India needs a data-driven strategy to plug skill development gaps
India’s rapidly growing youth population is a double-edged sword for its economic aspirations. While the demographic dividend presents a tremendous opportunity for growth, capitalizing on it calls for equipping the workforce with skills in line with the changing demands of the global economy. World Bank data shows a concerning trend: India’s labour mobilization rates have fallen from over 70% in 1990 to 56% in recent years.
This represents an alarming weakness in India’s economy and threatens to undermine its demographic advantage. As India strives to position itself as a global economic powerhouse, its ability to transform this demographic bulge into a true dividend through targeted skill development and labour market reforms will be critical. A skilled and educated workforce is critical for increasing productivity, fostering innovation and attracting investment, all of which in turn contribute to enhancing national competitiveness.
An analysis of the Periodic Labour Force Survey (PLFS) data provides more insights. The data shows that workforce growth rates vary across skill levels, offering an insight into the changing composition of India’s skilled workforce and its implications for overall competitiveness. It also showed a disturbing trend: a declining growth rate of highly skilled individuals (skill levels 3 and 4).
Between 2017 and 2022, the growth rate for these skill levels fell by more than 5 percentage points in at least 22 of India’s 36 states and Union territories. States such as Sikkim, Karnataka, Nagaland, Uttar Pradesh, West Bengal and Goa have had an over 10-point fall in the growth rate of their highly trained workforce. On the positive side, the semi-skilled workforce (skill level 2) has grown
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