Skills, Firms and the State in India: Securing Development or Perpetuating Inequality?

The reform of skill development has attracted considerable attention from policy makers in India in recent years, for example in the formation of the National Skill Development Council to coordinate skill development and various public-private partnership initiatives on skill formation. Skills are considered key in economic development and in reducing inequality, and the policy changes in India are in line with strategies elsewhere: skill formation and upgradinghas assumed a critical role with increased global competition, either as a means to retain competitive advantage by industrialised economies or to upgrade by emerging economies.The role of skills policies is particularly emphasised in new industrial regions that are developing in order to attract industry, especially multinational firms. This paper examines the policy shift in skills development in India as evidenced in the National Skill Development Policy 2009. While the government has put forward an integrated and holistic policy, underpinned by the insight of the skills ecosystems literature, this paper argues that the new policy faces severe challenges in a context of fragmented institutional skilling structure and unequal capital and labour relations.

India has witnessed an impressive increase in GDP growth over the last two decades. At the same time, it is undergoing a demographic shift i.e. an increase in the share of working-age population in total population. With a working age labour force of 431 million (those aged between 15 and 59 years) in the total labour force of 470 million (NSSO 2009-10), the challenge is employment creation and skillsupgrading of the existing as well as growing workforce. The National Skill Development Policy 2009 set a target of 500 million to be skilled by 2022, with the Twelfth Plan (2012-17) target of skilling at least 50 million people by 2016-17. Indeed the fear is that if the skills challenge is not met within the next decade, India may not be able to sustain growth and it may leave large numbers among the increasingly youthful labour force unemployed with all its attendant negative implications for equality and social cohesion (Mehrotra et al. 2013).

The Indian case raises two important questions. First, why has skill formation not reduced inequality despite a focus on skills by the post-independent developmental state? Second, can India remain competitive through its existing patterns of skill formation? The paper sketches the predominant national skill pattern and formation in India. It examines skill formation in a new industrial region that is specifically inserted into global production network and often associated with skill development and/or overflow by mobilising the concept of skill ecosystems (Finegold 1999). The paper argues that while education and skills are important in securing justice and equality, the policy focus on skills does not take into account power relations in the labour market and the structures and incentives/constraints it provides to various actors, especially in shaping firms’ strategies. No matter how comprehensive a policy, it is unlikely to succeed unless unequal power relations in the labour market are addressed.