Education and Skill Development


India is a nation rich in human capital, with a rapidly growing economy and over half the population under the age of 25. This youth bulge provides the country with a substantial and growing workforce that has the potential to make India a major economic superpower in Asia and the world. In fact, over the last two decades alone, India has become the world’s third largest economy (behind the USA and China) in terms of purchasing power parity, and has quadrupled its per capita income. However, in order to sustain and expand on this type of growth, India needs to ensure that its workers are adequately educated and trained in universally marketable skills.


As of 2015, it is estimated that a mere 4.69 percent of India’s workforce has undergone formal skill training. This is a shockingly low proportion, especially when compared to 96% of workers in South Korea, 68% in the UK, and 52% in the US. Additionally, more than 90% of India’s labor force has not completed higher education and less than a third have graduated from primary school. As assessed by the World Economic Forum’s Global Competitiveness Report, India’s higher education and training system is ranked 93rd in the world. This is the lowest ranking among the BRICs countries (Brazil, Russia, India and China) and of the states in Bloomberg’s predicted top 10 largest economies in 2030. Studies show that low graduation rates coupled with low quality educational institutions (Mehta and Kapoor, 2007) have contributed to a growing divide between the skills currently available and those required (Uni and Sarkar, 2012) to drive India’s continued development and economic growth. 

Historically, India’s education and skill development services have been decentralized across various ministries, such as the National Skill Development Agency (NSDA), the National Skill Development Corporation (NSDC), and the Directorate General of Employment and Training (DGET), as well as NGOs, industrial associations, and donor organizations. Saurabh Johri explains that this decentralization leads to a wide range of standards and quality even within industries and poor mobility between jobs due to lack of training accountability. Most existing training curricula are outdated, with an emphasis on technical know-how rather than increasingly crucial analytical and problem-solving skills. Further, India’s apprenticeship programs are restricted by webs of red tape concerning permissions related to the length of training programs and the environments in which apprenticeships are allowed.

These obstacles notwithstanding, the demand for skilled labor is only expected to increase. By 2022, analysts predict that the demand for skilled workers will exceed 282 million, particularly in the construction, automobile, textile, and transportation sectors.

To take on these challenges and harness Indian potential, experts at our March 2014 conference recommended a framework to bridge the skills gap in India in an attempt to converge public and private sector efforts for maximum efficacy. Involving corporations in “industry led skill development initiatives” could help align skill development programs with actual industrial demands. Looking to the success of the American education and training system as a model, Saurabh Johri also recommended three areas of Indo-US collaboration. Johri suggested India work with the US to develop a training system similar to the US’ community colleges and vocational training schools. He also emphasized the potentials of technology sharing and finally, skill transfer, which would spur India’s progress towards its skill development goals and support cross-border movement of workers.

Modi Government on Education

Throughout his campaign, Narendra Modi signified his commitment to improving the quality and reach of education and skill development. The BJP election manifesto pledged to increase spending on education from 4% of GDP to 6%. Modi purported to universalize primary education and elevate the quality of higher education to make Indian universities competitive with top global universities. Additionally, the incoming government pledged to increase access to vocational training through correspondence and online classrooms and bring private companies into the campaign for skill development. These efforts were to be monitored by a National Commission on Education established by the BJP with the mandate to produce a report two years after its inception regarding the progress made in education and reforms still needed. However, this plan for oversight by one centralized body has yet to come to fruition.

While Modi’s election was viewed optimistically for the education and training sectors based on his track record in Gujarat, his first year in office has been widely seen as “disappointing” and even controversial when it comes to education. In January 2015, the government actually reduced education funding by more than 20% in its 2014-2015 revised budget estimates. The effects of this cut were predicted to be primarily absorbed by the eight new IITs (Indian Institutes of Technology) previously set up by the UPA government, and which were set to move to permanent campuses by July 2015.

Despite maintaining a commitment to expanding and improving education, the 2015-2016 Union Budget cut education spending by 2.02% from where it had been in the 2014-2015 revised budget. This decrease is even more drastic when compared to the change from the initial 2014-2015 budget outlay, which allocated a full 16.54% more to education than the current budget.

In his February 2015 budget speech, Finance Minister Arun Jaitley announced the government’s intent to ensure that each state has one major Central Institute. Jaitley proposed the establishment of AIIMS (All India Institute of Medical Sciences) in Jammu and Kashmir, Punjab, Tamil Nadu, Himachal Pradesh, and Assam as well as an AIIMS-like institution in Bihar. On the technical side, Modi government expressed its intent to open IITs in Karnataka, Jammu and Kashmir, and Andhra Pradesh.

In April 2015, the Commerce Ministry proposed, in a strategy paper shared with NITI Aayog (the in-house government think tank that has replaced the Planning Commission) and the ministries of External Affairs and Human Resource Development, a scheme to “internationalize” education by allowing foreign universities to establish campuses in India. This proposal is remarkably similar to the Foreign Education Institutions Bill introduced by the UPA in 2010, and adamantly opposed by the BJP at the time. The effort would have the potential to “promote India as a hub in Asia for quality education” and create an “Educated in India” brand, bringing education into the “Make in India” campaign.

India-US collaboration

There is some level of pre-existing Indo-US collaboration on education, in the form of initiatives like the India-Support for Teacher Education Project training program through USAID, Fulbright-Nehru program, and the US-India Higher Education Dialogue. In September 2014, the Modi government announced its intent to deepen this collaboration with the Global Initiative of Academic Networks (GIAN) program, which will create a short-term exchange framework for US STEM (science, technology, engineering, and mathematics) professors to teach at Indian institutions.

Skill Development

In the field of skill development, the Modi government has taken arguably more concrete, albeit limited action towards structural change. On July 31st, 2014, the first dedicated Department of Skill Development and Entrepreneurship was established. On November 9th of the same year, the department was upgraded to a full-fledged ministry. The government has continued to combine and streamline its efforts in education and skill development, with the Ministry of Skill Development absorbing administration of all Industrial and Training Institutes (ITIs) and Apprenticeship Training Programs.

On July 2, 2015, the first integrated National Policy for Skill Development and Entrepreneurship 2015 was approved by the Union Cabinet. The policy will center on four key areas of skill development. One stream will focus on overcoming existing challenges to skill development, which include low quality skill training infrastructure and trainers, and a lack of integration with education. Secondly, the policy seeks to align skill supply with demand by engaging industries in specialized skill development and creating a framework for quality assurance. By extending its efforts to the socially and geographically marginalized, including women, with efforts like the “Girl Child Education” group the Modi government emphasizes a policy of equity. Lastly, the policy seeks to educate potential entrepreneurs, foster mentor-entrepreneur relationships, and connect entrepreneurs with incubators and credit markets.

The Indian government has also proposed a framework of Common Norms to be utilized across all government industries and departments. If adopted, this measure will greatly improve coordination across the entire skills sector, which currently includes over 70 different skill development programs across government departments alone. While this is a national initiative, state governments will be expected to align with national Common Norms as well.

On July 15, 2015, Modi announced his new scheme “Skill India,” whose goal is to make India “the world’s human resource capital” by training over 400 million Indians in the next seven years. This will be accomplished through a comprehensive 12-week training program, to be hosted at existing industrial training institutes. To ensure access, decommissioned railway carriages will be refitted as mobile classrooms to serve remote areas. Defense veterans will also be tapped as skill-trainers at specialized skills universities to be set up in every state. There is also a proposal to make skill training a fundamental right. Although funding details of “Skill India” have yet to be made available, it is expected that private sector partnerships will help drive this skill training push. 

Challenges and Opportunities

One year into the Modi government, India’s academic and vocational education systems face a variety of challenges including the persistence of inadequate education for workers and a dearth of training programs in marketable skills. Cuts in funding for education between 2014 and 2016 have only exacerbated the problem. Yet a variety of opportunities remain for the Modi government to capitalize on its vast human resources. The commitment to establishing a Central Institute in each state, creation of the streamlined Ministry of Skill Development and Entrepreneurship, and development of a Common Norms framework for skill training have helped spur standardization and elevation of quality in education and training. Further, if India can effectively open up to business, with which it can collaborate on targeted skill development programs; and to foreign partners, which can facilitate knowledge exchanges, its graduates and labor force will not only sustain, but also multiply India’s growth.