As of 2018, the output per labour for India is 77.45% lower than the world’s average
A study showed that 70% of the Indian youth were unaware of the Skill India programme
Lack of high skilled labour in India could be the reason for lower labour productivity
India is said to have the largest young population in the world — more than half of the Indian population is below the age of 25 years. Although the abundance of young individuals guarantees the availability of reserve workforce in the economy, it does not guarantee the quality of skills this workforce would possess when included in the overall workforce of the country. The labour productivity of India is way below the world, this can be attributed to the fact that — as per International Labour Organisation (ILO) estimates the output per labour for India in the year 2018 ($5,672) is 77.45% lower than the world’s output — $25,151.
In the Union Budget 2019, the finance minister proposed to bring a new education policy which would focus on skill development among technology-intensive sectors such as —AI, Robotics and Big Data Education. The advent of such a proposal was predictably provided, a recent study on the employment scenario of India quoted — only a mere 3% of Indian engineering graduates have new-age technological skills in areas such as artificial intelligence, machine learning, data science and mobile development. Provided the deeptech industry in India is largely driven by the startups, promotion of such skills would help in filling up the shortage of workforce which is faced by the deeptech startups in India.
In order to improve the skill set of the Indian workforce an efficient and effective implementation of the program is required. Inferring from the history of skill development and education reforms in India, anticipating a successful implementation of the scheme looks uncertain.
The Half-Hearted Implementation Of Skill-India Scheme
The Skill India scheme was launched under the ambit of Ministry of Skill Development and Entrepreneurship in 2015, with a mission to train over 400 Mn youths of India in a wide range of skills. The purpose of the scheme was to train the youth and prepare them for the job market.
Although the government claims that the scheme was a success, a recent study by ORF concluded that 70% of the Indian youth were unaware of the scheme. The lack of awareness of such a scheme in a country where 62% of the population is in the working age group, highlights the failure in the execution of Skill-India scheme. This is a trend that can be seen in a lot of other schemes such as digitisation of Indian classrooms, and the launch of the national digital library. Failed execution of such schemes which were intended towards improving the skill set of the Indian workforce has resulted in the lagging productivity of Indian labour in comparison to its global peers.
Labour productivity: BRICS vs The World
Among the group of prominent developing nations (BRICS), only India and China have the output per worker below the world average. In the case of India, the output is 77.45% lower, whereas in the case of China it is 43.85% lower.
The growth rate of labour output for China is slightly ahead of India. The CAGR of labour output for India between 2014 to 2018 was 5.56% whereas for China the growth rate was 6.75%. In order to benefit from the young demographic of India, increasing the labour productivity of the country would be the only sustainable option. Given that the working age population of India will continue to shrink as the population ages further.
If this time, the government is serious about improving the skill set of the Indian workforce the awareness of such schemes needs to be improved so that participation from all sections of the society is possible. Successful implementation of such a scheme which promotes deep technology skill set such as AI/ML and Big data would not only enhance the overall labour productivity of the country but would also act as a boon for deeptech startups in India.
As per a study conducted by DataLabs, the scarcity of high skilled labour in India was one of the biggest hindrances in the business growth of deeptech startups operating in India. As per DataLabs by Inc42, between 2014 to 2018 the funding in deeptech startups made only a mere 1.45% of the total venture capital poured into the Indian startup ecosystem.
The dreams of India becoming a leading economy in the world can only be achieved if the annual GDP growth rate of the country is in the rage of (9-10)%. A recent study concluded that in order to achieve a sustainable annual GDP growth rate of India need to increase the labour productivity of at least 7.3%. The presence of deeptech across industries like banking, manufacturing, agriculture and others is quite prevalent these days in the context of the Indian economy. The enhancement of the deeptech sector in India can unleash a new wave of the industrial revolution where the collaborative participation of man and machine can help India leapfrog its per labour output above the world average, without disrupting the traditional job market across various sectors of the Indian Economy.