October , 2019
Skill utilisation will hold the key
14:08 pm

Nikhil Raghavan

Since 2018, India’s working-age population (people between 15 and 64 years of age) has grown larger than its dependant population — children aged 14 or below as well as people above 65 years of age. This bulge in the working-age population is going to last till 2055.

Prof. K. Nagaraj, retired Professor of Madras Institute of Developmental Studies and a visiting faculty at Asian College of Journalism, Chennai, told BE, “The fact that a large proportion of our population comprises the youth by itself does not make them a ‘dividendʼ. One has to have a mix of enabling conditions in place for this to happen and we are woefully inadequate in terms of those conditions. Or, to put it even more simply, unless the large proportion - and the number - of young in this country are provided with the wherewithal to acquire and use modern skills that a modernising economy needs, this 'dividend' may not fructify. There is no automaticity, or guarantee, that this transition will happen on its own or by the market mechanism. The state would have to formulate and implement a coherent policy on the enabling conditions for this to happen.”

Nagaraj thinks that there are broadly two sets of constraints that need to be addressed. The first is related to constraints on skill acquisition and the second is constraints on skill utilisation. These two sets of constraints are particularly binding in the case of the young who are first-time entrants in the employment market and these constraints also can vary a great deal across social groups depending on class, caste, gender and location.

Nagaraj stated, “Let me give a couple of examples on what I mean by these constraints. One obvious constraint on acquisition of modern skills is lack of access to education. Education provides the basis for acquisition, adaptation and innovation of modern skills and on this front our record has been woefully inadequate. The high dropout rates at the primary and secondary levels themselves, the low overall level of access to higher education and very importantly, extremely high and persistent - and even increasing - levels of inequalities based on class, caste, gender and location in access to education all testify to this very poor record. And unless we find remedy for this situation through appropriate state policies, a large section of the youth will not be able to acquire modern skills, a modernising, dynamic economy would require and they will just join the already bloated informal economy.”

But these constraints are not just economic. They could also be social. Take, for example, the young females. The constraints they have to face in acquisition of skills could be particularly severe given that they carry the burden of all domestic work. The role that gender based inequalities play in all these is all too obvious. As for the constraints on skill utilisation, the obvious example would be lack of effective demand. Even if skills are acquired, if there is no demand for these skills - an issue underlying in the present crisis in the economy - these skills will not be put to use.

In the short-term, can the so-called ‘demographic dividendʼ be leveraged to deal with problems of overall low growth, the agrarian crisis and rural-urban inequalities?

Nagaraj stated, “I do think that with appropriate public policies, the large stock of rural labour force - which consists mostly of rather unskilled or semi-skilled youth who are mostly underemployed - can be put to use for the creation of productive assets in rural areas. This could be done through large scale increase in public expenditure on a programme like MGNREGA. This should put some purchasing power in the hands of the rural poor and hence increase consumption demand in the economy. Additionally, it will also help to mitigate the problem of underemployment to some extent if it is planned and implemented properly through a decentralised panchayat set up. It can add to productive rural assets and hence lead to some relief to the agricultural sector. Apart from this, I think the MSMEs that are in a major crisis, can be revived through proper fiscal incentives. This could be done in both rural and urban areas.”

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