FOCUS SOCIETY Amit Kapoor
There exists a gap between what students are being taught and what the industry requires from professionals
Leveraging human capital is a fascinating topic for developing societies. It is because social and economic progress is critically dependent on it. Most observers point out that India possesses a distinct demographic dividend. The dividend will only fructify into tangible gains if appropriate policies and structural mechanisms are put in place.
At present, approximately a million young people are entering the workforce each month. The challenge is to help them contribute to economic development. These youth over the next ten years have the potential to make or mar the prospects of India’s growth story. There are four essential parts to the realization of the demographic dividend. These are skilling, entrepreneurship, proactive approach to youth affairs and employment generation.
Skilling is crucial. There exists a gap between what students are being taught and what the industry requires from professionals. The skill gap is responsible for a large section being unemployed and unemployable. The issue of employability can only be solved when the curricula takes the industry needs into account. Vocational education, as well as skilling for students who drop out of school early is one of the best ways of ensuring a means of livelihood and movement out of poverty. The ministry of skill development and entrepreneurship was created by bringing together all the skill development initiatives of the government under a single roof. The central ministries and departments have trained around 58lakh people in 2014-15.
Related to skilling is entrepreneurship. Providing employment to a million people every month is an unachievable target for the government. Therefore, an imperative for employment generation and labour market development is entrepreneurship. The government realizes this and has created the above-mentioned ministry. So far, India has not fared well with respect to entrepreneurship. The formal creation of firms in India is low and cumulatively smaller than much smaller places like Hong Kong if one observes World Bank data during the 2004-11 period.
There are many social, cultural and economic reasons for this. Risk aversion in society, very high costs of failure and lack of access to funding are some of the reasons for the India’s low scores on most international indices of entrepreneurship. An access to venture funding and changing the mindset of people in society will go a long way in promoting entrepreneurship and helping energize the youth for national development.
Recent years have also witnessed the phenomenon of brain drain where talent from India is leaving the country as people look for greener pastures abroad. The trend can only be abated or reversed if the incentive structures within the country are changed and proper means of engagement are built with the diaspora abroad. Successive governments have failed to do so and this is where youth diplomacy can play an active role in engaging with not only our diaspora but with youths from across the world. India is a young nation and can grow immensely by exchange of ideas at a youth-to-youth level.
Finally, there is the issue of employment generation. That can be achieved if only there are appropriate incentives for enterprises. Further liberalization of foreign direct investment (FDI) norms and industrial policy could enable greater capital inflows that can aid in industrial and economic development. The present regime has moved in the right direction in this regard but much bolder steps are required especially in opening up more sectors to foreign direct investment.
The recently released quarterly survey of employment October-December 2014 shows that 1.17lakh jobs were created in eight key sectors. This was lower than the 1.58lakhs created in the previous quarter. Also, if one compares data from July to December 2014, one observes that there were 2.75lakh jobs that were created, compared to 1.26lakh jobs a year ago. That’s an increase of 118 percent rise for the six-month period year-on-year. The surge was led by the IT and BPO sector that added 89,000 jobs in the October-December 2014 quarter. It was followed by the textiles and apparel segment that added 79,000 jobs.
One of the major planks on which the present government won the 2014 general elections was job creation. On this count, the government seems to be doing well. However, one must realise that this is a limited survey of just eight sectors. Also, the growth in employment seems to be concentrated in the IT and textiles and apparels sector. Broad-basing the survey to other sectors as well as broad-basing of jobs created will go a long way in ensuring that trends are observed and appropriate policy actions taken. Over the next few years, the government will have to focus continuously on these critical areas for growth to be broad-based and inclusive.