Coordinated Action on Skills and Employment for India’s $5 Trillion Economy Goal: WB

Syllabus: GS3/Economy

Context

• Recently, the World Bank, in its report ‘Jobs at Your Doorstep’ has emphasised the critical need for India to adopt a coordinated approach to skills development and employment to achieve its ambitious $5 trillion economy target.

Current Economic Landscape of India

• As of 2024, India’s GDP stands at approximately $3.7 trillion, making it the fifth-largest economy globally. 
• The Finance Ministry projects that India will become the third-largest economy with a GDP of $5 trillion by 2027-28.
  • This projection is based on continued reforms and the demographic advantage that India enjoys, with a young and dynamic workforce.

Roadmap to $5 Trillion Economy

• Economic Reforms: Major reforms such as the Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), and reduction in corporate tax rates have been implemented to create a conducive business environment.
• Digital Economy and Fintech: Promoting digital transactions and fintech innovations to enhance financial inclusion and efficiency.
• Infrastructure Development: Significant investments in infrastructure, with the Union Budget 2023-24 allocating ₹10 lakh crore for capital investment, representing 3.3% of GDP.
• Energy Transition and Climate Action: Emphasising sustainable development through renewable energy projects and climate action initiatives.
• Employment and Skilling: A robust job market increases consumer spending, which in turn drives demand and stimulates economic activity
  • Employment ensures that the benefits of economic growth are distributed across different sections of society, reducing inequality and promoting social stability.
  • A well-employed workforce contributes to higher productivity and fosters innovation, which are key drivers of economic competitiveness.

Key Challenges in Achieving $5 Trillion Economy

• Fiscal Deficit: Managing the fiscal deficit while ensuring adequate public investment in critical sectors.
• Employment Generation: Creating sufficient job opportunities to absorb the growing workforce.
• Global Economic Uncertainties: Navigating geopolitical tensions and global economic fluctuations.
• Skills Impartment: Ensuring the quality of training programs is essential to make them effective. This includes having qualified trainers and up-to-date training materials.
  • Skilling programs need to be accessible to all, including those in rural and remote areas.

Key Government Initiatives for Achieving a $5 Trillion Economy

• Economic Reforms:
  • Goods and Services Tax (GST): The implementation of GST has streamlined the indirect tax system, reducing the complexity and improving compliance.
  • Insolvency and Bankruptcy Code (IBC): This reform has strengthened the resolution framework for distressed assets, improving the ease of doing business.
  • Corporate Tax Reduction: The reduction in corporate tax rates has made India a more attractive destination for investment.
• Infrastructure Development
  • Capital Investment Outlay: The Union Budget 2023-24 allocated ₹10 lakh crore for capital investment, representing 3.3% of GDP. This substantial increase in capital expenditure aims to boost infrastructure development and attract private investment.
  • National Infrastructure Pipeline (NIP): This initiative aims to invest ₹111 lakh crore in infrastructure projects by 2025, covering sectors like energy, roads, railways, and urban development.
• Digital Economy and Fintech:
  • Digital India: This initiative promotes digital literacy and aims to bridge the digital divide, ensuring that all citizens have access to digital skills and services.
  • Fintech Innovations: The government is fostering a conducive environment for fintech startups, enhancing financial inclusion and efficiency.
• Energy Transition and Climate Action:
  • Renewable Energy Projects: India is investing heavily in renewable energy, with a target to achieve 450 GW of renewable energy capacity by 2030.
  • Climate Action: The government is committed to sustainable development through various climate action initiatives, including the National Action Plan on Climate Change (NAPCC).
• Production Linked Incentive (PLI) Scheme:
  • Boosting Manufacturing: The PLI scheme aims to boost domestic manufacturing in key sectors by providing financial incentives for incremental production.
  • Sectoral Focus: The scheme covers 14 sectors, including electronics, pharmaceuticals, and automobiles, to enhance India’s manufacturing capabilities and export potential.
• Make in India and Start-up India:
  • Make in India: This initiative aims to transform India into a global manufacturing hub by encouraging both multinational and domestic companies to manufacture their products within the country.
  • Start-up India: This program supports entrepreneurship by providing funding, mentorship, and regulatory support to startups.
  • PM internship scheme 2024: The scheme aims to provide one crore internships in its first five years and enhance employability of candidates.

Key Suggestions

• Bridging the Skills Gap: Aligning education and training with market needs is crucial for addressing the skills gap.
  • It ensures that the workforce is equipped with relevant skills that meet industry demands.
• Technological Adaptation: As industries evolve with technological advancements, continuous skilling and up-skilling are necessary to keep the workforce adaptable and competitive.
• Enhancing Employability: Skilling initiatives improve employability, making it easier for individuals to find jobs and for industries to find skilled workers.
• Industry Collaboration: Collaboration between the government and industry is crucial for effective skilling. Industry participation ensures that the skills being imparted are aligned with market needs.
• Initiatives like the Sector Skill Councils (SSCs) and the National Skill Development Corporation (NSDC) facilitate this collaboration.

Conclusion

• The vision of a $5 trillion economy is ambitious but achievable with sustained efforts and strategic planning.
  • The government’s focus on structural reforms, digital economy, and infrastructure development lays a strong foundation for this goal.

Source: LM