Home >Politics >Policy >Skills ministry plans to raise $460 mn from World Bank
Under the apprenticeship programme, students get trained on the shop floor of factories. Photo: Pradeep Gaur/Mint
Under the apprenticeship programme, students get trained on the shop floor of factories. Photo: Pradeep Gaur/Mint

Skills ministry plans to raise $460 mn from World Bank

Funds sought for enhancing apprenticeship schemes and create more skilled manpower for manufacturing sector

New Delhi: Despite missing its 2014-15 skill development target, the cash-strapped skill development and entrepreneurship ministry is looking to raise about $460 million from the World Bank to enhance apprenticeship schemes as India wants to create more skilled manpower for its manufacturing sector, said two government officials who wished to remain unnamed.

“The skills ministry is pushing for World Bank funding to scale up some of its activities keeping in mind the ‘Make in India’ mission and the manpower required for it. The ministry has already given a presentation to the department of economic affairs (DEA) in the finance ministry on this," said one of the two officials. A ministry needs to go via the DEA to raise so-called soft loans, or loans bearing an interest rate below the market rate, from the World Bank.

“Yes, it is under way," said skills secretary Sunil Arora. Besides funding the schemes, the corpus will give a leg up to the cash-strapped skills ministry, currently working on a shoe-string budget.

Several ministries currently have their own allocations for skill development, but the newly created skills ministry does not have much in hand— 1,500 crore for the Pradhan Mantri Kaushal Vikas Yojana and a few hundred crores more that it was supposed to get from the labour ministry after two departments were moved from the labour ministry to the skills ministry.

Skills minister Rajiv Pratap Rudy had said on 31 March that the country would need around 5 trillion in the next five years. The second official said $460 million (around 2,950 crore) will help the ministry scale up the apprenticeship schemes as the government aims to increase the apprenticeship seats from less than 300,000 last year to more than 2.2 million over the next five years.

Besides, it also aims to fund half the cost of apprenticeship training for those who get trained at small factories. Under the apprenticeship programme, students get trained on the shop floor of factories.

At present, China has a 47% skilled workforce, Australia has 60%, Japan has 80% while the UK and Germany have 68% and 74%, respectively. In contrast, India has less than 5%, according to the skills ministry. India has a 470 million-strong labour market and some 13 million people enter the market every year.

The first government official cited earlier said the ministry hopes to get the funds as the department of training has achieved good progress under another World Bank-funded project. “Though the proposal has not reached the World Bank yet, we believe it will get through once it reaches them and this is based on our past performance," the official said.

The directorate of training and employment raised $280 million from the World Bank in June 2007 under the vocational training improvement project. The project was initially slated to be completed on 31 December 2012, but was extended to 30 September 2015.

According to a report prepared by the World Bank, the progress of the project was “satisfactory". As of 17 April 2015, at least 60% of those passing out of the Industrial Training Institutes, or ITIs, are getting employed, as against 32% in 2007 when the project started, the report stated.

Sharda Prasad, a former director general of employment and training, said that as the government is on the verge of completing the 2007 project on improving vocational training, it may be going for a second round of funding. Such loans have many benefits, including a long (35-year) repayment window and no interest rate attached to them—just a 0.5% service charge, he added.

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