SECTOR ASSESSMENT (SUMMARY): EDUCATION Sector Road Map 1. Sector Performance, Problems, and Opportunities

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1 Odisha Skill Development Project (RRP IND ) STOR ASSSSMNT (SUMMARY): DUATION Sector Road Map 1. Sector Performance, Problems, and Opportunities 1. Odisha s economy is in transition, with the manufacturing and services sectors having emerged as the main drivers of growth. During , the share of agriculture in total gross state domestic product declined from 32% to 15%, while that of manufacturing almost doubled from 18% to 33%. Although the services sector s share remained around 51%, its compounded annual growth rate (6.4%) is lower than that of manufacturing (10.2%). 1 Odisha recorded the largest reduction in poverty (25 percentage points) among all major states in India during ; however, its poverty rate (33%) still remains as one of the highest in the country. Odisha s human development index (HDI) of was much lower than the national HDI of in This high level of inequity and poverty is due to the fact that more than 50% of the population continues to depend on agriculture for their livelihood, and relatively small shares of the population are employed in manufacturing (24%) and services (25%), especially in the formal sector. Only 15% of households in the state report having a regular salary earner. Due to a lack of nonfarm job opportunities, almost 1 million people from Odisha work and reside in other parts of the country, according to the last migration survey ( ). 2. Nearly 34% of Odisha s population of 42 million is aged 15 34, and 30% of these young people are available for or seeking work, compared to the national average of 18%. The unemployment rate for this age group in Odisha (6.8%) is higher than the national average (5.8%) due to low education and/or skill levels. Only 7% of Odisha s young people have a diploma or a graduate certificate; 33% of the population are educated through grade 8 and another 25% through grade 10. Only 1.8% of Odisha s young people (2.5% of men and 1.1% of women) have received or are receiving formal vocational training, which is below the national average of 3.7%. Furthermore, only 64% of women are literate compared to 82% of men, and this rate is lower for women from scheduled tribes (41%). Finally, only 0.4% of women from scheduled tribes and 0.5% of women from scheduled castes have formal vocational training. 3. The low skill level and low employability of Odisha s young workforce is due to the state s weak skills development system, which is fragmented and lacks synergy with industries. The recent skills-gap assessment for Odisha projects an incremental demand supply gap in Odisha s total workforce of around 4 million for The key sectors with a skill shortage include healthcare (651,037), hospitality and tourism (656,018), information technology (IT) and IT-enabled services (614,363), construction (91,130), transport and logistics (22,192), and food processing (12,594). 3 The medium and small enterprise segment remains a major employer and is a target for skills development, as it provides 89% of nonfarm employment opportunities. 4. The capacity of educational institutes in Odisha is inadequate to meet skilling targets. In 2014, 872,000 students were enrolled in secondary and higher secondary education, and junior college; of these, 684,000 passed the examinations. On the other hand, the combined enrollment in all technical education, professional education, and training institutions was less than 130,000. Recently, private technical training centers have been appearing in Odisha 1 Government of Odisha Odisha conomic Survey Bhubaneswar. 2 United Nations Development Programme in India Orissa: conomic and Human Development Indicators. 3 rnst & Young Skill Gap Assessment for the State of Odisha: A District Wise Analysis. Kolkata.

2 2 despite their high fees, 4 but these mostly focus on certain service sectors requiring low capital investment. It is difficult for trainees of these institutions to find jobs due to low remuneration and low mobility of workers in these sectors. 5 Another major challenge is the large number of trainer vacancies in private industrial training institutes (ITIs) and polytechnics, which leads to poor capacity utilization at around 50% 54%, far below the rate among their public counterparts (90% 95%). The lack of qualified assessors affects both public and private ITIs, resulting in long lapses of time between training completion and certification. 5. Much of technical training is male-dominated and manufacturing-related. Only 11% of current trainees in ITIs are women, against a target of 30%. Supply-side factors, such as a lack of female teachers and hostels, as well as demand-side factors like employers preference for male workers in male-dominated trades, constrain female participation in technical training. Proactive measures are needed to overcome barriers and incentivize female participation; such measures may include the increased availability of hostels for women, scholarships, a genderbalanced pedagogic approach and training materials, and the promotion of training programs that can absorb a large number of female workers in nonfarm sectors such as construction and handicrafts. 6. ITIs in Odisha are facing several constraints: almost 50% of equipment in existing ITIs must be upgraded or replaced; 6 67% of assistant training officer positions (one officer must teach one unit of trade) are vacant; and only 26% of trainees find work after training. 7 ITIs still offer courses with low industry demand such as cutting and sewing, data entry, civil drafting, foundry works, and stenography, while failing to expand courses with growing demand such as electrical wiring, welding, and instrumentation mechanics. Many other courses teaching high demand skills such as advanced welding, vessel navigation, vision technician skills, and medical electronics are not readily available from ITIs or vocational education institutions. There is no systematic information system that can project employment needs across industry sectors, job demands, and skill requirements within Odisha, across India, or abroad. The limited use of video and mobile technology, as well as the absence of e-learning training programs and distance learning alternatives, impedes effective training and the modernization of Odisha s skills ecosystem. 7. Government institutions have limited flexibility to alter courses, hire competent faculty, forge direct partnerships, and adapt to industry needs. There are few incentives to motivate these institutions to achieve excellence; centralized, top-down curriculum design, assessment, and certification do not allow these institutions to respond to local industry needs. Although the private sector brings operational efficiency to skills training, the financial viability of training business models is limited. While services sector training is more financially viable given the low levels of investment necessary for buildings and equipment, job placement is more difficult. Successful training models include the enter for Research and Staff Performance in Bhopal, and the entral Tool Room and Training enter in Bhubaneswar, where capital expenditure was subsidized by the government and training was conducted as in the private sector. These models also have the right mix of training and production to focus on manufacturing trades, along with high industry linkages and placements. 8. Some good practices exist in Odisha. The enturion University, a private entity, has established close linkages with potential employers and uses various government schemes to 4 Private institutions account for 83% of total enrollment in mass level technical education and training. 5 The job placement rate of private ITI graduates is as low as 37%. 6 Government of India ITI Survey for Odisha. New Delhi. 7 Footnote 6.

3 3 subsidize poor students. Through the Gram Tarang program, it offers over 35 courses to students with different education levels (5th, 10th, and 12th pass-outs), mostly in backward regions, and achieves good placement rates (over 70%) in close partnership with the private sector. Similar good practices can be identified for adaptation, replication, and expansion. 2. Government of Odisha s Sector Strategy 9. The Government of Odisha is taking an integrated approach to both economic and human capital development through a series of policies and strategies in the main economic sectors. The Odisha Industrial Policy 2015 emphasizes generating employment and enhancing employability through skills development. This component is also articulated in a number of new policies, including the Odisha ntrepreneurship Development Policy 2014, Odisha State Policy for Girls and Women 2014, Information and ommunication Technology Policy 2014, Odisha Solar Policy 2013, Agriculture Policy 2013, Odisha Tourism Policy 2013, and Strategic Roadmap for Development of lectronic System Design and Manufacturing Sector in Odisha. 10. The government has implemented several initiatives to improve its skills development system and address skill shortages. In 2016, it established a high-level Odisha State mployment Mission (OSM), chaired by the chief minister, to address the problems of youth unemployment and underemployment specifically. It also established the Skill Development and Technical ducation Department (SDTD), 8 combining the Directorate of Technical ducation and Training (DTT), OSM, employment generation services, and labor regulation. While the establishment of the SDTD improved coordination, it did not significantly enhance the operational efficiency of its sub-units. Nearly half of OSM s 20,000 trainees were awaiting assessment for almost a year due to a lack of assessors, and the DTT is unable to meet industry demands due to poor infrastructure and outdated standards, assessment, and certification processes. 11. Recognizing the growing importance of skills training, the government established an autonomous implementation institution, the Odisha Skill Development Society (OSDS), in In December 2016, OSDS was merged with OSM and renamed as OSDA to further consolidate and effectively coordinate all skills training programs. With OSDA, headed by an eminent industry leader, the government aims to streamline the existing institutional arrangements and make it the nodal agency for meeting skilling targets with clear policy directions. OSDA has three priorities: (i) to enhance the ITIs capacity; (ii) to accelerate training delivery through the establishment of eight advanced skills training institutes (ASTIs); and (iii) to scale up short-term, employability-related training through private providers. 12. To achieve economic transformation, quality training for manufacturing has been prioritized for skills development given its strong growth in Odisha. The government is implementing a number of initiatives to revitalize its skills ecosystem. It is preparing to leverage the private sector s efficiency along with public financing by investing in the ASTIs and engaging private operators to operate and maintain the ASTIs. The government envisages establishing an international quality assurance system through partners from advanced countries. The government aims to establish a network of hubs (ASTIs) and spokes (government ITIs) in Odisha, with each hub serving as a resource center for a group of spoke ITIs and mentoring them in pedagogy, technology use, industry linkages, placement, trainer training, recognition of prior learning, and apprenticeships. 8 In 2012, Odisha established the mployment, Technical ducation and Training Department, which was renamed the SDTD in 2015.

4 4 3. ADB Sector xperience and Assistance Program 13. The first loan of the Asian Development Bank (ADB) to India for skills development and secondary education reform, Supporting Human apital Development in Meghalaya, was approved in September It aims to enhance the employability of Meghalaya s youth by improving the quality and delivery of, and access to, the state s secondary education and technical and vocational education training programs. The project catalyzes the participation of private and public training providers, engages with sector skills councils, and supports employment-linked training for Meghalaya s youth. A second ADB loan was approved in November 2014 for Supporting Kerala s Additional Skill Acquisition Program in Post-Basic ducation. 10 This project focuses on specific constraints of higher secondary and undergraduate students by polishing their nglish communication, basic IT, and soft skills, while providing them with high-demand vocational skills outside regular school hours and during vacations. Both loans are currently being implemented. Lessons learned from these programs with regard to institutional coordination, industry linkages, public private partnerships, and monitoring the results of skills training are being applied to the proposed loan for Odisha. 14. ADB has provided technical assistance (TA) to the National Skill Development orporation 11 and to the National Skill Development Agency 12 to enhance coordination among central- and state-level skill development programs and ensure convergence across the public and private sectors. The National Skill Development Agency TA helped anchor and operationalize the National Skills Qualifications Framework; strengthened the state skills development missions in selected states, including Odisha; and evaluated the selected skills development schemes to improve their effectiveness. The TA helped align the skills development activities with the national qualification framework and assessment and accreditation requirements, while informing good practices to harmonize and coordinate skills development efforts by various stakeholders at the national and state levels. 15. The proposed investment project will targeting Odisha s core problem, the low employability of its young workforce, by (i) promoting equitable access to quality training, (ii) improving institutional capacity and upgrading training infrastructure, and (iii) effectively mobilizing and coordinating key players, including the private sector. The project supports the Government of India s goal of transforming into a skill-driven economy under the flagship initiative Make in India. It will also support various priorities identified in the National Policy for Skill Development and ntrepreneurship While avoiding duplication with any ongoing skills programs, the project will help the Government of Odisha develop a viable training model through public private partnerships and the establishment of a strong and autonomous institution, OSDA, to ensure the effective implementation of the proposed loan. 9 ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan and Administration of Technical Assistance Grant to India for Supporting Human apital Development in Meghalaya. Manila. 10 ADB Report and Recommendation of the President to the Board of Directors: Proposed Results-Based Loan and Administration of Technical Assistance Grant to India for Supporting Kerala s Additional Skill Acquisition Program in Post-Basic ducation. Manila. 11 ADB Technical Assistance to India for Skill Development for Inclusive Growth. Manila. 12 ADB Technical Assistance to India for apacity Building of the National Skill Development Agency. Manila.

5 5 Problem Tree for ducation F F T Persistent unemployment and underemployment; low wages for workers Limited pool of skilled workers; low Industry productivity Demand supply mismatch between training and jobs Social disparity; frustration and alienation among young people O R P R O B L M Low employability of Odisha s young workforce Inequitable Access Poor quality training (lack of relevance to industry) Weak skills development ecosystem Lack of institutional leadership A U S S Shortage of existing TVT capacity not aligned to industry demands Inadequate to meet the 12th plan target of training in priority sectors and skills Uneven geographical spread of ITIs/Polytechnics/SDs Poor connectivity with remote rural areas xclusion of marginalized groups, minority communities, women from mainstream training and jobs Insufficient funds to implement the TVT infrastructure expansion plan restricting equitable access to quality skills development Low quality of training due to obsolete curriculum/equipment ducational inputs, materials and delivery are outdated and lack market relevance Limited involvement of industry in TVT, and lack of labor market knowledge among training providers Poorly updated trainers/faculty Insufficient attention given to ensuring skilled TVT teaching force Lack of innovation in modeling and devising schemes that make it financially and economically attractive for large scale private investors Weak quality assurance of TVT provision Dysfunctional employment exchanges Inadequate communication and mobilization amongst grass root level beneficiaries Inadequate capacity of OSM to drive policy reform, implementation and monitoring of a large comprehensive program Lack of coordination on skills programs run by various ministries and agencies Insufficient human resources within government to lead and manage new skills initiatives Lack of autonomy in TVT institutes and limited capacity among managerial training staff ITI = industrial training institute, OSM = Odisha State mployment Mission, SD = skill development centers, TVT = technical and vocational education and training. Source: Asian Development Bank.