BUDGET 2024| Senior Economist Santosh Mehrotra on skill development and govt initiatives| Oneindia

7 months ago

In an interview on One India with Pankaj Mishra, senior economist Santosh Mehrotra shares insights into India's vocational education and skill development. With his expertise shaping frameworks, he anticipates enhanced allocations and initiatives for employment and skill development in the interim budget. His pioneering work on poverty criteria, shaping government policies, prompts anticipation for budget strategies targeting poverty alleviation, especially in rural and extremist-affected regions, reflecting Mehrotra's profound influence on socio-economic policy.

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Transcript

00:00 Hello and welcome. You're watching this special broadcast on One India and Good Returns. The day

00:06 has arrived when the all-important interim budget will be presented by Finance Minister Nimra

00:13 Sitaraman and it's our honor to be joined by Professor Santosh Mehrotra, a senior economist.

00:19 Professor Mehrotra, thank you so much for speaking to One India and Good Returns.

00:23 Thank you. Thank you for inviting me.

00:26 Sir, you know, talking about the vast and extensive experience that you have

00:34 in drafting key frameworks for vocational education and skill development in India,

00:41 what are your expectations, if I may ask, in these sectors from this interim budget?

00:47 I have to say, Pankaj, that my expectations are very significant, but I fear that those

00:56 those expectations are unlikely to be realized, because the government is far too focused on the

01:04 elections. But, you know, so at best one can tweak certain things. You know, the biggest thing that I

01:14 would expect at the current juncture is if industry could be better encouraged to engage in vocational

01:23 education and training, I wouldn't necessarily expect the government to allocate more money,

01:29 but at this juncture just to allocate the littlest bit which would bring

01:37 an employer and industry engagement in skill development. It's not enough.

01:44 Every country in the world, Brazil, China, Germany, Korea, countries which have very robust

01:55 vocational education and training systems, they have very, very active employer engagement in the

02:06 pre-employment training system. And in addition, they have very active apprenticeship systems.

02:15 Now, despite the existence since 1961 in our country of what has been called the Apprenticeship

02:24 Act and a very welcome change or amendment in the Act carried out by this government in the last

02:34 eight or nine years, there has been some increase from a quarter of a million apprentices to about

02:40 half a million apprentices in the country. But that still is a fraction of the number of apprentices

02:48 the country needs. So my ideal expectation, if you ask me, Pankaj, my ideal expectation would be,

02:56 you know, they should really make apprenticeship into a right of every young person.

03:04 Because young people are not being able to join jobs despite their, and because they have very

03:13 poor employability skills, because the pre-employment training is not preparing for

03:19 them for the labor market and the labor market is very tight, very tight despite an economic recovery.

03:25 Absolutely. No, you're right when you say that, you know, the young workforce should be

03:34 well prepared, not just mentally but also skill-wise. Do you believe, Professor Mehrotra,

03:40 that, and I'm just asking you this as a curious parent also, that it should, the apprenticeship,

03:48 or for that matter, skill development, should start somewhere from the schooling days also.

03:52 Is it possible, there are lots of talks about NEPs which involve the involvement of languages,

03:58 but why not maybe try this capacity building program here?

04:02 No, we already have it, Pankaj. Since class, since 2014, we had made sure that when we wrote the base

04:12 document of the National Skills Qualification Framework for the then Ministry of Human Resource

04:18 Development, we provided for an option of vocational education course being taken up by a

04:26 youngster who makes the transition into secondary, meaning into class nine. So, nine, ten, eleven,

04:33 twelve, you have had for the last nine years vocational education option. My ask would be of

04:43 the government that it should become a stream. What is a stream? For instance, in China,

04:50 vocational is a stream while general academic is an alternative stream. So, after completing,

04:57 yeah, so for instance, after completing nine years of general academic compulsory education in China,

05:05 children take an exam and then half of them get streamed into vocational and half

05:12 remain in the general academic and believe it or not, yeah, believe it or not, the vocational

05:19 children actually receive a stipend which the general academics do not when they enter the

05:27 senior secondary. So, in other words, the vocational is actually incentivized. That's

05:34 why they have such a skilled labor force, Pankaj. It's very important for our government to recognize

05:40 that our young are, I think the ASAR report has every year repeatedly informed us that our

05:48 children are not learning enough and therefore if they are poorly skilled as well, then why do you

05:55 expect them to be employable? It's absolutely critical that we begin to offer them a stream

06:02 and we bring employers into the school system. So, it's not that we don't have it.

06:07 So, 20,000 schools at the secondary level already have it,

06:12 but it's not of the quality that we want because we will get quality only with employers engaging.

06:20 True, true. You're right. I mean, those skill development centers that popped all across the

06:29 country, I mean, we saw a lot of them in Delhi as well and still need to go back from the drawing

06:36 board and see what results it has fetched. Talking about, you know, this was the job aspect of it

06:42 and employability, talking about poverty alleviation. Now, this is something that has

06:50 been finding its mention again and again since the time I started watching the budget and started

06:57 understanding it a little bit. You know, what is your view on the poverty alleviation strategies

07:09 that the government has employed or plans to employ maybe in the rural and extremist infested areas?

07:21 You see, the one thing that will alleviate poverty is new non-farm jobs. In the rural areas,

07:34 there are far too many young people who have gotten better educated and they are still stuck

07:41 in rural areas and still stuck in working in agriculture when that's not their first preference.

07:50 Young girls have also all gotten much better educated and their expectation is that they

07:57 will move out of their rural homes into urban locations, into jobs, into services and industry.

08:03 However, non-farm jobs have not been growing. Would you believe it, Pankaj, that in the last

08:11 three years, beginning April of 2020, 60 million workers were added to agriculture within the last

08:20 three and a half years. The periodic labor force survey of the government itself

08:28 shows this beyond a shadow of doubt. The share of agriculture in total employment

08:36 has actually gone up instead of coming down. This is the opposite of the structural change we

08:44 want to see in the economy. Please remember that from 2004 to 2019, you know, absolute numbers in

08:56 agriculture were falling. What we've seen is the opposite happening in the last three and a half

09:02 years and therefore, you know, you can alleviate poverty in the rural areas only by pulling workers

09:09 out of agriculture into non-farm jobs and those non-farm jobs are not growing at any way

09:15 required or the rate required because 50 to 60, so five to six million young people join the labor

09:28 force every year. In addition, there are millions to be pulled out of agriculture. In addition,

09:33 there are the stock of unemployed of about 37, 38 million. So, you are not going to get

09:41 rural demand growing in the absence of non-farm job creation because only then will real wages

09:51 begin to increase. I have shown in my recent work that real wages have actually stagnated

09:57 in the last six years. So, how do you expect poverty to decline? The reason why poverty fell

10:03 very dramatically, I'm talking about income poverty, it fell dramatically between 2004 and 14

10:11 by 140 million people rising above the poverty line. What the reasons were essentially twofold.

10:23 One was non-farm jobs being growing very fast, especially in construction workers were pulled

10:30 out of agriculture. The absolute number of workers in agriculture began falling for the

10:35 first time in India's history and because of that, the labor market in rural areas tightened

10:42 partly also because Manrega raised demand for work in rural areas. So, that also raised incomes.

10:50 So, labor market in rural areas tightened that raised open market wages. It raised open market

10:58 and that had a knock-on effect on open market wages in urban areas. So, the combination of

11:05 new non-farm jobs and the rise in rural wages across the economy, sorry, the rise in wages

11:11 across the economy, rural and urban, that's the reason why poverty fell in such dramatic terms.

11:18 Income poverty fell in dramatic terms. We've had neither of the two trends showing up in the last

11:25 six or seven years. Well, that's a critical aspect I would say that has been a miss and I'm sure,

11:33 you know, the policymakers and those who would be taking a close look at it must factor this also.

11:46 Professor Mehrotra, in the beginning, you rightly mentioned that elections are around the corner

11:52 and my final question to you would be, time and again, five years we have these looks of our

11:59 elections and a lot is, you know, on the stakes as they say are very high each time. Where to

12:10 from here? I mean, there are lots of things, there are lots of boxes to be checked but if I had to

12:16 ask you three crucial aspects that the government must focus on, what would you list there?

12:22 See, Pankaj, we are at a very crucial juncture in the evolution of the Indian economy. I don't think

12:32 it is recognized sufficiently in government that for our demographic dividend to be realized,

12:39 for us to take advantage of this once in a century opportunity, once in a lifetime opportunity

12:47 in the life of our nation of the dividend which can actually raise incomes if we provide jobs.

12:59 I don't think this is sufficiently recognized. So, which means the topmost priority has to be that

13:08 total investment to GDP ratio rises. That's what creates new jobs. Now, the unfortunate

13:16 part is that this government inherited an investment to GDP ratio of 31% in 2013-14.

13:26 In the last 10 years, in no fiscal year has the investment to GDP ratio reached the level of 31%.

13:38 It actually fell all the way to 26%. It is now down, increased to 29.4%. So, that's not good

13:47 enough. You can see that capacity utilization in the industry is now around in the region of 74%.

13:56 That's not still good enough for new investment, private investment to happen. So,

14:03 government is trying to stand in for private investment. It cannot suffice because most of

14:09 the investment in the economy is the private sector. And FDI is in the last analysis,

14:17 despite the gross numbers, the fact of the matter is that in none of the 10 years of this government,

14:24 the FDI to GDP ratio has exceeded 2% in none of the years. So, absolute numbers don't matter so

14:32 much when the economy is already quite large. What matters is how much is FDI as a proportion

14:40 of total investment. And then it must be in new greenfield sites, not in brownfield sites, meaning

14:49 they take over existing firms. That's the other problem. So, you have two levels of problems.

15:00 Another side of this capital flow, if the Indian investors not finding the opportunities

15:10 within India are taking money abroad, they're investing abroad. So, the net FDI into India is

15:18 not as much as is made out from the gross FDI number that the government spokespersons normally

15:24 talk about. Right. Well, definitely, it's a tightrope walk, I would say. And needless to say,

15:36 for factors such as these, as you mentioned, more than just a cursory glance on this budget as an

15:44 interim budget would be required. Professor Santosh Mehrotra, thank you so much for speaking

15:49 to us. Lovely learning from you. Lovely hearing you. And we wish you all the very best, I think,

15:57 in the short while from now the budget will be on. So, thank you so much for speaking to us.

16:02 Thank you very much, Pankaj. Bye-bye. Bye, sir.

BUDGET 2024| Senior Economist Santosh Mehrotra on skill development and govt initiatives| Oneindia

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