1. Rajendra Prasad Mamgain Institute for Human Development
OVERCOMING SKILL CONSTRAINTS IN FAST GROWING ECONOMIES: A CASE OF INDIA
Rajendra Prasad Mamgain
Senior Fellow
Institute for Human Development
New Delhi, India

2. Annual Average Growth Rates of GDP
Period
Agriculture
Industry
Infrastructure
Services
GDP
1.99
6.2
6.6
4.33
3.58
2.3
5.77
4.92
4.36
3.4
3.84
7.33
7.85
8.62
5.25
3.64
5.86
7.32
7.92
6.03
2.9
8.66
14.14
9.59
8.02
Source: CSO
Indian Economy moving to a ‘new’ and ‘higher’ growth trajectory
High growth in manufacturing, services and high-end products

3. Composition/ Structure of GDP - Broad Division (1999-00 prices)
Period
Agriculture
Industry
Infrastructure
Services
55.11
10.31
7.92
26.36
50.62
12.56
9.89
26.54
44.26
14.31
12.24
29.07
37.92
15.84
14.21
32.03
31.37
17.63
14.58
36.43
23.89
17.55
16.21
42.35
17.8
17.1 21
44.1
Rapid change in the structure of GDP

4. Compound Annual Growth Rate of Employment (UPSS)
Sectors
Agriculture, Forestry & Fishing
1.19
0.63
0.90
Mining & Quarrying
3.91
-0.51
1.63
Manufacturing
1.79
3.00
2.41
Electricity
4.10
-1.00
1.46
Construction
5.15
7.23
6.21
Trade, Hotels & Restaurants
3.61
5.03
4.34
Transport, Storage & Communication
3.22
4.92
4.08
Finance., Real Est. & Business
5.35
6.97
6.18
Pub Admn.,Edu.,Health & Others
3.41
0.22
1.76
Total (1+2)
1.84
1.80
Relatively slow growth in employment during the period of economic reforms
Rapid increase in the share of manufacturing, construction, trade, transport and financial services
Changing structure of employment. Declining share of Agriculture – 61% in 1994 to 52% in Rapid increase in the share of manufacturing

5. Growth in Employment
CAGR & (%)
Workers (in Millions) %
Total Workers
396.4
100
455.7
2.83
Informal workers
362.8
91.52
420.7
92.32
3.01
Formal workers
33.6
8.48
35.0
7.68
0.84
Source: NCEUS, 2009
Comparatively very low growth of employment of formal workers. Growth largely driven by informal workers.
Growth of employment in formal sector largely driven by informal workers.
In the formal sector, rapid increase in the share of informal workers—41.97% in to 46.02% in , growing at 2.26% per annum. Growth of formal employment in formal sector marginally increased by nearly 1 per cent

6. Workers by their Educational Levels (UPS)
Male
Female
Total
Illiterate
36.23
74.35
46.35
26.87
61.37
36.41
Literate without formal schooling
1.33
0.96
1.23
2.67
1.78
2.42
Below primary
12.70
6.91
11.16
9.39
7.25
8.80
Primary
14.30
6.98
12.36
15.74
10.03
14.16
Middle
14.84
4.36
12.06
19.11
8.84
16.27
Secondary
8.86
2.23
7.10
10.84
3.98
8.94
Higher secondary
4.16
1.01
3.32
5.81
1.88
4.72
Graduate General
4.34
1.74
3.65
6.11
2.79
5.19
Graduate-Technical
0.41
0.11
0.33
0.47
0.20
0.40
Technical Diploma
2.83
1.34
2.44
2.98
Agriculture
0.12
0.04
0.10
0.08
0.07
Engineering/technology
1.12
0.84
1.43
0.28
1.11
Medicine
0.23
0.17
0.21
0.26
0.22
Crafts
0.09
Other subjects
1.27
0.97
1.19
1.18
100.00

7. Mean Years of Schooling of Workers by their Employment Status, 2004-05
Male
Female
Person
Agri. Labour
2.4 1
1.8
Self employed in agri
4.5
1.9
3.4
Unorganised
Casual
3.8
1.7
3.5
Regular
7.1 5
6.7
Self-employed
6.5
5.9
Unorganised-Total
6.1
3.7
5.6
Unorganised workers in organised sector
6.4
5.5
6.2
Organised sector
9.1
8.1 9
All
6.9
4.9

8. REGRESSION RESULTS (POPULATION BASED)
DEPENDENT VARIABLE: PER-CAPITA NSDP,
Educational Level
Intercept
Coefficient
t value
Illiterate
10.122
-0.024
-3.039***
Literate
9.436
-0.018
-0.4
Primary
8.117
0.076
3.352***
Middle
8.8
0.025
1.161
Secondary
8.469
0.083
3.221***
Hr. Secondary
7.899
0.347
3.806***
Graduate (General)
7.528
0.578
4.858***
Graduate-Agri
9.472
-3.109
-1.667
Graduate-Eng
8.77
2.863
2.786***
Graduate- Medicine
8.651
6.413
2.999***
Technical degree
8.608
1.627
1.980*
Diploma-Agr
8.917
5.571
2.147**
Diploma-Eng
8.831
0.761
2.614**
Diploma-Medicine
8.852
2.55
1.779*
Diploma-Crafts
8.854
2.792
3.098***
Diploma- Others
8.804
0.452
2.624***
Total Diploma
8.783
0.258
2.840***
Sec & above
8.113
0.07
4.088***

9. Skill Levels of Population in the Age-group 15-29 Years in 2004-05
Skill
In Millions
Percentage
Male
Female
Person
Receiving formal training
2.7
1.2
3.9
1.79
0.87
1.35
Received formal training
4.1
3.1
7.1
2.72
2.24
2.45
Formal training
6.8
4.3
11.1
4.51
3.10
3.83
Hereditary
7.4
3.8
11.2
4.91
2.74
3.87
Others 11
3.80
Informal
14.2
8.1
22.3
9.42
5.84
7.70
Sub-total training
21.00
12.40
33.40
13.93
8.94
11.54
No training
129.8
126.3
256.1
86.07
91.06
88.46
Total
150.8
138.7
289.5
100.00

10. SKILL DEVELOPMENT CHALLENGE
Quantitative Dimensions
About 80% new entrants to workforce have no opportunity for skill training
Against annual 12.8 million new entrants to workforce, the existing training capacity is only 3.9 million per annum (2.2 million or 58.1% in formal education and training institutions
Only 2.4% of existing workforce and 3.7% of youth population has formal training as compared to 96% in Rep. of Korea, 75% in Germany, 80% in Japan and 68% in UK
Very high drop out—only 45.4% attending educational institutions in the age-group years
Comparatively very low enrolment ratio at secondary and tertiary levels—12% as compared to 82% in USA, 59% in UK, 30% in Brazil and 23% in China
Industry facing shortages of skilled persons
Over 70% of global business executives in India see shortages of skilled persons a significant constraint on the growth of their business
Growth strategy to result in rapid increase in high end skill intensive occupations and industries
The number of skills for which training is provided to be increased hundred fold—from 40 at present to 4000 as provided in China

11. Industry Extent of Shortage
Biotechnology
18% in production link to over 80% in innovation and R&D segments of the industry
Food Processing
For plant operations, R&D, food safety and quality assurance, supply chain, regulatory work and technical support
Health
Doctors, nurses and technicians/paramedics
Education
25 to 40% in central universities especially in disciplines like engineering, management, economics, computer science & IT. In private institution – 33 to 75% IT
Demand for 3.5 lakh engineers against a supply of 1.5 lakh engineers per annum. By 2010 shortfall by 5 lakh
Textiles
Textile engineer, fashion designer, CAD, management professionals, retail sale professionals-over 1 million jobs to be created over a few years
Engineering/heavy equipment & machinery
Engineers in disciplines like industrial, mechanical, electrical, instrumentation, geotech, designing, IT etc
Automotive Industry
Require 2.5 million workers. Automotive engineers, rubber technologists, mechanical engineers, electrical and services engineers
Banking & Finance
Risk Managers-90% shortage, IT professionals-65% shortage, Credit operations professional-75%, Financial analysts-80%, Economic & Planning analysts-80% shortage
Retail
20% shortage of operations, shop floor executives, visual merchandiser – 56% shortage, Purchase managers – 30% shortage

12. Industry Extent of Shortage
Pharmaceuticals
30-55% shortage
Quality control, process development, R&D, IPR and legal experts, packaging
Chemicals
15-40% shortage
R&D, TPR specialists, Regulatory affairs expert, process engineers, executive managers

13. Rapidly increasing demand for high end skill intensive occupations and industries
Emerging Sectors
Demand (in '000 persons) 
2008
2022
Automobiles
13000
35200
Building, construction and real estate services
35968
83270
Banking, Financial Services and Insurance
4000
8000
Construction Materials and Building Hardware
1140
1643
Education and Skill Development Sector
8006
112080
Electronics and IT Hardware Industry
906
4129
Furniture and Furnishing industry
1455
4873
Gems and Jewellery sector
3335
7943
Healthcare Services sector
3146
16010
IT and ITES Industry
2200
7500
Leather and Leather Products Industry
2500
7139
Media and Entertainment Sector
1046
4040
Organised Retail
2838
176252
Textile sector
35400
61600
Tourism
3530
7172
Total
118470
536851

14. Qualitative Dimensions
Mismatch in demand and supply
Very high unemployment rate among educated and technically trained labour force along with shortages of such persons with employable skills
Rapid growth in the number of institutions imparting technical education and training with a larger participation of private sector but their quality of education remains a matter of concern
Glaring regional disparities in the location of such facilities with limited access to rural areas and poorer regions within the country
Abysmally lower participation of SCs, STs and poor
Inflexibility in the course/ curriculum leading to oversupply in some trades and shortages in others
Lack of modern infrastructural facilities, tool kits, faculty, etc.
A huge shortage of faculty in engineering colleges
Weak system of testing, certification and acceleration
Weak industry-institution interaction
Limited apprenticeship training
Firm-level in-service training is not widespread strategy in manufacturing firms—only 15.6% offering such training as compared to 92.4% in China, 42.3% in Korea, 59.1% in Brazil and 57.9% in Russian Federation. Severely constraining firms’ capacity to innovate

15. Unemployment Rate in according to Educational level 2004-05
Male
Female
Total
not literate
0.37
0.19
0.27
below primary
0.90
1.01
0.93
primary
1.15
1.14
middle
1.84
3.01
2.10
secondary
3.00
7.98
3.92
higher secondary
3.89
13.14
5.45
graduate
5.61
19.12
8.02
postgraduate and above
4.76
17.00
7.51
technical degree
5.79
9.31
6.32
Diploma/certificate (below degree)
Agriculture
9.36
24.44
12.21
Engineering/ technology
7.77
25.70
9.28
medicine
3.58
13.25
7.16
crafts
3.48
10.37
7.15
other subjects
7.70
15.80
10.58
Sub-total
7.27
16.80
9.47
Diploma or certificate (graduate and above level)
engineering/ technology
9.32
34.93
13.61
2.86
8.29
4.28
8.47
13.73
10.03
4.62
17.98
8.45
6.48
20.76
9.93
1.71
1.76
Largely educated unemployment, more in technical diploma holders

16. Growth of Technical Education in India
Total number
Indices
Year
Institutions
Enrolment
3729
854454
100
4473
943765
120
110
7121
191
159
8934
240
185
11426
306
245
16570
444
447
Growth rate of Institutions and Enrolment
CAGR of Institutions
CAGR of Enrolment
4.65
2.52
8.06
6.28
4.64
3.07
5.04
5.71
7.72
12.82

18. National Policy on Skill Development
Eleventh Plan attaching top priority to skill development as an engine for inclusive growth
Setting up of Skill Development Mission in the 11th Plan with an outlay of Rs crore
National Policy of Skill Development launched in February 2009 with an objective to expansion of present capacity of 9.3 million to 15 million during 11th Plan
Prime Minister’s National Council for Skill Development at the top level for policy directions and lying broader strategies
National Skill Development Corporation (NSDC) created to support the private sector initiatives in skill development on PPP model
Rs 1000 crore for NSDC in budget
Some private corporate sector making entry in the field of skill training