The proposed TA "Capacity Building of the National Skill Development Agency" is in line with the country partnership strategy, 2009-2012 for India, which aims at supporting India's efforts toward inclusive growth, and the country operations business plan, 2013-2015 for India, which recognizes education as a new sector in Asian Development Bank (ADB) operations in India. The project is fully aligned with Strategy 2020.
The project's impact is strengthened skills ecosystem to ensure that 12th Five Year Plan (2013-2018) targets and beyond are met, and its outcome is enhanced capacity of NSDA to guide quality skills development initiatives across central ministries, states, and the private sector.
Through this proposed CDTA for National Skill Development Agency (NSDA), ADB will be able to engage with NSDA which has the mandate of ensuring convergence across the various national and state level skill development initiatives, and of building the capacity of SSDMs. There will therefore be significant positive synergies between the proposed CDTA and ADB's loan operations in India. It aims to enhance the employability of the youth of that state by improving the quality and delivery of skills training and secondary education. This loan will help the Meghalaya State Skill Development Mission in scaling up outcomes-based skills training by facilitating PPPs in skills training. It will also support tracer studies and skills-gap analyses to guide the skill development programs.
|Project Rationale and Linkage to Country/Regional Strategy
The low employability of India's youth is one of the major binding constraints to inclusive growth. More than 50% of India's population of 1.3 billion is below 25 years, and around 65% is below 35 years in age. Of India's working age population (aged 15 to 59 years) of 431 million, 29% is illiterate and another 24% has studied only until the primary level or below. Only 17% of the labor force has senior secondary (grades 11 and 12) and higher levels (including diplomas, graduates, and above) of education.
It is estimated that 57% of India's youth suffer from some form of unemployability. Surveys show that only 30% of India's information technology (IT) graduates, 25% of engineering graduates, and 15% of finance and accounting professionals are suitable for employment. Currently, most companies have to spend substantial resources for retraining their new recruits which adds to their costs and erodes competitiveness. This poses a major constraint for both Indian companies and for companies from advanced countries such as Japan which are keen to scale up investment in India.
While each year nearly 13 million new workers join the labor force, India's annual skills training capacity is only 5 million. Further, the reach of these training programs is limited, and the quality is often below par. These facilities and programs need to be upgraded and aligned more closely with India's emerging labor market needs and changing economic structure. The Government of India's skills development initiatives are fragmented across 21 line ministries (e.g., Ministries of Labor and Employment; Human Resource Development; Rural Development; Micro, Small, and Medium Industries; Industries and Commerce; Power; and Textiles) leading to duplication of effort and wastage of resources. Most of these government-sponsored training programs are not adequately responsive to the private sector's evolving needs. Moreover, it is difficult to tailor these centrally-driven programs to meet the specific needs and constraints of the 28 states and 7 union territories of India, which are fairly diverse.
The recent establishment of the NSDA as the apex autonomous coordinating body for skills development programs is therefore, a major step in the right direction. NSDA subsumes the Prime Minister's National Council on Skill Development, the National Skill Development Coordination Board, and the Office of the Adviser to the Prime Minister on Skill Development. The Department of Economic Affairs, Ministry of Finance, Government of India is the nodal department responsible for providing planning, logistics and budgetary support to NSDA. The establishment of the NSDA will help to ensure convergence across the skills development programs at the central level being driven by multiple ministries. NSDA will also guide the various state skill development missions (SSDMs), which are mostly nascent, through analytical advice (e.g., benchmarking surveys, tracer studies, and preparation of the required training manuals), and channelize financial support to them in the coming years.