In this guest article Ms. Sunita Sanghi, Principal Adviser, Ministry of Skill Development and Entrepreneurship (MSDE) and Deepali Raina, Former Consultant, NCVET, share their views on National Training Fund (NTF) and how it can be a vehicle for convergence to meet the various needs of skill development in India.
A quality driven system at all levels, be it infrastructure, curriculum development, fostering industry partnerships, improved pedagogy, assessments and others is required for achieving optimal outcomes in the vocational education system. Currently, there are multiple schemes implemented by various Central Ministries /Departments and State governments leading to duplication of efforts and sub-optimal utilization of resources.
The learners and industries who are the ultimate end users of all skill development initiatives have no role / choice to exert in the current arrangement. A well-established institutional framework of funding, which takes into account peculiarities of the skill development space, is perquisite for realizing the objectives of skill development policy on ground.
This necessitates exploring alternative options of funding that promotes convergence, transparency and demand driven skilling ecosystem. This brings on board National Training Fund (NTF).
Current funding scenario in skill development
Currently, all funding across skill development programs is largely government grant-based with focus on delivery of services for pre-employment training; reskilling and up-skilling; Recognition of prior learning (RPL) and apprenticeship training with limited focus on improving quality and relevance of training and quality of teachers/assessors.
The private sector buy-in remains extremely low, thus attributing to the lack of participatory approach in the skilling per se.
The situation calls for paradigm-shift and overhauling of the existing funding mechanism in the vocational education in the country. One of the models is that of the National Training Fund (NTF).
National Training Fund (NTF)
While we will attempt to understand and evaluate the proposed NTF in terms of its rationale and applicability in the India context, it is important to consider that such kind of consolidated funding arrangements in skilling ecosystem are existing in other countries like that of European Union and others. A broad understanding of these existing arrangements globally will help us in building a perspective of our system.
The national training funds across the world are becoming an instrument for financing training by providing an institutional framework for collecting and allocating finances to the training providers.
Training funds can be categorised in three ways, on the basis of the purpose they are used for viz. Pre-employment Training Fund, Enterprise Training Fund and Equity Training Fund. The question is what is National Training Fund; what are its objectives and benefits; what can be the model for India.
Usage of National Training Fund
In the Indian context, the NTF is proposed to be a consolidated fund that may derive its resources from government budget given to various central ministries; National Skill Development Fund and other sources like proportion from Corporate Social Responsibility (CSR) funds, Member of Parliament Local Area Development (MPLAD) Funds, Education Cess and Building and Construction Workers Cess etc. The consolidated fund would be instrumental in addressing multiple objectives of pre-employment training, quality training and enterprise training through fresh skilling, re-skilling, up-skilling, Recognition of Prior Learning, apprenticeship training, etc.
The training fund can also be used for training of workers in enterprises either in terms of recognition of prior learning or to finance the apprenticeship training. A mechanism to support industries and small enterprises for pre-employment training may also be plugged in to boost participation of industries in the process. This way the training fund would address the skill requirement of MSME and informal sector.
Convergence, autonomy and a quality assured monitoring system in place is must to ensure that NTF meets its desired objective of addressing the varied needs of the skill development. For this, a Special Purpose Vehicle with fire wall arrangements with the administrative Ministry (Skill Development and Entrepreneurship) is envisioned.
Role of other Ministries in executing NTF
It is crucial to understand the role of other Ministries (apart from Skill Development) in the execution of NTF. To understand this, lets first understand how the fund would operate.
- The starting point of any process in NTF would be the choice made by the learner on a common IT platform. A well-integrated Labour Market Information System (LMIS) may be operationalised where in a learner can register and based on his requirement would opt for a particular scheme, sector and course.
- A number of such entries may lead to creation of batch for particular scheme of the Ministry, which can then take it up in their system for further implementation.
- This LMIS would not operate in isolation but maybe integrated with job aggregators and National Career Services that would channelize candidates into jobs, apprenticeships and training.
The provision of registration of candidates and selection of courses would be crucial in weeding out duplication of training and would also provide a transparent data in regard to training numbers. Funds may not be given individually provided to the line Ministries. The line Ministries would provide all training targets under the central schemes to the National Training Fund. Since funds would be released through a single entity, it would ensure competitiveness amongst training providers and hence significantly enhance the quality of training.
Generation of Resources
The next important question may be how will NTF generate resources. The payroll levies (that are implemented in nearly 40 countries worldwide and are the main source of financing skill training) may not be an effective mechanism for funding skill training in India; given the large size of informal sector and its unique challenges of access and equity faced by large sections of the population.
Over 98% enterprises in India employ less than 10 workers. Such enterprises may not have the resources to contribute individually to the levy. The funding resources for this National Fund may then come from five major sources, viz. (I) Central Budget Outlays for all Central Ministries (ii) Mandating 50% of the 2% CSR funding under the Companies Act (iii) Contribution from the Members of Parliament Local Area Development Scheme (MPLADS). A 20% contribution from MPLADS/MLA funds can be used particularly for creating infrastructure for skill development. (iv) 25% of Funds from Building and Other Construction workers’ Welfare Cess (v) Other donations and multi-lateral funding may also be utilised.
The NTF may be backed by an online web portal for effective real time monitoring of these skill development schemes with access to various stakeholders. A ranking of training providers may also be displayed on the portal to enable the candidates to choose his/her training provider.
Advantages of NTF
The possible advantages of well implemented NTF broadly include a lot of points but not limited to enhanced competition among training delivering entities, accountability, optimum utilisation of funds, addressing information asymmetry especially for learners and others. While the perception one may develop while reading the outlines of NTF, is that it will disempower the local level structures at state and district level.
Contrary to this, access and equity being the fundamental blocks of the proposed NTF, a more collaborative role of State and district machinery is being envisaged to reach out to the maximum number of target beneficiaries.
With all these advantages in place, the pragmatic view also warns that by just having consolidated fund and robust labour market system may not be sufficient in itself to address the various systemic challenges of the skill ecosystem. However, it does give a scope for utilisation of resources in a more transparent and participatory manner for components that go beyond tangible hardware part to address the very core of learning process that is crucial for translating the demographic advantage of our country into demographic dividend; contributing to socio economic growth of not only our country but the world over.