Skilling to employment

Skilling and employment are among the biggest challenges for India. A new NITI Aayog report notes that about 87 million people aged 15-29 are outside education, employment or training, while only 8.25 per cent of graduates are employed in jobs aligned with their qualifications. The mismatch points to a fundamental weakness in India’s education-to-work transition. The objective of education and skilling policy must, therefore, move beyond producing certificates to improving employability, earnings and livelihoods. But skilling is only one part of the challenge. The latest Quarterly Bulletin of Unincorporated Sector Enterprises, released by the National Statistics Office, for instance, shows that unincorporated non-farm establishments fell 5.4 per cent sequentially in the first quarter of 2026-27, while employment declined 9.7 per cent. The contraction was particularly sharp in rural India, where establishments dipped by nearly 10 per cent and the workforce by 13.4 per cent. Manufacturing establishments and employment fell 8.6 per cent and 12.1 per cent, respectively. 

Besides, the composition of employment is dominated by own-account work. Working owners accounted for 62.4 per cent of workers in the first quarter of 2026-27, up from 60.2 per cent a year earlier, while the share of hired workers declined from 24.4 per cent to 22.8 per cent. This should not automatically be celebrated as a rise in entrepreneurship. In an economy where wage employment opportunities are inadequate, self-employment usually represents a fallback for workers unable to find wage employment. The policy challenge is consequently not merely to support self-employment but to ensure that those who work for themselves become more productive and earn more. This is where the NITI Aayog report’s proposed shift in skilling policy is important. India has trained 76.7 million people since 2014-15, but the persistence of a large-scale labour-market mismatch suggests that training numbers alone are a poor measure of success. It recommends moving towards outcome-linked, industry-backed programmes, with funding tied to verified placement, wage progression, and sustained employment rather than enrolment and course completion. 

Workplace exposure also needs to be expanded because 80 per cent of learners cite inadequate practical experience and industry exposure as a major gap in their degrees. For instance, only 8.5 per cent of trainees of industrial training institutes took up apprenticeships in 2018, while around 32,000 of the 60 million registered micro, small, and medium enterprises had engaged apprentices under the National Apprenticeship Promotion Scheme. Training must also be better matched to demand in the local labour market. Data systems for state-level skills, which bring together information on training capacity, local demand, wages, vacancies and placement outcomes, are needed. Such information can help steer learners towards sectors where opportunities actually exist, rather than leaving them to choose courses based on perceptions of occupations. Finally, affordability cannot be ignored. For workers, the time spent on training can mean forgone income. Modular, part-time and flexible programmes that allow people to learn while earning, alongside skill vouchers and outcome-based financing, should be encouraged. Thus, overall, India needs policy interventions that help rapidly expand employment opportunities, along with systems that impart relevant skills to its growing workforce. This is particularly important as India’s demographic advantage may begin to close sooner than earlier expected. How efficiently India addresses these issues will, to a large extent, determine the pace of its growth over the medium to long run.