Prime Minister launches SKILL INDIA

Make in India is Skill-ing India

A couple of days back , PM Shri Narendra Modiji launched this scheme

Some 20 odd Central Government Ministries / Departments are engaged in this effort

Many State Governments are joining forces to impart Skills Training to millions of Indian Youth

As to the number of youth planned to be trained , following figures are reported :

400 million by 2022

Creation of a pool of 500 million skilled youth by 2022

Exportable surplus of 40/50 million skilled youths

Major burden for this Herculean effort will be borne by some 11,500 ITIs ( Industrial Training Institutes ) , with a combined intake capacity of 1.6 million students per year ( most have 2 / 3 year courses )

An intake of barely 140 students per ITI per year !

But Skill India program is talking of imparting skills to some 60 million youth every year , for the next 7 years !

That would require some 4,40,000 ITIs , altogether !

Now , assuming that setting up a full-fledged ITI , would require an investment of Rs 1 Crore , we are talking of a fund of Rs 4.4 lakh*crores !

Governments ( Central + States ) don’t have that kind of money

Nor will banks lend that kind of money to anyone to set up an ITI , without assurance of adequate returns ! Banks are already bleeding with NPAs amounting to Rs 4 lakh*crores and begging the Central Government for re-capitalization !

There are two sources from where this kind of money can come from

These are :

100 % FDI in ITIs

Black Money Channelizing in ITIs

To encourage Black Money to flow into this most productive and beneficial use , we must come out with an Amnesty Scheme for such investments thru SPVs.

And , whether the investment came through 100 % FDI or thru Amnesty Scheme , the income from operating an ITI , should be made tax-free for 20 years

Nothing short of an ” Out of Box ” thinking will help !

If this suggestion is implemented , I see following consequences :

FDI INFLOW IN SERVICE SECTOR

   There will be a huge inflow of FDI from Foreign Investors , who , today
   earn 2 % from their bank deposits . Their investment in an Indian ITI , 
   can earn them , may be , 10 %  - and tax-free !

UPGRADING OF TECHNOLOGY

  Instead of finding ( in our present ITIs ) , a 20 year old lathe , we will 
  see most modern machines / technologies in these new ITIs
  This will tremendously raise the Skill Level of graduating students - the
  kind of skills which will enable students to find jobs abroad

JOB CREATION

  We should , simultaneously amend the Apprentice Act - 1951
  Under the amended Act , every factory will be required to take fresh 
  Apprentices in the ratio of 1 : 3 ( one trainee for three permanent 
  employees , in each trade ) , instead of current prescribed ratio of 1:7

  This will create a huge demand for ITI trained students

COST REDUCTION

  Since ITI trained apprentices are paid a stipend ( generally 20 % of the
  wages paid to regular / permanent / skilled workers ) ,  this will sharply
  reduce the manpower costs of manufacturing units 

 This will lead to India becoming a " Low Cost Economy " and increase the
 competitiveness of our products , in the international markets , thereby
 boosting our exports ( currently , a meager 1.7 % of World Trade ! )

 This is the major reason why Foxcon ( Taiwan ) wants to put up 10
 factories in India , at an investment of $ 20 billion 

ADVANTAGE , MSME

 Under amended Apprentice Act , permit MSME to retain ITI trained skilled
 workers , on a stipend-basis , for 4 years ( instead of current 2 years )
 This lowering of wages will make MSME very competitive in their cost.
 In turn , this will encourage large organized factories to outsource / 
 sub-contract more components to MSME , instead of manufacturing 
 in-house

 This will result in a robust " Supply Chain Eco-System "

 It is such an Eco-System in China , which compels Apple to have 331 
 Component-Suppliers in China as against ONE supplier from India !

PRODUCT QUALITY

 Product quality depends upon quality of skilled manpower coming out of
 ITIs
 When lakhs of ITIs are competing with one another for attracting 
 students , each will try to raise the quality of its training
 When such highly trained students enter work force , quality of  " Make
 in India " products , is bound to rise

PERCENTAGE OF SKILLED WORKERS

 Of the total work force , percentage of skilled workers in India today , is
 meager 3.5 % , as against 96 % in South Korea  !

 If my suggestion gets implemented , we should be able to raise this
 figure to at least 50 % in next 10 years !

DEMAND FOR TEACHERS

 There will be a huge surge in demand for Highly Skilled persons to act as
 teachers / trainers  in 4.4 lakh ITIs   

SELF EMPLOYMENT

 MUDRA bank will provide loans to ITI trained skilled workers to set up 
themselves as local area Carpenters / Electricians / Plumbers / Welders /
Masons / Repairers etc

Thousands of ITI trained workers will tend to become Self Employed

You will be justified in asking :

” How do we know that your suggestion will transform India’s Unskilled
Youth into a Demographic Dividend ? ”

All I can say is :

” Luck happens when preparedness meets opportunity . If we prepare
ourselves , opportunity will arrive , sooner than later ”

hemen parekh
18 July 2015
B2BmessageBlaster

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