Arvind Singhal: Dividends from human capital

Focus on skill-based and require vocational training

With the new government in place, and the ministers in their allocated saddles, expectations of change are expectedly running amok. India, of course, needs a lot to be reformed and needs transformational changes in all sectors both on ideological as well as policy fronts. Education, however, is one sector where the country has actually regressed during the tenure of the last two governments, even as over 250 million children have been born in the last decade alone who would be rightfully demanding access to accessible, affordable, high-quality and employability-enhancing education.

Hopefully, the new government will waste no further time debating ideology or creating illusory vote banks, and will get down to the daunting task of reforming the education sector at all levels.

Justifiably, a lot of attention is focused on primary education and on higher education. Both need the creation of “capacity” on a war footing. However, relatively less attention gets paid to those estimated 400 million out of about 460 million jobs which are skill-based and require vocational training. These jobs cover an incredible vocational spectrum that includes cooks, hairdressers and beauticians, electricians, plumbers, carpenters, masons, truck and bus drivers, cab drivers, fork lift operators, retail front-end operations such as selling and visual merchandising, pathology lab technicians, healthcare equipment technicians, construction site staff including crane and other construction and earth-moving equipment, mechanised farming equipment operators, administrative and secretarial functions, tourism guides, fitness instructors, etc to list just a few. Yet, less than 6 per cent of this huge mass of workers receives any form of vocational training.

The current landscape of vocational training in India comprises about 5,500 industrial training institutes and about 1,750 polytechnics. China, having a population not much bigger than India, has over 500,000 such institutes. India offers about 175 trade-training programs. The US, with a population just about a quarter of India’s, offers over 1,500 trade-training programmes. It is no surprise that while over 18 million currently enter the employment market every year (and this number poised to increase every year for decades to come), the current vocational training infrastructure caters to just about 2.5 million per year and even there, the quality of training so imparted is at best “average” and at worst, totally ineffective when benchmarked with the needs of the job. Hence, probably only 5 per cent of Indian youth is single-skill vocationally trained compared with 96 per cent in Korea and 22 per cent in even Botswana!

The government has, of course, constituted the National Skill Development Mission and has allocated Rs 31,000 crore in the Eleventh Plan for the development of skills in 20 high-growth sectors, with the objective to create 70 million additional jobs by 2012. However, this quantum of investment will still fall woefully short of the immediate and emerging needs of the economy which needs a much better-skilled workforce both to improve the capacity of output, and for quality and productivity improvements all around. Hence, what India needs is a massive influx of private investment as well as leveraging government and private resources through innovative public-private partnership models.

Notwithstanding policy hurdles, India is seeing an increasing quantum of investment in the education sector. However, a lot of this investment is being directed either to more elitist primary schools, including the much fancied IB (international baccalaureate) ones, or to the more alluring engineering, dentistry and business schools, and the entrance exam-focused training bucket shops. Sadly, the pioneering example of NIIT has yet to be determinedly and successfully replicated across other vocational training areas even though, as NIIT has so successfully demonstrated, there is a proven business model. Further, as NIIT has also demonstrated, some of these businesses can be grown to multi-thousand crore in revenue size and can be multinational businesses for even more growth in the future. Admittedly, it may not be glamorous to set up a training business for barbers and beauticians (even when there are over 1 billion heads and bodies to be taken care of on a near monthly basis) or a training business focusing on training cooks and chefs for the tens of thousands of new food services outlets India will see coming up in the next decade. However, the balance sheets of such training businesses can be very attractive and the gains for the economy even more impressive.

arvind.singhal@technopak.com