India’s future is fundamentally tied to its focus on employment generation, workforce development and skill development, reflecting the nation’s ambitions for economic advancement and social upliftment. The Union Budget for 2024–25 has made a strategic pivot, placing an unprecedented emphasis on these domains, particularly given that 65% of India’s burgeoning population is under 35. Despite this demographic advantage, a significant portion of the youth remains inadequately equipped to navigate the complexities of a modern economy.
According to the 2024 Economic Survey, only 51.25% of India’s youth are considered employable. The employability rate for graduates presents a starker reality—approximately 47% for technical graduates and a mere 22% for non-technical graduates. This essentially means that nearly one in two graduates lack the necessary skills to seamlessly transition into the workforce post-graduation. Recognizing this gap, the government has introduced a transformative Budget internship scheme, offering one-year internships in 500 leading companies to 10 million young individuals over the next five years. Each intern will receive a monthly allowance of ₹5,000 along with a one-time support grant of ₹6,000, with the government shouldering the majority of these costs. The strategic intent of this initiative is to provide the youth with exposure to real-world business environments, effectively bridging the disconnect between their skills and the demands of the formal and informal job sectors.
Evolution and Future of Workforce Development in India
Over the past two decades, India’s economic narrative has been a combination of high aspirations and persistent structural challenges. A GDP growth rate of 6-8% has been consistently driven by significant economic reforms, from the era of Liberalization, Privatization, and Globalization to the introduction of the Goods and Services Tax and the implementation of the New Education Policy in 2020. However, despite these milestones, the nation faces an ongoing challenge of generating productive employment for its estimated 565 million-strong workforce. The road ahead demands cohesive leadership and a forward-looking approach to align the aspirations of the youth with the evolving demands of the economy. Visionary policies, robust industry-academia partnerships, and a relentless focus on skilling and reskilling are imperative to propel India’s progress and elevate the nation’s stature on the global stage.
Challenges for India’s Growth
Furthermore, as a chorus of global analysts fervently champion India’s ascent as the next great economic power, the need for policies that create tangible job opportunities becomes increasingly apparent. Goldman Sachs envisions India becoming the world’s second-largest economy by 2075, while the FT’s Martin Wolf forecasts that by 2050, its purchasing power will surpass that of the U.S. by 30%. Yet, as we transition into Industry 4.0, the challenge is to ensure that this economic dynamism translates into genuine employment and enhanced employability. Despite our impressive GDP growth, current policies seem adept at creating economic metrics rather than tangible job opportunities. To secure a future where economic progress benefits all, we must forge a path that not only celebrates prosperity but also ensures that it leads to substantial, meaningful employment. With India’s working-age population set to expand until 2044, nearly 7.85 million non-farm jobs need to be created annually to meet the demand. This calls for an urgent acceleration towards formalising the workforce and building a skilled ecosystem in the country. Apprenticeships emerge as a cornerstone of formalising employment and seamlessly integrating training with practical experience, which is notably underutilized compared to global benchmarks. Unlike the UK, where apprenticeships constitute over 2% of the labour force, India’s figure is a meager 0.18%. To bridge the education-employment divide and ensure inclusive job creation, scaling the skilling ecosystem through substantial investments and reforms is imperative.
Strengthening the Skilling Ecosystem: The Interplay of Education and Employability
According to a McKinsey & Co. report, India could face a potential skill gap of 85-90 million by 2030. To address the skills gap, industry stakeholders and educational institutions are collaborating to develop specialized training programs and certification initiatives to equip workers with the necessary skills for Industry 4.0. Government initiatives such as the National Apprenticeship Promotion Scheme (NAPS), Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), and Pradhan Mantri Yuva Udyamita Vikas Abhiyan (PM-YUVA). These initiatives will be pivotal in enhancing apprenticeship training and skill development among the youth, thereby alleviating skill shortages and aligning workforce capabilities with industry demands. However, despite these initiatives, retention and training challenges persist. A significant gap remains between the skills imparted through education and those demanded by employers, often resulting in no job guarantee for graduates. Students are not sufficiently motivated to upskill themselves, leading to a mismatch in the labour market.
How Apprenticeships and Degree Apprenticeships can help in Workforce Development?
Apprenticeships and degree apprenticeships present a viable solution to this conundrum, helping effectively bridge the gap between education and employment. Apprenticeship programs provide practical training, industry-relevant skills, and career advancement opportunities, making them indispensable for modern workforce development. Education alone will not suffice, rather a combination of skills and education is essential. Stipends and subsidies offered through apprenticeships provide financial support to learners, making it easier to acquire necessary skills while earning. Degree apprenticeships, which combine academic learning with on-the-job training, ensure that students are well-equipped to meet industry demands. By integrating structured on-the-job training with classroom education, degree apprenticeships create a skilled ecosystem that can significantly enhance India’s labour force participation and employment rates.
Policy Changes Required to Catapult Apprenticeships to the Next Level
To elevate apprenticeships and align them with India’s economic ambitions, strategic policy reforms are essential. One of the key changes needed is a transition from a bilateral model, typically involving just students and industries, to a tripartite engagement that includes students, educational institutions, and industries. This shift, exemplified by innovative Degree Apprenticeship programs, aims to integrate theoretical learning with hands-on practical experience. By doing so, it effectively creates a specialized talent pool tailored to meet the evolving needs of various industries. A crucial policy focus should be on increasing the apprenticeship quota in Production Linked Incentive (PLI)-registered organizations to a benchmark of 15%-30%, particularly in sectors like textiles, tourism, and logistics. This would not only formalize the workforce but also enhance skill development across key sectors. Additionally, providing government incentives for Third-Party Aggregators (TPAs) can play a transformative role in expanding apprenticeship opportunities, especially for MSMEs, by addressing financial constraints and facilitating scalability.
Extending the duration of apprenticeships to align with various educational stages—from secondary education through postgraduate levels—is another pivotal step. This approach aims to attract a diverse range of participants, including those from rural backgrounds and women, which could significantly boost formal employment rates. Streamlining regulatory frameworks and implementing an integrated Apprenticeship Credit Framework in alignment with the National Education Policy (NEP) and the National Skills Qualifications Framework (NSQF) are essential measures to ensure smooth transitions across educational levels. States like Tamil Nadu and Maharashtra have already taken commendable initiatives with programs such as Naan Mudalvan and Laadka Bhau Yojana. Naan Mudalvan focuses on equipping youth with job-ready skills and enhancing career opportunities, while Laadka Bhau Yojana aims to provide financial support and incentives to promote employment among males. However, there is ample potential for other states to adopt and expand similar programs on a broader scale. Promoting economic pluralism, where diverse economic models—including large enterprises, MSMEs, and the informal sector—are integrated, is vital to creating a more inclusive job creation framework. By leveraging different economic drivers, India can better address the diverse employment needs of its population and provide wider access to opportunities.
The success of India’s employment ecosystem hinges on the collaborative efforts of industry, academia, students, and policymakers. As the job market evolves, roles like AI and machine learning specialists, data analysts, cybersecurity experts, renewable energy technicians, and advanced manufacturing engineers are becoming increasingly relevant. In this collaborative model, industry partners contribute practical insights and real-world challenges to help shape academic curricula, ensuring that students acquire relevant and market-ready skills. Academia, in turn, must remain agile in updating courses and incorporating new technologies and methodologies that reflect the rapidly changing job landscape. Policymakers have a crucial role in establishing a regulatory environment that supports educational innovation, encourages private sector participation in skill development, and incentivizes organizations to invest in employee training. Students should be encouraged to pursue lifelong learning and adaptability, equipping themselves for diverse career paths in a constantly evolving job market. Government-led initiatives are vital in creating a structured framework for skill development, promoting public-private partnerships, and aligning training efforts with national economic goals. By aligning educational programs with industry needs, encouraging continuous learning, and supporting skill development initiatives, India can effectively bridge the gap between employability and employment, addressing current challenges and preparing the workforce for future demands.
