There is a dual challenge of developing skills and utilizing them in a proper way. The Economic Survey 2014-15 has stated that as per the Labour Bureau Report 2014, the present skilled workforce in India is only 2 percent, which is much lower when compared to the developing nations. As per the report, the number persons aged 15 years who have received or be receiving skills is merely 6.8 percent.

The Economic Survey 2014-15 stated that as per the National Skill Development Corporation there is a need of 120 million skilled people in the non-farm sector for the period 2013-14. Dearth of formal vocational education, lack of vide variation quality, high school dropout rates, inadequate skill training capacity, negative perception towards skilling, and lack of industry ready skills even in processional courses are the major cause of poor skill levels of India’s workforce. Some recent initiatives that aim to enhance access, equality, quality, innovation in the area of higher and vocational education are the Rashtriya Uchchatar Shiksha Abhiyan, Technical Education Quality Improvement Programme, and National Skill Qualification Framework.

A dedicated Department of Skill Development and Entrepreneurship has been created under the Ministry of Skill Development, Entrepreneurship, Youth Affairs and Sports to accord focused attention in this area. The Deen Dayal Upadhyaya Grameen Koushalya Yojana for poor rural youth and Nai Manzil for education and skill development of minority dropouts have also been set up.

The Economic Survey has shown the cause for concern is the deceleration in the compound annual growth rate of employment during 2004-05 to 2011-12 to 0.5 percent from 2.8 percent during 1999-2000 to 2004-05 as against growth rate of 2.9 percent and 0.4 percent respectively in the labour force for the same periods.

There have also been structural changes to the share of primary sector in total employment has dipped below the halfway mark while employment in secondary and tertiary sectors have shown a considerable increase. Self-employment continues to dominate, with a 52.2 percent share in total employment with significant share of workers engaged in low-income-generation activities, the Economic Survey added.

The Economic Survey also observed that there are other issues of concern like poor employment growth in rural areas, particularly among women. In order to improve generation of productive employment under the Mahatma Gandhi National Rural Employment Guarantee Act, the Intensive and Participatory Planning Exercise has been initiated to prepare the labour budget for financial year 2015-16 in selected 2500 backward blocks using participatory rural appraisal technique.

The Economic Survey 2014-15 has concluded that a major impediment to the pace of quality employment generation in India is the small share of manufacturing in total employment. However, data from the 68th NSSO round (2011-12) indicates a revival in employment growth in manufacturing from 11 percent in 2009-10 to 12.6 percent in 2011-12. This is significant given that the National Manufacturing Policy 2011 has set a target of creating 100 million jobs by 2022. Promoting growth of micro, small, and medium enterprises is critical from the perspective of job creation which has been recognized as a prime mover of the development agenda in India.

Skill Development policy focus strengthens institutional capacity and targeted schemes to address workforce skill gaps and employment composition challenges. Low workforce skill levels, limited vocational provision, and poor employer-readiness drive a policy focus on expanded skill formation, use of a National Skill Qualification Framework, and targeted schemes; institutional measures include a dedicated Department of Skill Development and Entrepreneurship. Structural employment concerns-declining primary-sector share, dominant low-income self-employment, slowing employment growth, and weak rural and female employment-underscore regulatory priorities to promote manufacturing, MSME growth, and participatory labour-budget planning under rural employment schemes.