1.35 million persons have been trained/tested up to 31.3.2012.

Skill Requirements by 2022

The quantitative as well as qualitative skill gaps can further widen going forward if there are no or limited efforts towards addressing the key supply related issues. As per the skill gap study conducted by the National Skill Development Cooperation over 2010 – 2014, there is an additional net requirement of 109.73 million skilled manpower by 2022 across twenty four key sectors (Table 7). As India strengthens its base as a knowledge economy, there would be additional requirements to the highly skilled workforce in sectors like financial services, IT/ITeS, Bio-technology, Healthcare and Pharmaceuticals. Further, with value added industries being given a policy push under the ‘Make in India’ initiative, highly skilled workforce would also be required in high-end industries.

Aligning Higher Technical Education with Labour Market

In recent years, Indian economy has grown rapidly interestingly, by skipping the manufacturing stage and going straight to the services sector, the country took a rather unconventional, path to growth. This resulted is a surge in demand for graduated in certain areas taking the higher education sector by surprise. Unable to meet this demand, technical and higher education sector received a lot of flak. Ironically these shortages were accompanied with rising graduate unemployment and underemployment. Changing nature of work and growing integration of Labour markets at the global level makes the coordination between higher education and labour market complex. There have been three key developments in the Indian Labour market in recent years. First the country’s high economic growth created new jobs in the IT and IT enabled services, pharmaceuticals, biotechnology and engineering design sectors. In addition, several new economy sectors such as finance, insurance, organized retail; aviation, hospitality, animation, media, real estate and infrastructure opened up a wide variety of Job opportunities, not all necessarily requiring graduate qualification.

Secondly, many Indians are new hired for jobs overseas and a wide range of jobs are offshore to India. At the same time, Indian companies are also hiring foreign nationals. Thus, there is a global labour market. More and better jobs are being created for Indians, who are playing and important role in this global labour market. Finally, due to technical changes, most jobs in both manufacturing and services sector are new clustered at the low productivity end, while some are at the high productivity end, with the middle hollowing out. Thus, a majority of the work force is engaged in jobs requiring basic of intermediate skills.

Presently, there is so many numbers of Engineering Colleges, Polytechnic Colleges in India. All these should have augmented the pace of industrial development. Instead, the institutes are producing persons who fall much short of desired expectations of the industries. In other side the industries are on a look out for persons who technically equipped, possess managerial skills, are creative, and can easily adapt to the changing market situations. There developments are evident from the population data of 2001 census. Out of 402 billion workers, merely 12.5 million workers were in high skill category (legislators, senior officials, mangers & professionals) that could be related to people requiring graduate degree or above. 127 million cultivators, 107 million agricultural labourers and 16.9 million workers in household industries did not obviously require graduate qualification.

Higher education enrolment ratio at 11% through low in absolute terms appears to be adequate to meet demand for graduates. Its growth of about 9% annually in recent years (though not as dramatic as China where it has grown by 20% annually) is healthy and yet there is skill shortage in many areas. The reason for this lies in the internal structure of the India technical and higher education and training sectors are organized in the country. Higher education in India is skewed of favours of humanities and arts and about 4/5th of the graduates do not have any employable sills with rigid academic structures, there is little student choice and large variation in quality across institutions. Ordinary graduates that the country’s higher education system churns out (Produce mechanically and in Large quantities) are unfit for the new jobs being created. It is therefore not surprising that graduate unemployment rate at 19.6% is significantly higher than the overall rate and more than 60% of graduates perform jobs that do not require graduate skills. Now with slowdown, with media reporting job losses and weak placements, people are voluntarily opting for further education and skill up gradation. Thus skill shortages are not general, but specific and often temporary and cyclical. The solution may, therefore, not lie in large scale expansion of higher education, but in identifying the shortages and finding context specific solutions and building adaptive capacity in the system. Linkage between higher education and the labour market are tenuous. Addressing the problem of unemployment and underemployment of graduates on the one hand, and the problem of skill shortages on the other requires interventions that make the connections between higher education and the jobs more efficient.

Labour Market Scene

In spite of the contradictory process in economic development the labour market is being established. The labour market is a system of relations, including legal and economic norms providing the reproduction and effective use of the labour force. The main components of the labour market are the market of jobs and the market of unemployed labour force (http://www.unevoc.unesco.org/fileadmin/user_upload/pubs/iug003e.pdf). As compared to other developed and developing countries, India has a unique window of opportunity for another 20-25 years called the “demographic advantage”. If India is able to skill its people with the requisite life skills, job skills or entrepreneurial skills in the years to come the demographic advantage can be converted into the dividend wherein those entering labour market or are already in the labour market contribute productively to economic growth both within and outside the country. But meeting this objective is a daunting task as India faces the challenge of skilling large labour force that is largely illiterate or below primary and unskilled. The structural transition from the agricultural to the non-agricultural sector has seen rapid decline in the contribution of farm sector to the GDP to 16 per cent but a very slow decline in the workforce participation level to 48 per cent resulting in the low level of productivity in the agricultural sector. The nature of jobs created is informal (91 per cent of the workforce) and the status of employment is self-employed. Further, there is the high degree of unemployment among the youth due to aspirational mismatch or skill mismatch, declining participation of females in the labour force and an economic environment wherein jobs are not created commensurate with the economic growth. The distribution of the workforce by sector and status of employment shows that in agriculture sector where almost 32 per cent is self-employed majority is operating as own-account worker or unpaid helper (Table 8).

The proportion of those working as casual labour is higher in agriculture (17 per cent) followed by construction (9 per cent) and manufacturing (2 per cent). On the whole, about 52 per cent of the total workforce was self-employed, of which own-account workers accounted for 33 per cent and the unpaid helper 18 per cent. The proportion of workforce with regular wage or salary was just 18 per cent and 30 per cent were casually employed. When we talk about productivity it only covers those who are in the regular wage or salaried employment. The self-employed operating as own account workers are mostly household enterprises assisted by unpaid helpers. In this type of employment the productivity levels are low, working conditions poor, wage employment is totally absent. On the other hand if the own account workers can be upgraded to becoming an employer by providing skill development and other logistic support, it leads to creation of further wage employment and enhancement of their productivity.

Last but not the least; The digital economy has the potential to enhance productivity, income and social well-being. It is creating job opportunities in new markets and increasing employment in some existing occupations. As digital technologies enable the production of more goods and services with less labour, they also expose some workers to the risk of unemployment or lower wages. They also enable changes in the organisation of work, with implications for the capability of existing policies and programmes to ensure labour market inclusion, job quality and skills development. To reap the benefits of the adoption of digital technologies, governments, businesses, trade unions and academia will need to address new economic and labour market challenges. The panel will focus on policies to foster growth and employment in new economic activities enabled by digital technologies, to accompany workers along the transition to new jobs, and to help ensure job quality in the digital economy (https://www.oecd.org/internet/ministerial/meeting/New-Markets-and-New-Jobs-discussion-paper.pdf).

Role of Technical Education in National Economic Development

National development is an exploitation and utilization of both human and material resources to improve the lots of a nation. It involves the improvement of the social welfare of the people of that nation. Education on the other hand, is particularly acknowledged as the cornerstone to any form of development as well as democratic processes. National development, measured by the degree of socio-economic advancement of a country, reflected in her positive changes in science and technology, is a function of the standard of technical education available to her citizens. The linking of skills and productivity would not only benefit the enterprise and economy but would also facilitate different segments of the population particularly the marginalised sections of the society to reap the benefits of the economic growth through skill development. The lack of access to education and training or the low quality or relevance of training keeps the vulnerable and marginalized sections into the vicious circle of low skills and low productive employment. The National Skill Policy provides a framework to ensure access to various target groups to realise their potential for productive work and contribute in economic and social development. However, different approaches need to be adopted which may overlap as groups are not mutually exclusive such as improving agriculture marketing extension; investing in rural infrastructure; making available quality education; on the job and targeted training for the disabled and identifying the requirement of migrant workers. The question is how one links the skill development to future challenges so as to address the demand of the growing economies. The National Skill Development policy provides for integration of skill development into the national development polices such as developing infrastructure, reducing poverty and decent work agenda. The diagram below explains the relationship between skill development strategy for productivity, employment and sustainable development.

It emerges that coordination among various stakeholders, coherence in sectoral, macro and skill policies, knowledge sharing and effective participation of trade unions and employers along with technology development is central to any development strategy. The participation by all stakeholders would strengthen move towards skilled economy. It would also ensure that small enterprises get access to training services and developing their managerial capabilities for growth. It also emerges that while coherence is necessary, it is also necessary (repetition) to ensure gender equality, upgrade technology, and diversify production structure, building up individual competencies and collecting /dissemination of information on future requirements as also available supply. This would improve availability of skilled manpower and reduce the supply mismatch. In this back drop an attempt has been made to see where India stands and how its skill polices can be integrated with macro and the sectoral policies to achieve increase employability. The interrelationship between skill development, productivity, employment generation and sustainability is clearly shown in Figure 5.

The role of higher education as a major driver of economic development is well established, and this role will increase as further changes in technology, globalization, and demographics impact India in a big way. To remain competitive in light of these changes, regions will need to improve productivity and adopt an innovative spirit. Higher education has the capacity, knowledge, and research necessary to help achieve these goals.


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