Skills Strengthening for Industrial Value Enhancement Operation

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The objective of the Skills Strengthening for Industrial Value Enhancement Operation Project for India is to improve access to quality and market-driven vocational training provided in ITIs and apprenticeships. India’s gross domestic product (GDP) grew by 7.6 percent in 2015-16 steadily recovering from a low of 5.1 percent in 2012–13. This GDP growth was largely supported by robust consumption growth on the expenditure side and strong growth in the services sector, averaging more than 9 percent between 2012 and 2015, on the production side, although a recovery of industrial value added in 2015–16 was notable. With growth, poverty has declined rapidly from 38.9 percent in 2004–05 to 21.6 percent in 2011–12 (1.90 purchasing power parity per day) at a pace significantly faster than that witnessed in earlier periods. Poverty reduction was supported by greater rural-urban integration, increase in nonfarm wage employment, especially in construction, and higher rural wage growth. Given the cooling of the latter two trends in the past three years, it is likely the pace of poverty reduction moderated. Going forward, India’s growth prospects remain bright. A million youth will enter the labor market every month for the next two decades, and India will soon have one of the youngest and largest working-age populations in the world. These demographic dynamics and a rising age-savings profile are likely to generate significant volumes of savings and investment over the coming years. The average schooling of the working-age population, and, consequently, worker productivity, will increase by at least a full year until 2030 even with no further improvements in the educational attainment of today’s youth (that is, simply because younger cohorts are better educated) and could rise much faster if further progress is achieved on the education agenda. The proportion of population living in urban areas is expected to rise to 40 percent in 2030 from around 30 percent today, reinforcing productivity-boosting agglomeration effects. Combined, these effects are likely to form the foundations of India’s strong growth for decades to come.