Since the liberalization of the Indian economy in the early 1990s, the country has seen incredible economic growth. With that, new businesses, investors and, as a result, jobs have inspired globally attractive terms such as “India’s rising middle class,” “outsourcing central,” or the “Indian tiger.” This year alone, the country is expected to hire 10 to 15 million people for infrastructure and manufacturing projects, as well as in the rising export industry. “India’s rapid economic growth can be attributed in part to its highly entrepreneurial and rapidly globalizing private sector,” reports the AIM group, which toted India and China as the “best places to look for employment.” In sectors such as large-scale manufacturing, the job market grew at an average of 10% per annum between 2003 and 2009, when other economies, including those of other “major capitalist countries,” were nearly stagnant. The rise in opportunities in “skilled” industries stand in stark contrast to handloom and village industries, which, according to an article in the Dawn, have declined in employment opportunities at an annual average rate of 15%, and joint family enterprises declined at an annual average rate of growth of 11.2%.
India’s major obstacle to continued growth is also one of its most opportunistic: a need for a trained and reliable labor force. Despite one of the largest youth populations in the world, the country lacks the educational programs, systems and training centers to provide up-to-date technical, vocational, and literacy and language skills to its ever-growing employable population. In the next 20 years, India will add 250 million people to the working-age population, compared to Brazil’s 18 million and China’s 10 million during the same period. If the potential of these youth remains untapped, it will not only slow growth, but a cycle of poverty and illiteracy will persist that only further drains society economically and socially.
The biggest hindrances to youth development are poverty, health practices, gender biases, education and employment, among others. India has the highest number of young people in the world at 84.5 million – 44% of the global youth population — who live in “extreme poverty.” Further, 44 million of India’s youth is under-nourished (again, highest in the world) which is 23% of the total youth population. Yet, if given the proper skills to contribute productively and to take advantage of the new labor market, these highly trainable, capable and employable young people could dramatically transform the country’s future.
Realizing this potential, the Bhubaneswar Municipal Corporation (BMC) announced last month that it was launching an initiative to train underprivileged urban youth to give them the skills to improve their job prospects. The youths will be trained in a host of areas, including industrial sewing, electrical maintenance and welding and plumbing. Once the two-to-six month training is finished, the students will get a minimum monthly salary of INR 5,000 (~US$110)—as compared to INR 1,200, the average monthly salary for an unskilled worker—and the institutes will ensure that 70% of trainees find employment. The local training institutes will receive funding from the BMC.
Training programs have been an emerging trend in India since the Finance Minister announced in his 2008-09 budget speech that “…There is a compelling need to launch a world class skill development program in Mission mode that will address the challenge of imparting the skills required by a growing economy. Both the structure and the leadership of the Mission must be such that the program can be scaled up quickly to cover the whole country.”
The Ministry’s resulting initiative was the National Skill Development Corporation (NSDC), an innovative public-private partnership program (PPP) that aims to “facilitate the development and upgrading of the skills of the growing Indian workforce through skill training programs.” The “one-of-its kind” PPP has an equity base of INR 10 crore (~US$2.23m), of which the private sector has a 51% stake and the Government of India has a 49% hold. “Our primary goal,” says the NSDC, “is to foster private sector and industry participation in skill training and development.” Since February 2010, NSDC has approved 29 projects that, collectively, propose to skill more than 40 million people in different vocations over the next decade. Overall, the program aims to train, or upgrade the skills of, 500 million people in India by 2022.
The NSDC’s investment in the skills training sector has catalyzed a growing business. An Economic Times article earlier this month identified skills training as the latest trend in business. The article highlights a number of top CEOs who have left their corporate posts to be part of an “unusual tribe that is flocking to grab a share of the skills training market in India, predominately through the National Skill Development Corporation (NSDC).” Their goals are about impact: each of them hopes to reach at least a million disadvantaged youth to offer training or skill upgrades. “From Bharti Airtel’s former CEO Rajiv Sharma to Star News former president Ravina Raj Kohli, ‘skilling’ is turning out to be the latest draw for corporate hotshots,” says an Indian Express article, calling “skilling” the “latest biz mantra.” And, unlike your typical volunteer-driven after-school-programs, these training centers are operating with viable financial models and developing infrastructure to meet large-scale objectives.
With sheer number of youths and the large supply-demand gap, the movement needs to focus on scale. That’s certainly the goal of Empower, a portfolio company of NSDC, which promises to “provide enduring opportunities” in the private sector for 200,000 disadvantaged youth by 2021. The social enterprise will focus on classroom and on-the-job training for IT/BPO, tourism, hospitality and travel and organized retail segments, and plans to reach scale through a franchise model that will open nearly 600 centers around the country. “We ingrain the 4Cs (communication, confidence, computers and customer service) into our trainees,” says Empower. Initially, the NSDC will extend a loan of INR18.91 crore (~US$14.21m) and, in return, has the right to a 10% equity stake in Empower with an additional 16% later.
Another NSDC-funded enterprise, TalentSpirit, headed by the former CEO of Virtusa Corporation, provides a 90-day module to train and place graduates in banks and IT companies. Last year, the company trained 1,500 students and took in INR 6.5 crore (~US$4.21m) in revenues. While trainees pay INR 40,000 (~US$890) and increase access for poor youth, banks have agreed to provide loans of up to 90% to students. The government, which fell short of its target numbers last year, hopes loan programs such as these, as well as new marketing campaigns, will boost interest and participation among the emerging workforce.
“Young people can be dynamic agents of social change,” says the World Youth Report (WYR), “…but they must be given the right tools to work with.” Increasing access to jobs will improve their prospects for financial security. The positive economic and social value of this will have ripple effects throughout society. Financial security will increase, children will remain in school longer, families will improve nutrition and overall health, and future generations will continue to build on employment empowerment and choice.
The opinions expressed on the Searchlight South Asia site are solely those of the authors and do not necessarily reflect the positions of the Rockefeller Foundation.