Today's Editorial

Today's Editorial - 08 July 2024

India needs an urgent data-driven strategy to plug skill gaps

News Excerpt:

India's rapidly growing youth population presents both opportunities and challenges for its economic aspirations.

India’s Demographic Dividend: 

  • The demographic dividend presents a growth opportunity, requiring workforce skills aligned with global economic demands.
  • World Bank data shows a concerning trend: India’s labor mobilization rates have fallen from over 70% in 1990 to 56% in recent years. This represents an alarming weakness in India’s economy and threatens to undermine its demographic advantage. 
  • As India strives to position itself as a global economic powerhouse, its ability to transform this demographic bulge into a dividend through skill development and labour market reforms is critical.
  • A skilled and educated workforce is critical for increasing productivity, fostering innovation and attracting investment, all of which in turn contribute to enhancing national competitiveness.

Workforce Skill Level Analysis:

  • Data indicates that workforce growth rates differ across skill levels, highlighting shifts in the composition of India's skilled workforce and its impact on overall competitiveness. 
    • It also showed a disturbing trend: a declining growth rate of highly skilled individuals (skill levels 3 and 4). 
  • Between 2017 and 2022, the growth rate for these skill levels fell by more than 5 percentage points in at least 22 of India’s 36 states and Union territories. 
  • States such as Sikkim, Karnataka, Nagaland, Uttar Pradesh, West Bengal and Goa have had an over 10-point fall in the growth rate of their highly trained workforce.
  • On the positive side.
    • The semi-skilled workforce (skill level 2) has grown significantly, with a national compounded annual growth rate of 59.5% between 2017-18 and 2022-23. 
    • More than 45% of the workforce across states falls into this category, showing a growing demand for individuals with intermediate-level abilities
    • The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) has made a substantial contribution to this positive trend by offering skill training and certification. 
    • During the same period, skill level 1, which comprises low-skilled workers, increased by 24.8%. 
    • This tendency indicates a continuous reliance on skilled labour across industries, potentially driven by construction, manufacturing or services.
  • On the Negative Side: Despite progress, PLFS data shows many workers aged 15 to 59 lack formal vocational or technical training.
    • The proportion has dropped from 91.9% in 2017-18 to 72.6% in 2022–23, it still indicates a major gap in formal skill development for a sizable segment of the Indian workforce. 
    • The PLFS statistics suggest that semi-skilled and low-skilled workers are likely to dominate the workforce, 
    • The growth of high-skilled workers lags. This may have implications for India’s competitiveness.

Rural-Urban skill Disparities:

  • On average, rural regions have much lower skill intensity than their metropolitan counterparts. 
    • In India, metropolitan districts host skill-intensive trade clusters. 
  • Cities such as Mumbai, Bangalore, Delhi and Hyderabad have evolved as centers for IT services, financial services and other knowledge-intensive businesses.
    • These industries often require a higher number of skilled individuals such as software engineers, data analysts and financial professionals. 
    • As a result, these urban zones naturally attract a more skilled workforce. 
  • In contrast, rural districts specialize in agriculture, small-scale manufacturing and traditional crafts, which typically demand a smaller number of highly qualified people
    • The presence of these businesses in rural areas helps explain the observed lower skill intensity. 
  • Addressing this disparity necessitates not only skill development, but also the establishment of skill-intensive clusters in rural areas, which may result in more balanced growth across India.

Way Forward

  • The government has aimed to address this through its Skill India Mission, which resulted in expansion of the skill level 2 workforce. But more coordinated efforts are required by state governments.
  • Andhra Pradesh proposed a 'skill census' to assess current skills across regions and sectors. 
    • If adopted by other states, it could promote competitive federalism by utilizing detailed data.
  • By mapping the current skill landscape, policymakers can identify areas experiencing skill shortages and develop focused strategies accordingly. 
    • State governments can create specialized skill-building programmes to address the demands of their unique workforces and industries.
  • This data-driven strategy can result in improvements in skill-development projects. By addressing the talent gap through targeted measures, India can realize the full potential of its demographic dividend.


  • The road ahead for India’s skill development efforts is difficult, but the rewards are significant. By investing in human capital and utilizing data-driven initiatives, India can turn its demographic advantage into a meaningful economic dividend. A skilled and productive workforce will not only drive innovation and increase productivity, it will also significantly contribute to the overall competitiveness of the nation, accelerating India’s journey towards becoming a developed economy by 2047.

Beyond Editorial:

 Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 

  • It was launched in 2015 to encourage and promote skill development in the country by providing free short duration skill training and incentivizing this by providing monetary rewards to youth for skill certification. 
  • The overall idea is to boost both industry and employability of youths. During its pilot phase in 2015-16, 19.85 lakh candidates were trained.
  • After the successful implementation of pilot PMKVY (2015-16), PMKVY 2016-20 was launched by scaling up both in terms of Sector and Geography and by greater alignment with other missions of Government of India like Make in India, Digital India, Swachh Bharat, etc. 
  • The Scheme is aligned to Common Cost Norms and has a total budgetary outlay of Rs 12000 Crores.

Objectives of PMKVY 2016-20

  • Enable and mobilize a large number of youths to take up industry designed quality skill training, become employable and earn their livelihood.
  • Increase productivity of the existing workforce,and align skill training with the actual needs of the country.
  • Encourage standardisation of the Certification process and put in place the foundation for creating a registry of skills.
  • Benefit 10 million youth over the period of four years (2016- 2020).


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