India’s Skilling Landscape: A Case of Mismatch
The Economic Survey (2024-25) reveals that India stands at a pivotal moment, with 26% of its population in the 10-24 age group, offering a once-in-a-lifetime demographic opportunity. It observed that as one of the youngest nations globally, India’s future prosperity hinges on how effectively it harnesses this youthful workforce. The real challenge lies in creating quality jobs that provide sustainable livelihoods, align with global demands, and promote inclusivity. By prioritizing reskilling and upskilling, simplifying business regulations, and fostering labor flexibility, the government aims to drive sustainable job creation. Sectors like the digital economy and renewable energy are poised to offer vast opportunities essential for achieving a Viksit Bharat. India’s demographic dividend is at a pivotal moment. By 2041, the workforce will peak, giving us a 17-year critical window to capitalise on the country’s vast human capital. To make the most of this opportunity, India must confront the crucial challenge of addressing the mismatch in its skills landscape.
The latest survey highlights the clear mismatch between occupational and educational skill levels. Around 53.25% of the graduate population is employed in low-skilled occupations. Similarly, 29.8% of the people with postgraduate degrees are employed in low-skilled occupations. Only 38.23% of the people with graduate degrees are employed in jobs requiring specialised skills. This mismatch stems from key challenges such as low educational attainment, poor learning outcomes, a shortage of high-quality jobs, and the limited emphasis on practical skill development.
The first and fundamental issue lies in the educational levels of the workforce. Data from the Periodic Labour Force Survey (PLFS) provides insights in this regard. As stated in the Economic Survey, in 2023-24, over 90% of our workforce had educational qualifications at or below the secondary level. Among these, 52.4% possess only a primary-level education or less, while 37.8% have completed secondary education. The latest UDISE report for 2023-24 indicates that the current Gross Enrollment Ratio (GER) at the secondary level is 77.4%. The National Education Policy (NEP) 2020 aims to achieve a 100% GER at the secondary level by 2030. It is noted that over the years, at the secondary level, GER also has shown a significant improvement of 19.45% between 2011 and 2021. However, this trend observed in secondary education doesn’t extend as prominently to higher education levels.
The Gross Enrollment Ratio (GER) for higher secondary levels (grades XI-XII) is notably low, at just 56.2%. Even more alarming is the GER for higher education, which reached only 28.5% for the academic year 2021-22. Since 2014-15, GER for higher education has notably improved from 23.7% in 2014 15 to 28.4% in 2021-22. Furthermore, data from the All-India Survey on Higher Education (AISHE) reveals a troubling decline in pass-out rates for undergraduate degrees, showing a decrease of 28.43% from 2011-12 to 2021-22. As a result, only 7.6% hold graduate degrees, and only 2.2% have a postgraduate degree or more. Consequently, 88% of the workforce is engaged in occupations that require low competencies, such as agriculture, construction labour, and clerical work. These issues are also evident at the state level. States with large demographics, such as Bihar and Assam, report that over 90% of the workforce has low education and skill levels. In contrast, UTs like Chandigarh and Puducherry have made strides in improving educational outcomes, with a higher percentage of their workforce having access to higher education and vocational training.
The second issue is the occupational distribution. In 2023, 94% of states/UTs have more than half of their workforce in medium-skill jobs, and over 52% of states/UTs have more than 20% low-skill levels. States like Bihar, Chhattisgarh, and Uttar Pradesh have the highest share of low-skilled workers, while places like Chandigarh and Goa have the lowest. These issues at the sub-national level further bring to light the urgent need for upskilling initiatives and vocational educational programs.
This mismatch can be bridged only if we capitalize on the potential of the demographic dividend, improving the quality of education at all levels. While the National Education Policy (NEP) and the Right to Education (RTE) have expanded access to education, the quality of learning outcomes remains a matter of concern. Improving proficiency in basic subjects such as arithmetic, science, and languages at the school level is as crucial as aligning the higher education curriculum with the requirements of Industry 4.0, i.e., AI, data sciences, and machine learning. Access to quality Higher education directly affects employability, and addressing the gaps is vital to resolving the issue of unemployment at the graduate level and enhancing the country’s global competitiveness and productivity across sectors. Additionally, the country’s perception of formal vocational training as a last resort to employment needs to be changed to one of a pragmatic, viable, and high-quality option for the population’s economic opportunities.
Addressing the broken link between Technical and vocational education and training (TVET) systems and labour markets is imperative to address this mismatch. In India, TVET is a key upskilling initiative through various initiatives that focus on improving the skill levels of the population, yet only 3.73% of the workforce have undergone vocational training. While 28.33% of workers have informal training through self-learning or traditional methods, this is insufficient to equip individuals with the competencies required for emerging industries. Only two states have over 10% of their population receiving formal training, and five states have more than 80% without vocational training. While progress has been made since 2017, there is still a gap in improving vocational training across state levels. Restructuring formal vocational training in India through industry-academia partnerships can ensure that the curriculum and the pupil meet the demands of our evolving economy. Integrating on-the-job training into educational and vocational programs at ITIs should also be enabled earlier in education.
State governments must drive the path to a prosperous India by 2047 by strategic action to close the skill gap and develop a workforce that is not only large in numbers but also competitive, skilled, and equipped to deal with evolving current dynamics and the future of the workforce.
The article was published with Economic Times on February 28, 2025.
