Indian Government is all set to alter its financing model in order to make employees more polished in terms of their employability skills. The decision is promised for the betterment of employees. The employees in the private sector will be encouraged to take up in- house training, as it is done globally. The costs will be reimbursed from a central fund.
What is the present situation?
At present, employability skills training in India is largely taken upon by the government with only 36% of companies conducting in-house enterprise-based training. Whereas, 86% firms in Germany, 85% in China, 52% in Russia and 51% in Brazil and Mexico provide employability skills themselves. A remodelling calls for an urgency because the current financial model has not produced an adequate number of trained youth. Also, the quality of training is often poor and does not match the employability skills which are required in the industry.
Remodelling the situation
A senior government official told ET that the financing model being considered by the skill development ministry is the “reimbursable industry contribution” (RIC) model, which is successfully running in 62 countries.
“There will be a dedicated training fund generated by either levying taxes or from mandatory corporate social responsibility contribution from each employer, with the government matching industry contribution to creating a robust fund exclusively for skills training,” the official added.
Under this model, companies that use dedicated funds for vocational education and training (VET) can be reimbursed the cost based on the training done, which can either be in-house or purchased from accredited vocational training partners.
According to the official, RIC would be applicable to any registered private or public enterprise employing at least 10 people. “However, employers in consultation with the sector skills council will have to mandatorily submit its requirement of skills and annual training plan for reimbursement in the RIC framework,” the official said, adding that the reimbursements would be linked to incremental improvement from the baseline and not on the absolute training capacity.
At present, general tax revenues are used to fund public and private training providers. Another variant of financing skill development from general tax revenue is tax deduction of 150% of the expenses incurred on skill development programmes by the enterprises. The government funds all the pre-employment training in India for every pillar of the VET ecosystem. This includes the human resources development ministry funding vocational education at the secondary school level and the skill development and entrepreneurship ministry financing training under ITIs.
As Prime Minister Narendra Modi’s Skill India Mission aims to make India the human resource capital of the world by imparting skills to 50 crore youth by 2022. Let us see what outcomes this remodelling brings to us.
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