To ensure smooth flow of funds for skill development of around 400 million workforce in the country,industry chamber Federation of Indian Chambers of Commerce and Industry (Ficci) has proposed the formation of a National Skills Loan Guarantee Fund.
The chamber has mooted the idea to the government,after an internal meeting of its Skill Development Forum,chaired by Perot Systems president Anurag Jain. The fund is proposed to be formed in conjunction with the government,financial institutions and aid agencies,to provide an incentive to banks to deliver loans. Such a fund is likely to ensure consistency in delivery of funding schemes.
Financial institutions are generally hesitant to extend loans for vocational training. Banking world dismisses small loans for skill training. The fund would provide guarantee on small loans to banks, said Jain. According to the Ficci proposal,the fund could even be implemented by the newly-formed skills development company under the finance ministry,the National Skill Development Corporation or the labour ministry. The fund assumes heightened importance as it would also enable a vast majority of workers being shed off in various industries to re-train and acquire alternative skills,said Jain.
The fund will facilitate micro-credit with flexible repayment schemes for a vast majority of untrained,unskilled labour force. Indian working population is estimated at 400 million,to which 12.8 million get added every year. Of these,40 per cent are illiterate,25 per cent have received primary education and 35 per cent have received middle or high school education.