Govt looks at corporate pockets to fund skill development

PAY AS THE LEARN: Labour ministry proposes cess on corporate turnover for a national fund

New Delhi, August 22: To finance skill development, the labour and employment ministry has proposed a national fund whose corpus will be derived from a cess on corporate turnover besides budgetary support by the Centre and states.

In its National Policy on Skill Development, to be placed before the Cabinet soon, the ministry has estimated funding needs to the tune of 2 per cent of the GDP during the Eleventh Plan (2007-12). This translates into a staggering $4 billion a year. The expenditure on training should be scaled up progressively to touch 5 per cent of the GDP over the following 10 years.

Further, to ensure continuous availability of funds, the policy proposes a non-lapsable pool, which means that if funds earmarked remain unutilised in a particular year, they will be carried over to the next. According to industry sources, a 1 per cent cess on corporate profits itself would help the government mop up about $2 billion a year. The policy, however, calls for a cess on corporate turnover.

The policy aims at increasing women participation in training, which is very low now, to 25 per cent by 2012. For the socially disadvantaged communities, including the minorities and the poor, reservations will be strictly enforced. Additionally, a special financial support scheme will be announced for the poor and backward classes.

The policy will be reviewed every five years and revised to take into account progress in implementation and emerging domestic and global trends. A National Skills Development Authority will also be set up to implement the policy with representation from central and state ministries, employers, and workers’ organisations.

The ministry has also laid emphasis on attracting foreign direct investment for creation of job opportunities for skilled labour. The policy has placed an unequivocal emphasis on the informal sector that employs 90 per cent of the total workforce. The informal sector has registered faster growth and thrown up more employment opportunities than the formal sector. Therefore, government’s skill development expenditure will give priority to unorganised sector to pull the poor out of the poverty trap.

The policy will cover school-based training, formal apprenticeship, workplace learning, adult training and re-training, non-formal training and learning, informal apprenticeship, lifelong learning, and vocational education and training. To ensure skills up gradation, government will put in place mechanisms for providing training loans, paid leave for training and tax incentives on training costs incurred.

THE GAME OF SKILL

THE POLICY aims at increasing women participation in training, which is very low now, to 25 per cent by 2012

THE MINISTRY will invite foreign direct investment for creation of job opportunities for skilled labour

THE POLICY places emphasis on the informal sector that employs 90 per cent of the total workforce and has grown faster and thrown up more employment opportunities than the formal sector