Skill Development in India: PM-SETU, Challenges and Reforms

GS Paper III: Indian Economy and issues relating to planning, mobilization of resources, growth, development, and employment.

Context: India’s preference for academic degrees over practical skills highlights a structural challenge in workforce development. Greater recognition of vocational education, industry-linked training and investment in human capabilities are essential for building a globally competitive workforce.

Understanding the Skills Gap in India

• Degree-Centric Mindset: Academic qualifications often receive greater social recognition than craftsmanship and technical expertise, discouraging vocational careers.
• Colonial Legacy: The historical preference for clerical and administrative work over productive manual occupations has contributed to the undervaluation of skilled labour.
• Skill–Employment Mismatch: Educational qualifications do not always match industry requirements, contributing to underemployment and recruitment difficulties.
• Dignity of Labour: Occupations such as carpentry, welding, baking and machine operation are essential to productivity but often lack social prestige.
• Ethical Foundation: The Bhagavad Gita emphasises performing one’s work with dedication, reinforcing the value of craftsmanship and professional excellence.
• Global Competitiveness: India’s ambition to become a global skills hub requires industry-relevant training, technical expertise and continuous learning.

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Skill Expenditure- Complementing Capital and Operational Expenditure

• Capital Expenditure (CapEx): Investment in productive assets such as factories, ports, highways and machinery.
• Operational Expenditure (OpEx): Recurring costs required to operate and maintain assets, including electricity, repairs and raw materials.
• Skill Expenditure (SkillEx): Investment in vocational training, apprenticeships, reskilling and upskilling to strengthen workforce capabilities.
• Productivity Gains: Skilled workers improve output quality, reduce wastage and enhance technological adoption, complementing investments in physical infrastructure.
• Industry Responsibility: Employers should treat workforce development as a productive investment aligned with technological change and industrial demand.

PM-SETU- Modernising Industrial Training Institutes

• Objective: The Prime Minister’s Skilling and Employability Transformation through Upgraded ITIs (PM-SETU) scheme aims to modernise Industrial Training Institutes (ITIs) and improve employability through industry-oriented training.
• Investment and Coverage: The scheme envisages an outlay of ₹60,000 crore over 5 years (shared between Centre, States, and Industry) to modernise 1,000 government ITIs.
• Hub-and-Spoke Model: Modernised ITIs act as hubs (200 Hub ITIs) that provide training resources and expertise to smaller spoke ITIs (800 Spoke ITIs).
• Industry Linkages: Updated equipment, industry-aligned curricula and apprenticeship opportunities can improve practical competencies.
• Employment Outcomes: Success depends on translating training into recognised skills, job placements and better earnings.

Significance of Skill Development

• Economic Productivity: Improves efficiency, product quality and industrial competitiveness.
• Employment Generation: Creates opportunities in manufacturing, construction, healthcare, logistics and renewable energy.
• Entrepreneurship: Enables self-employment, small businesses and specialised services.
• Inclusive Growth: Expands economic opportunities for rural youth, women and disadvantaged groups.
• Technological Adaptation: Prepares workers for automation, artificial intelligence and emerging industries.
• Global Competitiveness: Strengthens India’s capacity to supply skilled workers to domestic and international labour markets.

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Major Challenges

• Social Stigma: Vocational occupations are often perceived as less prestigious than academic careers.
• Outdated Infrastructure: Some training institutions lack modern equipment, qualified instructors and updated curricula.
• Industry–Academia Disconnect: Limited employer participation can produce skills mismatched with workplace requirements.
• Unequal Access: Rural and disadvantaged learners face financial, geographical and infrastructural barriers.
• Weak Employment Linkages: Training programmes may prioritise enrolment and certification over placement, wages and career progression.
• Rapid Technological Change: Automation and emerging technologies require continuous reskilling.
• Limited Recognition of Prior Learning: Informally acquired skills may lack formal certification, restricting career advancement.

Way Forward

• Parity of Esteem: Promote vocational education as a respected career pathway alongside academic degrees.
• Modernise ITIs: Upgrade equipment, curricula and instructor training in collaboration with industry.
• Integrate Vocational Education: Introduce practical learning at school level and create pathways between vocational and higher education.
• Expand Apprenticeships: Combine classroom learning with supervised workplace training.
• Promote Industry Investment: Encourage employers to invest in continuous workforce development.
• Outcome-Based Monitoring: Evaluate training through employment rates, wage growth and employer satisfaction.
• Recognise Informal Skills: Expand Recognition of Prior Learning (RPL) and accessible certification.
• Align with Emerging Sectors: Strengthen training in artificial intelligence, electric vehicles, renewable energy and advanced manufacturing.
• Career Guidance: Provide students with reliable information on vocational careers, earnings and advancement opportunities.

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Conclusion

India must move beyond a degree-centric mindset and recognise skills as an equally valuable form of human capital. Industry-linked training, modern institutions and sustained investment in workforce capabilities can strengthen productivity, employment and inclusive growth.

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