Vocational Education In India Key Challenges and New Directions

Vocational Education in India:Key Challenges & New DirectionsIntroduction 74

Opportunities in VocationalEducation 76

Challenges for the VET Sector 80

The Road Ahead: Key PolicyInitiatives 81

| Volume 03perspectiveVolume 03 / 2010a q u a r t e r l y r e p o r t b y

| Vocational Education in India: Key Challenges & New Directions74

IntroductionSince the opening of the economy in the early 1990s and the subsequent evolution of India into a knowledge-based economy, the demand for higher levels of specific skills has been constantly increasing. Availability of skilled manpower is a critical success factor for driving the services sector, which in turn fuels the development of a knowledge economy. To become a superpower in the true sense, India needs to have a huge base of skilled manpower. This is essential to match the ever growing demand of modern industries where services predominate over agriculture or manufacturing. It is in this context that vocational education and training assume greater significance.

Current Scenario in Vocational EducationWhat is Vocational Education?

According to the Team Lease Labour Report, 2007, ‘Vocational education can be broadly defined as a training program, which prepares an individual for a specific career or occupation’.

The key objective of vocational education is to help develop individuals’ skills in very specific fields by giving them applied or concrete experience in specific vocations or trades. This not only makes them employable but also helps create opportunities for entrepreneurship.

The incidence of higher education is very low in India because of the poor education infrastructure. As per the 61st round of NSSO (see Exhibit 1), the percentage of population that completed primary education was 70 per cent, but less than 10 per cent go on to complete a graduation course and above.

This huge drop-out rate is largely due to reasons ranging from accessibility to affordable education to low perceived short-term benefits, to household circumstances that demand immediate employment for the students. Driven by the urgency to start earning at a younger age, most Indians resort to acquiring employable skills informally in a trade that gives them very low income. This has resulted in a huge shortage of a skill-trained workforce in India.

The 61st round of NSSO further suggests that almost 97 per cent of individuals in the age bracket of 15–60 years have had no exposure to technical education, which is another indicator of low skills sets among Indians. The other mode of acquiring employable skills sets is by vocational education, and the numbers here, too, are not at all encouraging. The demographic pattern of the country indicates that close to a third of the population of India are young people in the age band of 15–29 years. Of this population, only 7 per cent have received any

Graduation & above

6 6

20

35

55

70

80

CompletedDiploma

CompletedHigher

Secondary

CompletedSecondary

CompletedMiddle

CompletedPrimary

AllLiterates

Education Profile of Indian PopulationExhibit 1:

Source: NSSO, 61st Round

(All figures in %)

No vocational training

Received formal vocational training

Received informal vocational training

Receiving formal vocational training93

24

1

Incidence of Vocational TrainingExhibit 2:

(All figures in %)



75Vocational Education in India: Key Challenges & New Directions |

form of vocational training. Further, of this 7 per cent, only 2 per cent have received any form of formal vocational training. As seen in Exhibit 2, according to the occupational profile of India’s workforce, 90 per cent of the workforce population is employed in skill-based jobs, whereas more than 90 per cent have not had any kind of exposure to vocational education or training.

Poor penetration of vocational education and training is not restricted to rural areas alone. It is also low in urban areas where there is a higher installed capacity to impart vocational education and training.

Soures of Vocational Education

Skills in India are largely acquired through two main sources: formal training centres and the informal or rather, the hereditary mode of passing on skill sets from one generation to the next. Formal sources are largely channelised through the mainstream education system, under the ministry of HRD, through training institutions outside the purview of school and university schemes and also through polytechnics which offer various diploma courses.

As the above table indicates, there is clearly little capacity for imparting vocational education in India. It is also an established fact that, of the total capacity available, the capacity utilisation is quite poor. This has actually led to a huge mismatch in terms of demand and supply for a skilled, trained workforce.

TotalUrbanRural

15-19 years 20-24 years 25-29 years

76

2

1

33

22

0.6


(All figures in %)

Incidence of Vocational Education and Training: Difference in Urban and Rural IndiaExhibit 3:

Vocational Education and Training In India

Type of Source Institute Capacity Quantity

Mainstream education System

Centrally Sponsored Scheme of Vocationalisation of Secondary Education run by the Ministry of Human Resource Development

Enrolling less than 3 percent of students at the upper secondary level

9,583 schools offering about 150 educational courses of two years’ duration

Training institutions outside the school and university systems

Industrial Training Institutes(ITIs) and Industrial TrainingCentres (ITCs)

Total seating capacity of 785,000

5,488 public (ITI) and private (ITC) institutions imparting VET, of which 1,922 are ITIs and 3,566 are ITCs

Diploma level Polytechnics1,244 polytechnics run by MHRD with a capacity of over 295,000\

1,747 AICTE-approved diploma programs with 294,370 seats

Exhibit 4:

Source: Knowledge Commission Report

Seats Utilisation - Technician, Trade and Graduate Apprentices

Technicianapprenticeship

Tradeapprentices

Graduateapprentices

Source: Annual Report 2002–03, Ministry of Labour, Govt. of India

Under utilisation

Fullutilisation

Overutilisation

Seatutilisationagainst sactionedstrength in ITIs

Source: FICCI Survey, 2006

(All figures in %)

(All figures in %)51

24 25

5970

22

Exhibit 5: Exhibit 6:Seat Utilisation in ITIs



Exhibit 5 makes it clear that more than half of the available seats remain unutilised, which is another reason for the mismatch in demand and supply for skilled workforce. Given the rate at which the economy and the youth population of the country is burgeoning, if the current shortfall is not met in terms of developing a more skilled workforce, we run the risk of high unemployment which would, in turn, adversely impact the fortunes of the country.

Vocational Education: Current and Future Market Potential

The current size of vocational education is estimated at US$ 1.4 billion and is expected to grow to US$ 5.8 billion, a CAGR of 15.3 per cent.

It is estimated that 90 million jobs will be created over the next five years, of which almost half (45 million) are expected in the services sector. Of these, an estimated 7-10 million are expected to be created in hospitality, healthcare, and modern retail alone. Of these new jobs, more than half would require some form of vocational training.

Opportunities in Vocational EducationIndia’s Education Market

India is emerging as one of the world’s largest consumers of education services with a target population of close to 450 million (in the age band of 5-24 years). This number is expected to increase to 486 million by 2025, exceeding the combined target population in China (354 million) and US (91 million). In India, public and private spending aggregates to approximately US$ 100 billion per annum and private spends on education have grown at a CAGR of 10 per cent since 1994. In fact, compared to other developed countries, private spends in India are relatively higher (4 per cent of GDP, as seen in Exhibit 8).

India’s economy has witnessed continuous positive growth, which has led to a huge demand for a workforce in India. Recent economic surveys show that employment growth has been the largest in the Services sector, and this trend is in all likelihood going to grow in the future. Also, technological product and service innovations have fuelled the demand for more skilled workers. This demand has not been met, due to unavailability and poor quality of skilled workers. There is a lack of training facilities and skill development in as many as 20 high-growth industries such as logistics, healthcare, construction, hospitality and automobiles. Exhibit 9 shows the split of people intake over the next 5 years (2008-13) by different sectors.

Growth In Vocational Education and Training (in US $ billion)

2008

1.1

2.9

5.8

2013 2018Source: Technopak analysis, Company websites, published articles

Exhibit 7:

Exhibit 8:

UK 5.0% 1.2%

2.3%

4.0%

2.3%

1.3%

4.8%

3.5%

3.8%

3.8%

USA

India

Russia

China

Public PrivateSource: National Bureau of Statistics of China, 11th Five year Plan (Govt of India), OECD

Education Expenditure as Percentage of GDP



India has roughly close to 5,500 public (ITI) and private (ITC) institutes as against 500,000 similar institutes in China. As against India’s 4 per cent formally trained vocational workers, countries like Korea or even Botswana have a 96 per cent and 22 per cent vocationally trained workforce respectively. This does lead us to believe that there are tremendous opportunities for vocational education and training in India. These opportunities favour the organisations willing to enter the vocational education market as well as the students wanting to take up vocational courses to increase their employability.

Initiatives Taken in Vocational Education and Training in India

Government InitiativesInterestingly, the highest growth rate is being witnessed in vocational education in India, growing at almost double the rate of the K-12 education segment. The Government, too, has realised the potential of vocational education and training and has listed it as one of the priority areas in its 11th five-year plan. As per the VET framework suggested by the government, VET had an outlay of more than US$ 1 billion. The Central Government has launched a mission on vocational education and skills development. It plans to set up more than 1,500 new ITIs and polytechnics, 10,000 new vocational schools and 50,000 new skill development centres across the country.

As per government’s plans, of the 15 million students who need vocational education every year, about 5 million students would be provided initial training by strengthening existing VET Institutions and setting up new VET Institutions. The remaining 10 million students would be trained through non-formal/informal mode. The Government also plans to encourage the participation of the private sector and NGOs in a number of areas such as improvement of facilities and resources of VET institutions/centres, development of skills/standards, training packages, competency-based curricula and instructional materials, conducting tests, and providing joint certification. It wants to take up the accreditation of private VET providers (schools, colleges, universities, industry and community organisations) for quality assurance and uniformity in skills development. On an average, the government has earmarked an expenditure of roughly US$ 104 per person for imparting training and certification through the private sector.

Private Players in EducationSince the VET segment of education is not regulated, profit-making is allowed. With no controlled fee structure and limited mandatory recognition (except for ITIs and polytechnics), it has received huge interest from private players. One of the biggest success stories of private players making it big is that of Educomp Solutions. Educomp started its operation in 1995 as a computer service provider to schools, and now operates along the entire range of educational services, from ICT to e-learning and additional learning resources, content development and teacher training, and is now aggressively moving into actual school management and services. This success is strongly reflected in the share price of the company where its market capitalisation has increased 14 times (US$ 104 million to US$ 1458 million) in just two years. Other players like NIIT, Aptech, Everonn and Jetking too have their own successful business models. It is not just

Exhibit 9:

Construction

Wholesale trade

Community Service

IT/BPO

Banking & Insurance

Hotel & Restaurant

Public Admin & Defence

Communication

Service

Manufacturing

Agriculture

14

3551

37.8

12.712.76

6

5.8

5.6

4.23.8

3.3

1.8 0.4

Job Creation Over the Next Five Years

Source: Talent for Services Sector, Boston Consulting Group and Technopak analysis

(All figures in %)People intake over the next 5 years = 90 million



the IT and ITES sectors that have seen an influx of private players. This trend is also visible, though limited, in sectors like aviation, hospitality, retail management etc.

Corporates’ Individual InitiativesAcross business sectors, companies and industry bodies are not only beefing up their in-house training facilities, but also developing initiatives to make potential employees job-ready even before they enter the organisation. Some key measures include:

Hiring of skilled labour from outside the country•

A leading infrastructure development conglomerate, DLF Laing-O’Rourke is planning to bring over »20,000 carpenters and electricians from West Asia for projects in India.

India’s largest private sector company, Reliance Industries is using 40,000 blue-collar workers from »abroad for its Jamnagar project.

Creating in-house training facilities•

Bharti Group has created Bharti Resources, its own training and development company. »

Wipro spends 1 per cent (capital expenditure costs not included) of its revenue on training 14,000 fresh »graduates a year over a period of 12-14 weeks.

Wipro launched ‘Mission 10X’ on Teachers’ Day: a non profit programme aimed at enhancing »employability skills of engineering graduates.

Based on the trends of employability in the industry, retailing, healthcare, banking and insurance, construction and hospitality sectors are the key emerging segments.

Current Need-gaps in Key Industries:

Retail There are about 1.6 million people employed in India’s organised retail sector and another 2-4 million new recruits are expected in the next 5 years. Almost 90 per cent of these are expected to be in front-end jobs where vocational training is most required. The current in-house capabilities and outside training institutes are not equipped to impart skills to this large number. The biggest skill-gaps exist in areas such as:

Sales and customer management•

Store maintenance•

Visual merchandising•

Exhibit 11:

Services Sector Market Size 2008(US$ billion)

Market Size 2013(US$ billion)

Additional DirectEmployment 2008–13

(million)

% Population Requiring Vocational Training

Retail 410 535 2 to 4** 90

Healthcare 40 80 3.5 to 4* 20

Banking and Insurance 28 47 3.35 80–85

Construction 71 114 18 30–40

Hospitality 23 39 1.6–2 65–70

*Doctors and nurses estimates of~2million jobs are not considered in this dataset ** Estimated only for organised retail Source : Technopak analysis, Industry sources

Manpower Requirements in Key High Growth Services

Private Sector Technical Institutes’ corporate in-house training (e.g. Tata, Infosys,

Reliance), Confederation of Indian Industries (CII), Federation of Chambers of Commerce and Industry (FICCI)

Non-Government OrganisationsEducation programmes in slums/rural areas, Religious groups

(sub-contracted to run MES and TECOS by state govts)

Exhibit 10:

Source: Company websites and published articles

Non-Government Initiatives



Merchandise planning•

IT (billing package, merchandise planning tool, bar-codes, etc.)•

Construction The construction industry can be classified into real-estate segment, which is growing at a CAGR of 30 per cent and infrastructure segment, which is growing at a CAGR of 15 per cent. There is therefore a need to mobilise manpower for these industries which are growing at a faster rate than the overall economy. The difference in skill-based manpower within the two segments is:

Real Estate: It needs a relatively higher number of designers, carpenters, plumbers, electricians, i.e., •semi-skilled professionals.

Infrastructure: There is a greater need for high-skilled professionals such as engineers, though the need •for semi-skilled workers such as supervisors, quality controllers, etc. is also significant.

Similar shortages of manpower and a requirement for skilled and trained workers are quite evident in other key growing sectors as well. In all, it translates into a big opportunity for private players to enter the vocational education and training segment to cater to the ever-increasing demand for skilled manpower. Since the government-installed capacity is neither adequate nor fully utilised due to a plethora of reasons, ensuring private participation in vocational education and training would ensure far greater success in responding effectively to the needs of the economy.

Developing Public-Private Partnership for VET in India

One of the guiding principles, under which PPP can be developed for vocational education and training, is the university township model. Under this model, the land for the training institute is made available by the government, the infrastructure and operations are managed by a private player and the funding is provided by setting up a corpus of funds or grants by private players, alumni and donors. This not only helps in imparting international standards of high-quality education but also helps in providing the right mix of desired skilled workforce.

Land Infrastructure, Operations Funding

Government Private Player

Private Players

Alumni

Donors

•Land made available by Government•Same stature as Harvard / Kellogg•Focus on research and development•Create funding through corpus and endowments

Salient Features

•Brand-building for generations•Imparting international standard high-quality education•Create institution to attract talent and location of business

Opportunity

•Land: 500–700 acres•Number of graduates: 15,000-17,000 by end of 10 years•Funding through corpus built by corporate donors and investors•Capex (excluding land): US$ 312 million

Investments

Exhibit 12:

University Township Under PPP



Challenges for the VET SectorThough there is a growing demand for vocationally trained workers, the segment per se has not really picked up in India because of a variety of reasons.

Current Infrastructural Facilities and Poor UtilisationThe Kothari Commission on Educational Reforms, 1966 had visualised that 25 per cent of students at the secondary stage would opt for the vocational stream by the year 2000. However, the actual implementation of the plan has turned out to be quite poor. Less than 7,000 schools have received grants and at present only about 5 per cent of children in the 16-18 age group are in the vocational stream. Compared to India, these figures are far higher in not only developed economies but in some developing economies as shown in Exhibit 13.

More recent information suggests that the enrolment figure is less than 3 per cent of the students attending Grades 11-12. The weighted average capacity utilisation of the schools receiving grants is less than 50 per cent. This implies that the 350,000-400,000 students enrolled in vocational education comprise 3 per cent of the 15 million students or more in Grades 11 and 12. Thus, what it eventually means is that less than 1 per cent of students who had entered Grade 1 over the last decade or so would have eventually participated in vocational education. It is also widely recognised that the existing student capacity in ITIs/ITCs largely goes unutilised.

Societal PressuresHistorically, social stigma has been attached to vocational education and training as manual or industrial jobs were perceived as low paying and meant for low-caste communities. Largely because of this, students who completed their higher secondary education were more inclined towards academic or professional courses. Due to this attitude, the vocational education and training segment has suffered from poor enrolment.

Training of TrainersGood trainers have always been an issue with vocational education in India. Because of societal pressures, the segment has failed to attract good mentors. Teachers in general are poorly paid in India and the salaries of teachers in VET have been at the lower end of the spectrum. In many cases, in rural polytechnics or technical institutes, the teachers themselves have had only basic education.

Revision of Existing Curricula and Introduction of New CoursesIn some states, the course curriculum has not been updated for 20 or more years, so even if students have completed VET qualifications, they may not be employable in modern industry. Due to the transition of the

Exhibit 13:

Country Secondary Enrolment Ratio No. of Students (’000s)Vocational–Technical Share (per

cent of total secondary enrol-ments)

Russia 88 6,277 60

China 52 15,300 55

Chile 70 652 40

Indonesia 43 4,109 33

Korea 93 2,060 31

Mexico 58 – 12

Malaysia 59 533 11

South Africa 77 – 1

Source: World Bank Report

International Comparisons on the Size of Vocational–Technical Secondary Education



Indian economy from being agriculture-based to knowledge-based, it is all the more imperative to have new and revised courses which fulfil the requirement of modern industries. Of the trained candidates, the labour market outcomes as seen from placement/ absorption rates are reportedly very low. An ILO study done in 2003 reports that in the states of Orissa, Andhra Pradesh and Maharashtra, the percentages of graduates found to be in wage employment/self-employment upon graduation from ITIs were 16.2 per cent, 41 per cent and 35 per cent respectively. The corresponding percentages for those graduating from ITCs were 21.3 per cent, 22.8 per cent and 35.6 per cent respectively.

Inflexible ApproachThe current framework requires minimum qualifications, varying from Class VII-XII, for participation in formal vocational training. While this may be necessary for certain trades, it is unnecessarily restrictive in others. Additionally, once an individual leaves mainstream education for vocational training, there is no provision for him/her to return to the former at a later stage. This not only encourages a general view of work and study being mutually exclusive options, it also increases the perceived risk of taking up vocational training. Moreover, there is not enough emphasis on short training courses designed to impart specific skills. Vocational education and training in India rely exclusively on a few training courses of long duration (2-3 years) covering around 100 skills. In China, on the other hand, there exist about 4,000 short-duration modular courses which provide skills more closely tailored to employment requirements.

Association with IndustriesWhile there exists a provision for the participation of industry representatives/experts in the setting of curriculum and hiring of apprentices, there is still a significant mismatch between industry skill requirements and the talent pool emerging from ITIs/ITCs. This has contributed to low success in the labour market for VET graduates. The private sector largely undertakes in-house training programmes but training to outsiders is very limited, restricted to catering to their own felt needs in the nature of captive skill development. This is largely because of the fear of losing trained skilled workers to competition which has resulted in constant shortages in private investment in this area.

The Road Ahead: Key Policy InitiativesEncouraging Public–Private PartnershipThe central government too has realised the importance of industries in the creation of a suitably trained workforce for the country’s labour requirement. The DGET (Directorate General of Employment and Training, Ministry of Labour) initiated a pilot programme ‘Formation of Institute Managing Committee (IMC) for ITIs’ in 1998 in collaboration with the Confederation of Indian Industry (CII) to improve cooperation between Industry and ITIs. Under this concept, Industry is associated as partners rather than advisors. An IMC is formed at the ITI level, which manages some of the activities of ITIs. An IMC comprises members from State Government, Industry, ITI and others. The chairperson of the committee is a representative of the local industry. This committee works under the supervision and control of the Steering Committee, formed at the state level. The concerned State Secretary in charge of the vocational training at state level is the chairperson of the Steering Committee. The IMCs have already been formed in 515 ITIs in 28 states. Major benefits from IMCs are active participation of industry, organising campus interviews, arranging on-the-job training and industrial visits, training and development of faculty, vocational guidance and counselling, better upkeep of equipment, resource generation and utilisation by the ITI itself.

Upgradation of 500 ITIs into Centres of Excellence (CoE)A scheme for upgradation of 500 ITIs into CoE to produce world-class technicians has been launched by DGET. Already, 100 ITIs have been chosen for upgradation from domestic funding while another 400 are proposed to be taken up under a project with the World Bank’s assistance for which negotiations are taking



place. Multi-skill modular courses with active participation of industry are being introduced for different industrial sectors. The industry would also be involved for testing and joint certification.

Skill Development InitiativeTo fulfil the budget announcement of 2005–06, a scheme-‘Skill Development Initiatives’-to train 1 million persons in 5 years and thereafter 1 million every year is being taken up with a Public-Private Partnership model. It is envisaged to utilise available infrastructure with spare capacity to impart skill training to these persons.

National Mission for SkillsThe Prime Minister announced the setting-up of the National Mission on Skill Training in his speech on Independence Day, 2006. The Ministry of Labour and Employment accordingly has undertaken the task of setting up a ‘National Mission for Skills’ under its control for a period of 5 years initially so as to ensure that envisaged targets are met and the workforce is equipped with the necessary skills to be competitive in the world economy.

AuthorsLuv Jasuja, Principal Consultant | [email protected] Kashyap, Senior Consultant I [email protected]

Vocational Education In India Key Challenges and New Directions

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