India is one of the youngest nations in the world with more than 62% of its population in the working age group (15-59 years), and more than 54% of the population below 25 years of age. It is estimated that at least for the next three decades, India will continue to enjoy this demographic advantage. This advantage is further accentuated by the fact that the labor force in the developed countries of the world will decline by 4% in next 20 years, while in India it will increase by 32%. Australia, Japan, Canada and other countries from Europe are already experiencing ageing of their population. While a number of countries are experiencing ageing of their population, India is among the very few countries that enjoys a faster rate of growth of working age group population than the rate of growth of its population as a whole. This demographic phenomena gives India a distinct advantage of becoming a source of skilled work force, especially for those countries that are witnessing ageing and hence have an increasingly lower proportion of their population to support the economic activities being undertaken locally. However, India’s formally skilled workforce (4.69%) is dismally low compared to countries such as China (47%), Japan (80%), South Korea (96%), Germany (75%), and United Kingdom (68%). Thus, our ability to take benefit of this demographic advantage is limited by our ability to skill our existing and the new entrants to our workforce.
Further, India also faces the challenge of supplying its own industries with skilled manpower to fuel the economic growth as planned. As per the National Skill Development Policy 2015, it is expected that an additional skilled workforce of 109.93 million will be required in the country by 2022 in about 24 sectors analysed by the National Skill Development Corporation. It is estimated that 12 million people enter the workforce in India every year who not only need to gain employment, but who also need to have the required skills for different job roles.While this is a large number in itself, added to this, is the complexity that about 93% of workers are in the informal sector which is transient in nature.