How AP can create a model for Skilling India

To compete on a global stage, Andhra Pradesh needs direct upskilling policies such as Apprenticeship schemes that combine vocational education with work-based learning

When India found itself in 103rd position in the World Economic Forum ranking of 130 nations on the preparedness of talent, it was just another indication of the skills challenge. 
In just five years, the Government’s Skill Gap Analysis Report estimates that an extra 40 crore workers need to be skilled, re-skilled or upskilled. The current official estimate is that slightly more than half a crore people are being trained annually. With COVID, the numbers have spiked!
Mansi Arora, Rajesh Chakrabarti, and Kushal Sagar Prakash from Sunay Policy Advisory have undertaken an analysis of three skills policies. 
In Andhra Pradesh, the skills challenge is clear: more than 97 per-cent of the 21 lakh individuals expected to join the workforce between now and 2022 will be totally or partially unskilled according to the National Skills Development Corporation. 
To meet demand, Andhra Pradesh needs to skill about half of its workforce entering the labour market by 2022, or 10.5 lakh people 
Andhra Pradesh has undertaken an integrated skilling initiative, and the AP State Skill Development Corporation (APSSDC) has been established during N. Chandrababu Naidu’s Chief Ministership in 2014 as a public private partnership (PPP), with the hope of skilling two crore people in 15 years. 
The new research can help policy-makers by focusing on one important question: what is achieved with each additional rupee spent by AP on each skills policy? 
The first policy examined is the provision of loan assistance to small and medium enterprises (SMEs) to encourage expansion and job creation. This may seem a roundabout route to upskilling, but as a powerhouse of SMEs (like many Indian states), Andhra Pradesh can create jobs by supporting their growth and development. 
Research suggests that every rupee of loan will increase SME profit by about 0.89 rupees. Factoring borrowing costs, administration fees and default rates, it costs 16 rupees for every 100 rupees loaned. The researchers conclude that each rupee would generate benefits to the economy worth 5.6 rupees — a solid return on investment. 
But to compete on a global stage, Andhra Pradesh needs direct upskilling policies. One approach studied is apprenticeship schemes that combine vocational education with work-based learning. For the employer, the cost is ₹1.5 lakh, including salary, supervision, training, and administration. 
The government spends another ₹0.2 lakh reimbursing employers, and on marketing. The individual misses out on about ₹0.16 lakh in income during the apprenticeship. The total cost to everyone involved for one apprenticeship is approximately ₹1.9 lakh. 
The employee receives a substantial income increase over their working life, worth about ₹11.2 lakh. The employer benefits to the tune of ₹2.2 lakh, by having a more productive and job-ready workforce, increased revenue, and savings from having to recruit. 
Total benefits are ₹13.4 Lakh. Every rupee, therefore, spent on a year-long apprenticeship program is worth 7.2 rupees to the Andhra Pradesh economy. This is even stronger than supporting SMEs in generating societal benefits. 
Finally, the researchers look at expanding the current vocational training program to incentivise more people to join. This is job-specific, technical and hands-on. A similar analysis is undertaken: this time, the cost for each apprenticeship, both public and private, is about ₹46,000. 
The results are marked: an individual will earn ₹7.2 lakh more over their lifetime. (This accounts for expected income growth as well as changing workforce participation and unemployment). 
The analysis reveals that benefits to society are 16-times higher than the costs. Spending one rupee to generate 16 rupees in benefits to society is a very compelling investment. 
This research highlights the strong case for Andhra Pradesh to invest more in expanding access vocational training programs and the need to study the costs and benefits of skills policy options across India. 

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