Skills, Youth and Employability: India’s Quest for Economic Empowerment
Pratik Dake
Bureau of Research on Industry and Economic Fundamentals
Photo credit – Youth Futures
Education is the Manifestation of the Perfection Already in Man’
Youth, often referred to as ‘YuvaShakti’, are powerful agents of change driving progress and development[1]. The National Youth Policy 2014 defines youth as the individuals between the ages of 15 to 29 years. India is home to one of the youngest populations in the world, with youth accounting for 27[2]% of the total population. However, this share is expected to decline to around 24% in the coming years. Despite this, the absolute number of youths will remain substantial, reaching approximately 365 million by 2030. This demographic shift presents an opportunity for a ‘Youth Bulge’ that can help propel India toward its the national goal of a USD 5 trillion economy.
[1] National Youth Policy 2021
[2] Project Figure for the Year 2021, National Youth Policy 2014
Following the adoption of the International Year of Youth in 1985, the Government of India established a separate Department of Youth Affairs and Sports[1], which led to the formulation of the National Youth Policy in 1998, 2003, 2014 and 2021. To fully harness the potential of youth, it is essential to ensure they acquire the right skills necessary for future growth.
[1] Ministry of Youth Affairs and Sports
An economic trigger occurs when a country has more people available to work than those to feed. With the significant shifts in the India’s skilling ecosystem and the shortcomings of past skill development programs, there was a clear need to reassess the existing skill development framework. As a result, the National Policy on Skill Development and Entrepreneurship was introduced in 2015. Skill development is a shared responsibility among all stakeholders in the ecosystem.
Over the past few years, the Government of India has launched numerous schemes targeting skilling, employment, and entrepreneurship. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY), one of the flagship initiatives, was launched on World Youth Skills Day. By the end of Year 2020, it had trained approximately 1.05 crores youth through Short-Term training (STT) and Recognition of Prior Learning (RPL) Courses[1]. Ambitious programs such as Make in India, Startup India, Deen Dayal Upadhyaya Grameen Kausalya Yojana (DDU-GKY), National Apprenticeship Promotion Scheme (NAPS) play a crucial role in supporting youth through skill development. In addition to skill development, higher education is an important contributor to Science, Technology and Innovation (STI), benefiting both individuals and society. The Gross Enrolment Ratio (GER) for higher education was reported as 27.1% in the year 2019-20, compared to 24.5% in 2015-16 and 20.8 % in 2011-12[2].
[1] Ministry of Skill Development and Entrepreneurship
[2] All India Survey on Higher Education (AISHE) 2019-20
Source: Annual Report on Periodic Labor Survey Report (PLFS), MoSPI
The labor force participation rate of young aged 15 to 29 has risen from 38.20% in 2017-18 to 46.50% in 2023-2024. Additionally, the youth unemployment rate, which stood at 17.8% in 2017-18, decreased significantly to 10.20% in 2020-21; although it remains relatively high.
The GoI incurred an expenditure of around 1289.20[1] crores for the last financial year 2023-24 under various schemes of Ministry of Skill Development and Entrepreneurship (MSDE). The allocation of the budget to the youth agenda remains constant at an average of nearly 18% across all ministries, with over 50% of the expenditure committed to three ministries, the Ministry of Education, the Ministry of Social Justice and Empowerment and the Ministry of Skill Development and Entrepreneurship[2]. The budget allocated to youth development remains at 0.01% of India’s GDP[3], which is significantly lower than that of less develop countries such as Nepal and Bahrain (0.2% of GDP) and Bangladesh (0.1% of GDP).
[1] BUDGET ALLOCATION FOR ENTREPRENEURSHIP AND SKILL DEVELOPMENT PROGRAMME
[2] National Youth Policy 2021
[3] Ibid
In addition to revisiting the allocation of financial resources for the Youth Agenda, it is crucial to focus on emerging employment areas both within India and globally, particularly regarding cross-country talent demand. Job roles in the country focusing on green jobs, renewable energy, electric vehicle manufacturing, green mobility, robotics, machine learning, AR/VR should be supported through targeted interventions and programs, similar to Finland’s Talent Boost Initiative[1]. This initiative emphasis on promoting cross-sectoral cooperation between the states, cities and business sector for talent attraction and retention with an aim of boosting international skill mobility channels.
[1] Talent Boost – Ministry of Economic Affairs and Employment
One of the major challenges in current skilling programs is the lack of coordination between the numerous initiatives operating at both the state and central levels, leading to duplications of efforts. There is a need for a clear distinction among programs focused on skilling, reskilling, and upskilling to effectively achieve the desired targets. A key factor for the successful implementation of skill development programs is a robust mobilization strategy[1] and accurate mapping of training needs, ensuring that youth are well-informed about vocational opportunities and the labor market. As a result of these gaps, only 54% of certified candidates under the PMKVY scheme are placed[2].
[2] Pradhan Mantri Kaushal Vikas Yojana (PMKVY) | Placement Dashboard
India’s Skilling Paradox highlights a significant challenge: while agricultural opportunities are shrinking, there is a growing demand for skilled workers in manufacturing and services, yet the gap in essential skills remains vast. The 21st century job market will not only require task-specific roles but also multidimensional competencies that combine technical expertise with adaptability. To bridge the gap, India must develop a comprehensive blueprint for transferable skills that align with both current and future industry needs. This can be achieved by leveraging the efficiencies of the private sector through its direct participation in skill development and training programs. While this approach has already been initiated, it requires a more strategic focus in its implementation. In addition to focusing on employability, this approach should prioritize the portability of skills to ensure long-term, sustainable employment. By fostering adaptability, India will be better equipped to address future employment challenges arising from the rapidly changing economic landscape.