Supplying Skills for Jobs: A State-Level Analysis of Training Across India

18 August 2016

The report proposes a strategy for skill development that would more effectively allocate funds across states.

Executive Summary

The rapid growth in the size of India’s labor force has created a sense of urgency to create jobs and equip the country’s young population with the requisite skills for those jobs. The Indian government has been investing heavily in vocational training and skills development outside the formal schooling system. Yet only two percent of the population has undergone any formal training – a drop in the ocean given the magnitude of the challenge.

This report compares state-level investments in skills with state-level economic and social indicators. The analysis helps capture regional variation in skill development infrastructure across the country. Through this approach, the report analyzes the supply side of skills provision. It examines key questions of immediate relevance to policymakers: What factors determine a state’s demand for skills training? How should policymakers weigh competing factors in allocating funds for skills across states? The report compares the existing allocation of funding against these factors and presents policy recommendations for the government to align the geographic distribution of skills training facilities with the country’s social and economic priorities.

The report highlights that training facilities are located across India, with regional variation, and have grown in number and capacity over time. The spatial dispersion of training centers funded through public-private partnerships (PPPs) is not related to that of technical training institutes under the purview of the Directorate General of Training (DGT). There is no significant correlation between per capita income and the prevalence of training facilities. Facilities tend to be located in states with high human resource requirements, suggesting they are in line with employer demand. A greater number of facilities are found in less urban areas and fewer in remote areas such as the Northeast. Finally, PPP-funded centers are located in states with large youth populations, but there is no clear pattern with Industrial Training Instututes (ITIs).
The report proposes a strategy for skill development that would more effectively allocate funds across states. Policymakers must improve access to skills training at the state level by:

  1. Enhancing coordination between different agencies and schemes to ensure the particular needs of different states are taken into consideration.
  2. Adopting a single framework for allocating funding to be used across agencies and schemes, which takes into account factors beyond economic and industrial growth.
  3. Increasing the use of technology that complements physical skills training facilities, especially for the Northeast.