Economic Survey 2024-25 calls for focus on skills, education to maximize India's demographic dividend

NEW DELHI: A strategic plan for skills and education is essential to leverage the demographic dividend and achieve the 'Viksit Bharat 2047' goals, said the Economic Survey, advocating early vocational training to enable a smooth transition from learning to the job market.

A robust future road-map must prioritise industry-academia partnerships, continuous skill development, and flexible learning models to create a globally competitive workforce, said the Survey, adding that several key areas require focused attention and strategic intervention to achieve this vision of a robust skilling ecosystem.

The Economic Survey 2024-25 which was tabled in Parliament on Friday flags that a key challenge in the skill landscape is the prevalence of low-skilled workers, which is attributable to the quality of educational outcomes across different levels of education.

"Low educational skills in the workforce make a mismatch between their academic qualifications and job market demands. This mismatch has resulted in over 53 per cent of graduates and 36 per cent of postgraduates being underemployed in roles below their educational qualifications," it stated.

Schemes to bridge skill gap and promote employment

The survey suggested that targeted schemes that incentivise skilling and employment creation can help bridge the skill gap and promote job creation through the right incentives. Aligning skill development programmes with industry needs and adopting a long-term strategy focused on women and girls will prepare them for evolving job opportunities and help India effectively leverage its demographic dividend, it said.

It has also called for reshaping the labour market with an emphasis on women-led development for achieving gender parity and fostering inclusive economic growth. Early vocationalisation of education may be carried out to improve employability through vocational training, said the survey, adding that policies should prioritise targeted skill development and support for emerging sectors while encouraging transitioning from traditional to non-traditional roles.

With 65 per cent of its population under 35 years and a median age of 28, India's demographic dividend makes it a global talent hub, provided it can cultivate a workforce with employable, industry-relevant skills, according to the survey.

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Skill development is key to 'Aatmanirbhar Bharat'

"By creating a skilling ecosystem with a high-quality, globally competitive workforce, India can enhance employability for youth in global job markets. This attracts international investments, stimulates growth, drives innovation, and strengthens India's global economic position," the survey said.

Skill development is key to 'Aatmanirbhar Bharat', ensuring the workforce has the competencies to meet evolving industry demands and global standards, it added. The survey called for a "strategic plan for skills and education " as essential to leverage the demographic dividend and achieve the 'Viksit Bharat 2047' goals.

Industries demand for new skills

Advanced technologies such as automation, AI, and digitalisation are reshaping industries and creating demand for new skill sets. This technological transformation underscores the need for a dynamic, forward-looking strategy that prepares the workforce for emerging opportunities, it said.

Skill mismatch can result from imperfect matching between employers and workers, primarily driven by labour market inefficiencies or an imbalance between aggregate supply and demand for specific skills.

When the mismatch is due to the gap between the expected and actual skills of workers, it reflects a broader issue of mis-alignment between the demand for specific competencies and their availability in the labour force, the survey said.