Introduction
I keep returning to one simple idea: India’s demographic advantage will only become a dividend if we convert heads into higher-quality human capital. The Economic Survey 2025–26 brings this into sharp relief — not as an abstract policy brief but as a road map for what it will take to skill a nation for Viksit Bharat by 2047.Economic Survey 2025–26 — Chapter on Employment & Skill Development
Why this matters now
Today’s labour-market signals show resilience: growing employment, rising participation, and structural shifts toward services and organised manufacturing. Yet, the Survey flags a persistent skill deficit: only a tiny fraction of adolescents and youth receive formal, market-relevant training before entering the workforce. The PLFS and Survey statistics are stark — formal skilling coverage is far too low for us to turn scale into sustained productivity.Economic Survey 2025–26 — Chapter on Employment & Skill Development
The Survey calls for embedding skilling earlier — from secondary school — and re‑orienting the system from supply-driven certification to industry-driven employability. That pivot is not incremental; it is foundational.
Where the Survey’s prescriptions hit the mark
1) Embed structured skilling in schools
- Early exposure (Class 9–12 and even earlier) to practical, career-oriented modules reduces dropouts, builds career awareness, and creates smoother school-to-work transitions. The Survey recommends structured vocational pathways and PISA-like competency assessment at Class 10 so learning outcomes — not just seat-time — guide policy and pedagogy.Economic Survey 2025–26
2) Make skilling industry‑driven
- The biggest failure of many past interventions has been a mismatch between what training offers and what firms need. The Survey argues for employer involvement in curriculum design, workplace learning (apprenticeships/internships), and joint assessment — shifting incentives from throughput to sustained labour‑market outcomes.
3) Expand apprenticeships and workplace learning
- Apprenticeships must move beyond traditional trades into new-age sectors — green manufacturing, logistics, digital services and gig platforms. Unified governance of apprenticeship schemes and stronger district-level outreach will be key to scale without quality dilution.
4) Modernise the institutional backbone
- Upgrading ITIs (smart classrooms, modern labs, industry-aligned content) and repositioning them as demand-driven hubs is central. Outcome-based financing — tying payments and incentives to employment retention and earnings — can re-align provider incentives with learner outcomes.
5) Leverage digital infrastructure for real‑time learning and labour-market intelligence
- Integration of the Skill India Digital Hub (SIDH), National Career Service, and the e-Shram registry gives us a unique digital thread linking training records with employer demand. The Survey envisions using that infrastructure for continuous tracking and evidence-driven policy.
What I’ve argued earlier — and why continuity matters
I’ve written before about the need to tie skilling to productivity and employment rather than to arbitrary certification counts. In earlier pieces I urged industry participation, modernising training centres, and outcome-linked incentives — themes the Survey now foregrounds.Skills to gain Productivity — Hemen Parekh (Dec 2024)
Policy and implementation priorities I would emphasise
Local labour‑market intelligence: District Skill Committees should own granular demand diagnostics. Course portfolios must be localised — failures often stem from the wrong mix of courses rather than low teaching quality.
Outcome-based funding at scale: Move government transfers toward milestone payments (placement, retention, wage thresholds) and reputation-based renewal for training partners.
MSME-focused incentives: Smaller firms are where much of the job creation will happen. Design graded incentives, cluster-based partnerships, and equipment-sharing to lower the cost of absorbing apprentices.
Pathways and portability: Credit- and competency-based frameworks must allow stacking of short certificates into diplomas and degrees so learners can combine work and study over a lifetime.
Foundational, behavioural, and digital skills: Beyond domain skills, employers increasingly prize communication, problem-solving and digital fluency. These must be embedded into vocational modules and apprenticeships.
Women‑led skilling: Closing gender gaps in participation requires social and financial supports — flexible schedules, childcare linkages, and targeted outreach — so Viksit Bharat is also inclusive.
Risks and trade-offs
Scaling fast without quality checks will erode employer trust. That’s why assessments that signal competence (workplace-based testing, employer-validated badges) matter.
Over-centralised course lists risk irrelevance. The right balance is national standards with local aptitude for course mix and delivery models.
A short implementation sketch (how to accelerate in the next 3 years)
1) Year 1: Diagnostics and pilots — strengthen District Skill Committees, launch pilot outcome‑based contracts in 50 districts, upgrade 200 hub ITIs with industry partners. 2) Year 2: Scale digital integration — match SIDH/NCS/e‑Shram records, deploy career-mapping tools in schools, expand apprenticeships to new sectors with MSME clusters. 3) Year 3: Consolidate governance — unify apprenticeship missions, mainstream outcome-based financing, and publish district skills dashboards for transparency.
Final thought
If we treat skilling as an add-on we will fail. If we reframe it as a system — one that begins in schools, is local in supply, industry-aligned in content, and digital in measurement — India’s demographic advantage can become a productivity revolution. The Economic Survey 2025–26 gives us the technical scaffolding. The political economy question is whether we can align incentives across ministries, industry and local governments to build that scaffolding into durable institutions.
I have been arguing for these shifts for years; now we have an evidence-based blueprint. The real test is implementation at scale — and that will demand humility, iteration, and relentless focus on outcomes.
Regards,
Hemen Parekh
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