Skilling, Digitisation, and Formalisation of the Indian Economy

In a rapidly changing economic landscape, skilling and digitisation have become critical components for driving economic growth and development. Recognising this, India’s Finance Minister, Nirmala Sitharaman, has outlined a comprehensive plan to focus on skilling, digitisation, and formalisation of the economy in the Union Budget 2022-23.

India has one of the world’s largest and youngest populations, with more than 65% of its citizens under the age of 35. However, this demographic dividend can only be harnessed if the workforce is equipped with the necessary skills to meet the demands of a rapidly evolving economy. The government’s skilling initiatives aim to bridge this gap by providing training to millions of young people, enabling them to acquire the skills required to compete in the job market.

The National Skill Development Corporation (NSDC), set up by the government in 2009, has been at the forefront of India’s skilling initiatives. It has trained over 20 million people in various sectors, including construction, healthcare, logistics, and hospitality. The government’s focus on skilling is set to receive a further boost, with a proposed allocation of ₹3,000 crores for the NSDC in the Union Budget 2022-23. This will enable the NSDC to scale up its efforts and train more people in new and emerging sectors.

The digitisation of the economy is another critical component of India’s growth story. The pandemic has highlighted the importance of digital infrastructure, with many businesses and individuals relying on technology to carry out their daily activities. The government’s focus on digitisation aims to create a robust digital infrastructure that can support the needs of a modern economy.

The National Digital Health Mission (NDHM) is one of the key initiatives aimed at digitising the healthcare sector. The mission aims to create a digital infrastructure for healthcare that will enable seamless access to health records, e-pharmacies, and teleconsultations. The government has allocated ₹2,500 crores for the NDHM in the Union Budget 2022-23, highlighting its commitment to digitising the healthcare sector.

The government’s focus on digitisation is not limited to the healthcare sector. The National Language Translation Mission (NLTM) is another key initiative aimed at digitising India’s linguistic diversity. The mission aims to create a platform for the translation of government documents and websites in 22 Indian languages. This will enable millions of people who do not speak English to access government services and information easily.

The formalisation of the economy is another critical component of India’s growth story. Informal sectors account for a significant portion of the Indian economy, with millions of people working in jobs that are not recognised or regulated by the government. The government’s focus on formalisation aims to bring these sectors into the mainstream economy, enabling them to contribute to the country’s growth.

The Social Security Code, passed by Parliament in 2020, is a critical initiative aimed at formalising the economy. The code aims to provide social security to all workers, including those in the informal sector, by creating a universal social security system. The government’s focus on formalisation is set to receive a further boost, with a proposed allocation of ₹3,000 crores for the implementation of the Social Security Code in the Union Budget 2022-23.

The government’s focus on skilling, digitisation, and formalisation is set to have a significant impact on the Indian economy. Skilling initiatives will enable millions of young people to acquire the skills required to compete in the job market, thereby reducing unemployment and poverty. Digitisation initiatives will create a robust digital infrastructure that can support the needs of a modern economy enabling businesses and individuals to carry out their daily activities more efficiently. Formalisation initiatives will bring informal sectors into the mainstream economy, enabling them to contribute to the country’s growth.

The government’s initiatives are already yielding results. According to a report by the NSDC, over 1.8 million people were trained under various skilling programmes in the first half of 2021. The report also highlighted that the demand for skilled workers in the healthcare, logistics, and e-commerce sectors has been on the rise. The government’s focus on skilling is set to create a workforce that is equipped to meet the demands of the job market, thereby boosting economic growth.

Digitisation initiatives are also gaining momentum. The NDHM has already been rolled out in six Union Territories and is set to be launched across the country soon. The NLTM has also made significant progress, with the translation of government websites and documents in several Indian languages. These initiatives will not only create a more inclusive and accessible digital infrastructure but also drive innovation and entrepreneurship in the country.

The formalisation initiatives are crucial for ensuring that workers in informal sectors receive adequate protection and benefits. The Social Security Code aims to create a universal social security system that will cover all workers, including those in the informal sector. This will provide them with access to healthcare, insurance, and pension benefits, thereby improving their quality of life. The government’s focus on formalisation will also help curb the informal economy, which has been a significant challenge to the country’s economic growth.

In conclusion, India’s push for skilling, digitisation, and formalisation of the economy is a significant step towards realising the country’s economic potential. The initiatives are aimed at creating a skilled, digitally-enabled, and formalised workforce that can contribute to the country’s growth. The government’s commitment to these initiatives, as reflected in the proposed allocations in the Union Budget 2022-23, is a positive sign for the future of the Indian economy.

Overall, India’s focus on skilling, digitisation, and formalisation of the economy is a welcome move, and the initiatives are likely to yield significant benefits in the long run. The country’s demographic dividend can only be harnessed if the workforce is equipped with the necessary skills and the digital infrastructure is in place to support a modern economy. The government’s initiatives are a step in the right direction and hold the promise of unlocking India’s economic potential.

Reference: India’s focus going to be on skilling, digitisation and formalisation of the economy | Times of India | April 2023

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