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India prides itself on being a young nation, with a median age of around 28 years. Yet this demographic advantage is fast turning into a liability; barely 5 per cent of India’s workforce has received formal skill training, compared to over 50 per cent in developed economies.
Written By: DINESH SOOD
Thenewsdose.com
Former RBI Governor Raghuram Rajan’s recent remarks on India’s education system strike at the heart of a quiet but dangerous contradiction in India’s growth story. As the country races toward an AI-driven future, its education system continues to mass-produce degrees while neglecting the practical skills that actually sustain economies—today and tomorrow.
Rajan’s point is disarmingly simple: even in the age of artificial intelligence, plumbers, electricians, barbers, mechanics and other skilled manual professionals will not disappear. What may disappear, however, is India’s ability to supply such skills at scale—unless we urgently rethink how we educate and train our youth.
The Illusion of the Degree Dividend
India prides itself on being a young nation, with a median age of around 28 years and over 65 per cent of its population in the working-age bracket. Yet this demographic advantage is quickly becoming a liability. According to multiple government and industry assessments, barely 5 per cent of India’s workforce has received formal skill training, compared to over 50 per cent in developed economies and more than 70 per cent in countries like South Korea and Germany.
At the same time, higher education enrolment has expanded rapidly, with India’s Gross Enrolment Ratio crossing 28 per cent. But degrees have not translated into employability. Youth unemployment remains stubbornly high—hovering in double digits—while employers consistently report shortages of job-ready workers, especially in technical and service-oriented trades.
The result is a paradox: millions of educated but unemployable youth on one side, and an acute shortage of skilled hands on the other.
The Gendered Skill Gap Behind the Employment Crisis
Degrees still matter, but without industry-relevant skills, they offer diminishing returns—especially for women. India’s employability is improving, but not fast enough or equitably enough. The future belongs to economies that value skilled hands as much as educated minds.
For Indian women, skills are not merely about jobs; they are about agency, dignity and resilience. The sooner India recognises this, the stronger, more inclusive—and more future-ready—its growth story will be.
According to the India Skills Report 2025, only about 54.8 per cent of Indian graduates are projected to be employable by 2026, and women’s employability continues to lag behind men’s in several assessments. The Periodic Labour Force Survey (PLFS) shows unemployment hovering around 5.1–5.2 per cent, but women’s labour force participation remains stubbornly low, while youth unemployment and underemployment remain significantly higher in reality than headline numbers suggest
The paradox is sharper for women: higher education enrolment has expanded, with India’s Gross Enrolment Ratio crossing 28 per cent, yet degrees have not translated into jobs. Millions of educated women remain outside the workforce. At the same time, sectors that could absorb them—healthcare support, beauty and wellness, electrical maintenance, renewable energy services, care economy and skilled trades—face acute shortages of trained, certified workers.
AI Will Replace Tasks, Not Trades
Rajan’s intervention is particularly relevant in the context of AI anxiety. Automation will undoubtedly disrupt white-collar, repetitive and rule-based jobs—data entry, basic accounting, routine legal drafting and customer support among them. But hands-on professions that require dexterity, judgment, human interaction and on-site problem-solving are far more resilient.
A plumber fixing a leak in a congested urban slum, an electrician navigating outdated wiring, or a barber understanding customer preferences cannot be easily replaced by algorithms or robots—at least not at scale in a country like India. In fact, as urbanisation, infrastructure expansion, and service consumption grow, demand for such skilled work will rise, not fall. Ironically, these are precisely the jobs India’s education system treats as inferior.
The Structural Failure of Schooling
India’s schooling model remains rigid, exam-centric and degree-obsessed. From an early age, children are pushed toward abstract academic achievement, while vocational skills are sidelined as a “last resort”. Practical aptitude, craftsmanship, and hands-on problem-solving receive little respect in classrooms or society.
This bias feeds directly into the fragile gig economy India is building. Unlike developed countries, where gig work is often supported by high skill levels, certification, and social security, India’s gig workforce is mainly informal, undertrained, and insecure. Without a strong base of certified, skilled workers, the promise of a sustainable and productive gig economy remains hollow.
Way Forward: Reimagining Skills as National Capital
India needs a decisive pivot—from degrees as default, to skills as dignity.
First, vocational education must be integrated into mainstream schooling, not treated as an alternative for “non-academic” students. Skill exposure should begin early, with clear pathways from school to certified trades and lifelong upskilling.
Second, industry-linked apprenticeships must expand dramatically. Countries that have successfully bridged education and employment—from Germany to Japan—have done so by embedding real work experience into learning.
Third, social perception must change. A certified electrician earning steadily in India’s growing urban economy should be valued no less than a degree-holder stuck in chronic underemployment.
Finally, AI itself should be leveraged to train workers—through simulations, digital certifications and modular learning—rather than being seen only as a threat.
Raghuram Rajan’s warning is not anti-technology; it is pro-reality. A “Viksit Bharat” will not be built by algorithms alone. It will be sustained by skilled hands, practical minds and an education system that respects both. The sooner India recognises this, the stronger—and more inclusive—its growth story will be.
-The writer is Co-Founder and Managing Director of Orane International. Views expressed are personal.
