One of the reasons why SMEs are becoming uncompetitive is the shortage of people with the right skills. It is therefore essential that the government focuses on vocational education apart from primary education and secondary education, argues Ravi Parthasarathy
Today, we are following a path of economic development based on capitalism. This is simply because, whether one likes it or not, the world over, no one has found a better developmental model. Socialism just did not work; it delivered us the famous 2 per cent Hindu rate of growth. Everyone praises India for being the world’s largest functioning democracy. Very few realise the constraints of working in a democracy. The main constraint we have felt is that our frustrating processes repeatedly undermine outcomes. Despite this, capitalism is the only model we have. One often talks about the ills plaguing this system, but one must also realise that these ills are not going to disappear in a hurry. In fact, some of these ills are not going to go away – not in this decade, may be even for some generations. Today, as we try to combine democracy with capitalism, it is very heartening to see the government focused on economic rates of growth. This has had its trickle-down effect: today, growth is becoming a priority for everyone.
If you see the last decade and see the economic development which has taken place, you will see the change that has taken place. A decade earlier, in a large number of towns, the stores in the main street had virtually nothing in them. Today, in almost every urban habitat or semiurban habitat, the sheer range of goods that is available is astonishing. This is a trickle-down effect. There are, of course, parts of the country that lack even basic amenities but that is another story. But in a lot of other regions in West and South India, we no longer have the concept of an Indian village anymore. Instead, you have a kind of a continuum, a semi-urban continuum, with one township ending and another township beginning. So, the growth is taking place and it is trickling down. And it is this trickling down that we need to focus on in the coming decade. We need to have growth with equity. And achieving growth with equity is a challenge which requires a lot of stakeholders to come together.
There are some very good programmes that the Rural Development Ministry is conducting in vocational education in partnership with industry. The industry that needs particular skills sets down the curriculum and also appoints an auditor to ensure that it is what is being taught.
Yet another challenge that arises from ensuring equitable growth is increasing urbanisation. In fact, the next decade is likely to see up to 150 million people, if not more, migrating to city centres. And this urbanisation can be an opportunity, especially as technologies and capital converge not just in the country but globally. While there are many constraints, both known and unknown, we are well-positioned to take advantage of these constraints and convert them into opportunities.
The linkage between infrastructure and economic growth is well documented. And when you look at infrastructure like ports and roads, both of which have to be put up at the same time, one is faced with a conundrum. Today, we are building a road somewhere and a port elsewhere, not allowing the people to reap the benefits of both the facilities. If one puts all the stuff in the same area, one will reach critical mass at a faster pace, reaching the threshold of economic activity much faster. Here, then one can be accused of depriving the already deprived even more. But, it is something that needs to clearly strategised. There are two issues here, one is what is the administrative governance to make it happen at the same time and the second is who is going to play God in terms of deciding where one does it and where one does not.
When one talks about infrastructure, one often forgets its linkages with other sectors that are growing at a much faster pace. Consider the case of the small and medium enterprises (SMEs). It is often said that Germany is a country full of SMEs–high precision, high engineering and high technology SMEs. Our country is also full of SMEs, these may not be high precision, high engineering and high technology SMEs. But our economy is based on SMEs and it is they who are driving employment today. However, SMEs without the right infrastructure become globally uncompetitive. Yet another reason why they are becoming uncompetitive is the shortage of people with the right skills. For a country of 1.2 billion people, it is remarkable that we are so desperately short of qualified people. It is therefore essential that the government focuses on vocational education apart from primary education and secondary education. This is especially important given the fact that today in almost every sector, there is a perceptible gap between the qualifications of the people coming out for employment and the employer’s expectations.
Today, SMEs lack the strength and money power, either to get listed themselves or grab the attention of venture capitalists and other funding agencies for their growth. To overcome this problem, SMEs in a particular industrial sector should think of forming a joint stock company by pooling in funds and list them on the stock markets to raise funds
There is need to initiate a comprehensive change process driven by innovative approaches for skill development, in terms of outreach, flexibility, labour market relevance and transparency.
There are some very good programmes that the Rural Development Ministry is conducting in vocational education in partnership with industry. Here, the industry that needs particular skills sets down the curriculum and also appoints an auditor to ensure that it is what is being taught. The industry also guarantees a job for students of such courses and even pays for a part of the cost of that training. This is not a mega-profitable venture or only a philanthropic venture – it has to be sustainable. But it has its economic benefits. It enables people living below the poverty line to become eligible for some form of formal employment.
Funding is no longer a constraint given the government’s increased commitment levels, but the institutional structure to deliver quality of output has still to come alive. The training of trainers was a key element in the effort to overcome the massive gaps in relevance, reach and quality of skills and training infrastructure.
And, if India has to perform in this decade without the necessary skill sets, it faces a major challenge. There is need to initiate a comprehensive change process driven by innovative approaches for skill development, in terms of outreach, flexibility, labour market relevance and transparency. Also, how will industry achieve its goals, if it does not have the people with the required skill sets. And, if this decade is to really happen in the manner in which it can–for us to take advantage of our demographic attributes – the roadmap essentially covers two sectors: infrastructure and education, both formal and vocational. Properly executed, this can see the country increasing its formal workforce from about 30 million currently to about 100 million, giving life to the trickle-down effect of equitable growth.
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