Making India world’s ‘skill capital’

India is the IT hub of the world and the preferred choice of back office operations. Our capital markets are attractive and there is macroeconomic stability. We are grain surplus, our forex reserves are $ 120.6 bn, we have a robust manufacturing and service sector, our corporates are dynamic and on an acquisition spree. We have stable institutions of a free market economy and a well-developed financial sector. Each of these victories has come because of affirmative positive action that drives enterprise.

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The per capita income of India is $ 460 compared to $ 833 in Sri Lanka and $ 30,000 in the US. We are 127th in the Human Development Index and 55th in the Global Competitiveness Index. There are 40 million unemployed and many more underemployed in India today. This figure could reach up to 60 million in the next five years.

To put things in perspective, this is more than the entire population of countries like France, Italy and the UK. The per hour capita productivity of Indian workers is $ 5.45 compared to $ 11.69 in Thailand and $ 20.51 in Mexico. Whilst we are grain surplus, yet 280 million of our population live below the poverty line and over 400 million live on less than $ 1 a day. Of the 300 million children between 6 and 16, over a 100 million are not school going and of the balance, only a mere 10 per cent will complete school.

While we talk of India, most urbanites circumscribe the nation to the top 20 cities in India. Over 70 per cent of India lives in the rural reaches of the nation, even the urban areas have their own set of problems — be it rising poverty, straining public services, rise in youth delinquency and prostitution, burgeoning slum dwellings or lack of adequate civic amenities.

Over the years, surplus labour has been migrating to the urban areas in search of livelihood and better standards of living. If any, they only find low-paid employment in the unorganised sector and contribute to the proliferation of slum dwellings and urban poverty. These, in turn, put pressure on urban civic amenities, public services and infrastructure. Reports say that if the rural-urban migration continues at the rate that it is, urban public services will soon become unsustainable.

More than 400 million workers are part of the unorganised sector and 140 million do not have permanent year-round employment. Over 70 per cent of the labour force in all sectors combined (organised and unorganised) is either illiterate or educated below the primary level.

Cheap labour can be costly as unskilled workers are liable to accidents and unable to perform consistently. Without any skills and education, they do not meet the standards of industry for employment.

To ensure that the population rallies behind a progressive India, there is need to take everyone along. We would be naïve in thinking that as a nation we can move ahead without ensuring social inclusiveness.

Youth is India’s greatest asset, it can be enthusiastic and productive and at the same time amenable to new ideas and change. Hence they can be trained to think and work differently. Since traditional methods have not yielded the desired results, one would bet on the young more than anyone else to be the torch-bearers of transformation. The time is opportune for India to increase its knowledge and skill workforce base and boost productivity of agriculture, industry and services.

A study by the Population Reference Bureau, a private think tank, indicates that several developed countries will see a drop in their population over the next 50 years. Japan will lose 20 per cent of its population. Russia’s will drop by 17 per cent. Even a country like Iran is expected to lose people. About 44 per cent of the world’s population currently lives in countries where fertility is at or below replacement levels.

As these economies see their workforce depleting due to superannuation, they will find numbers difficult to replace. Second, a huge inadequacy of skilled workers in the Indian economy, presents an opportunity for productive employment of a sizeable number of our citizens. Third, as the world sees less and less growth opportunities in developed countries, investors and enterprises are keen to enter global developing markets that hold the promise of growth and higher return. As capital formation occurs there would be a greater demand for skilled workers that meet international standards of quality and productivity.

The question that now arises is, what preparations do we need to undertake to capitalise on these opportunities? Quite simply, we need our manpower skilled to standards that are nationally and globally bench-marked. This would help resolve the problem of unemployment domestically and at the same time remittances from our workforce abroad could ensure a better standard of living for people back home.

It enhances the image of the Indian workforce globally and encourages investment flowing inwards, thereby putting the multiplier into action, generating more jobs and encouraging further development. If we do not act with a sense of urgency, others would seize the initiative and in many ways shut this window of opportunity for India.

The downside of not investing in human capital and ignoring skill development on a countrywide scale can be catastrophic . First, the unemployment and underemployment figures are reaching an alarming proportion. This generates significant amount of negative sentiments amongst the victims of this socio-economic inequity. These push them towards anti-social activities, and they could join the ranks of terrorists, separatists and criminals, thus engendering socio-political instability.

Second, with societal needs comprising manufacturing, services and agriculture not being met, and as other economies meet the skills requirements of their industries, the handicap is going to hurt our industry even more and adversely undermine our competitiveness .

Third, as we have seen in some cases amongst the BPO/ITES, if the requisite skills are not available in the country, foreign establishments not willing to compromise on quality are likely to take flight and look for other countries to establish their operations. Apart from all this, there is the real problem of rural-urban migration.

India was the world’s largest economy in the first millennium and a late comer in the industrial revolution. We now have a unique chance to catch the bus we once missed. We need to reach out to the young, across the country, and provide them skill sets, which link with jobs and generates a climate of self-employment and growth. We have enormous potential, and are uniquely placed to being the Skills Capital of the world.

The writer is a former GOC-in-C, Western Command, and at present Principal Adviser, Confederation of Indian Industry