To empower youth, the Government has announced three transformative schemes aimed at promoting skilling across various sectors
One of the top nine priorities of the Union Budget is employment and skilling. In line with this, three schemes have been announced to promote skilling. The first scheme involves increasing the maximum loan amount for high-end skilling courses under the revamped Model Skill Loan Scheme from Rs 1.5 lakhs to Rs 7.5 lakhs, with an interest rate of 1.5% per annum. This scheme is expected to empower the youth by providing easy access to advanced-level skill courses, potentially removing significant financial barriers for many deserving students and candidates to gain futuristic and in-demand industry skills, thus creating a future-ready and empowered workforce.Recognising the significant role played by non-banking finance companies (NBFCs) and micro-finance institutions in the skill loan market, the Ministry of Skill Development and Employment (MSDE) has made pivotal modifications to the scheme.
This includes the inclusion of NBFCs, Micro Finance Institutions, and Small Finance Banks to extend loans backed by a guarantee against default up to 75% of the loan disbursed through the instrument of collateral-free loans of up to Rs 7.5 lakh to facilitate 25,000 aspirants every year.Without a vibrant skill loan market, many youths leave aspiring candidates without the necessary financial support to pursue their skill training. To ensure uninterrupted credit flow in the skilling sector and to provide low-income youths with access to affordable finance for specialized skill courses, the MSDE initially launched the Credit Guarantee Fund Scheme for Skill Development in July 2015, resulting in below expectations.
The low fund utilisation under the scheme over the past decade was due to the low ticket size of loans up to Rs 1.5 lakh, even as course costs and fees rose due to inflation, leaving many high-cost courses out of the scheme. Secondly, private banks still need to be more willing to finance government-sponsored schemes. As of March 31, 2024, loans amounting to Rs 115.75 crore had been extended to just 10,077 borrowers over the past decade.However, the government's unwavering commitment to addressing this issue is evident in the new model skill loan scheme, which aims to meet the challenges of a highly skilled workforce emerging from paced technological changes. Relevant skills are in demand, and the cost of acquiring specialised skills is higher.
Only 5% of the so-called skilled workforce is formally trained, creating a significant skilling gap that needs to be urgently addressed. While 26.5 crore children enrol in school each year, by the time they reach higher education, their numbers have dwindled to 4.3 crores. To align with the National Education Policy (NEP) 2020 mandate, an additional five crore children who pass school need to be included in higher education and to make skill training accessible to every individual, especially the large number of students from rural India.
The Model Skill Loan Scheme is not just a solution but a necessary and urgent step in bridging this gap.The skill economy is increasingly market-led, integrating new-age learning into the skill development ecosystem. The youth from urban and semi-urban areas recognise the opportunities for skilling and livelihood improvement. An initiative like the Model Skill Loan Scheme opens doors to many skill courses in sectors such as healthcare, beauty-wellness, IT, AI-data science, cloud applications, digital marketing, hospitality, animation, gaming, graphic designing, and drone technology.
These courses, driven by changing industry dynamics, offer substantial placement opportunities and the potential for global mobility, providing a promising future for the youth and opening doors to international career prospects.
The second scheme aimed at skilling 20 lakh youth over five years. The scheme, with a total outlay of Rs 60,000 crore, aims at fulfilling this objective by upgrading 1,000 Industrial Training Institutes (ITIs) in the hub and spoke arrangements with outcome orientation. It's an ambitious scheme that aims to make youth more employable by imparting industry-specific skills. The course content and design will be upgraded to reflect the skill needs of the industry. For instance, emerging IT sector needs could include cyber security or data analytics skills.The third scheme introduced in the Budget for Skilling Youth is a comprehensive scheme that provides the youth with internship opportunities in 500 top companies.
This first-of-its-kind scheme, aiming to cover one crore youth in 5 years, has the potential to be a game changer in tackling youth unemployment. This internship scheme's innovative approach and potential impact make it a beacon of hope for young people's future employment, promising a significant reduction in youth unemployment rates.
Moreover, landing an internship is difficult, leading to a vicious cycle of frustration and disappointment. Students with professional degrees like MBA, engineering, etc., may still find landing jobs or internships easier after graduation. However, the scenario could be more precise for unemployable humanities graduates with no ready-made market-appropriate skill set.
Thus, such a scheme providing young graduates across disciplines with internship opportunities at leading companies can be a game-changer if implemented properly and effectively. Perhaps, in the future, the government could consider widening the scope of this scheme by making it mandatory for companies above a specific size (the government could come up with a set of specifications to decide this) to take in a fixed number of interns every year and fund the training program through their Corporate Social Responsibility (CSR) funds. These funds are a company's initiative to assess and take responsibility for the company's effects on environmental and social well-being.Most importantly, the internship opportunities provided under this new scheme could significantly boost the employability quotient of youth. With concrete experience, they will be more likely to land a job. However, implementation, effectiveness, and accountability are crucial to fostering employable skill sets.
(The writer is a Co-Founder and MD of Orane International, a Training Partner with the National Skill Development Corporation(NSDC), Network Member of India International Skill Centres; Views expressed are personal)