One of the ambitious schemes is to get the country’s 500 biggest companies to provide paid internships to 10 million youth over the next five years, making them job-ready in the process.
While the intent is laudable, given high youth unemployment and unemployability, the scale of the scheme could make it unviable.
R. Shankar Raman, president and group CFO, Larsen & Toubro, said, “Labour issue is not simple. We too are working on this. All are not blessed with the same skill levels. They have to be trained.”
“It is not really about ₹5,000 per month. There is a need to do a realignment on what people want and what people possess as a skill. It is about the quality of the skill and there are various other basic issues that need to be addressed. There is no one-time solution. This has to be addressed on a continuous basis over several years,” Raman said at L&T’s earnings call on Wednesday.
A rough calculation shows that each of the top 500 firms will have to create space for 20,000 interns in five years, or 4,000 in a year. Companies are doubtful that they will have the capacity to take in and skill such a large number of youngsters, when the demand for manpower remains sluggish.
“We take 500 apprentices and interns every year from engineering colleges and B-schools , and give them a stipend. While apprentices and interns from engineering firms work in the plants, those from B-schools work in the corporate offices,” said the head of human resources (HR) of a conglomerate, requesting not to be named. “While the intention of the government to create employment is in the right direction, we will find it difficult to increase the numbers to about 4,000 from 500 in a year.”
In the five years from 2019-20 to 2023-24, India added 4.47 million people to the salaried workforce, which stood at a little over 90 million in 2023-24, according to the Centre for Monitoring Indian Economy’s consumer pyramids household survey. The salaried class includes managers, supervisors, white-collar professionals, clerks, industrial and non-industrial workers, and support staff.
Offering internships to 10 million people in the next five years in India’s top 500 companies will mean more than doubling the total employment generated across the salaried class in the past five years, or 11% of all the people employed under this category.
As per the Union budget’s announcement on Tuesday, the interns will be paid ₹5,000 per month along with a one-time assistance of ₹6,000. Companies will be expected to bear the training cost and 10% of the internship cost from their corporate social responsibility funds.
The emphasis on skilling comes at a time when the Economic Survey for 2023-24 found that about one in two graduates straight out of college is not employable.
“Estimates show that about 51.25% of the youth is deemed employable. In other words, about one in two are not yet readily employable, straight out of college,” the Economic Survey, unveiled on 22 July, said. “However, it must be noted that the percentage has improved from around 34% to 51.3% in the last decade.”
The Internship Scheme
Manufacturing, IT , IT-enabled services, automotive, and medium and small-scale sectors pick up interns and apprentices in large numbers.
The budget says that “participation of companies is voluntary” and those aged between 21 and 24 will be eligible to apply under the internship scheme. Graduates from IITs, IIMs, Indian Institutes of Science Education and Research (IISER), and chartered accountancy colleges aren’t eligible, the budget document says.
According to a senior executive at an industry body, the companies will not need interns for long periods.
“The employment opportunities are low, firms are not heading to campuses in large numbers. Interns are picked up for a couple of months, so getting the companies to skill for a year will need more clarity,” said the executive, who did not want to be named.
A consultant raised the concern of what happens to the fund if the intern leaves or the firm relieves the person midway.
According to Mint’s study of annual reports of 94 companies on the BSE 100 index, there were 3.83 million employees at BSE 100 firms as of 31 March 2023. The data included both permanent and non-permanent employees, and excluded workers (in some cases, only permanent employees were considered due to unavailability of data).
A government official told Mint that there also needs to be more clarity on how one will demarcate this internship scheme from the apprenticeship programmes, wherein companies have to adhere to an intake of a minimum number of apprentices a year, depending on their manpower.
The Apprenticeship Framework
An apprenticeship is a structured system of training where individuals, known as apprentices, learn a trade or profession through a combination of on-the-job training and classroom instruction. Apprentices can be both graduates and non-graduates. Students who turn apprentices can also use the stipend to fund their education.
The stipends depend on whether the candidate has been picked up under the NAPS (National Apprentice Promotion Scheme) or NATS (National Apprentice Training Scheme) programme. The former is meant for all trades and may take non-graduates, while the latter is largely for engineers and technical apprentices.
The Economic Survey also pointed to challenges faced by apprenticeship programmes as a reason for gaps in skills.
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“There exist significant challenges in the Indian apprenticeship ecosystem, such as lack of coordination between education institutions and industry, inadequate infrastructure, gaps in the regulatory framework,” the survey said. “Besides, the negative perception of vocational training as being inferior to academic education is one of the biggest challenges.”
“The apprenticeship framework thus needs to be recalibrated to provide flexibility and negotiability in work hours, compensation, and disengagement,” it added.
Note: Mint data team contributed to the story with the data and analysis.