"Labour productivity has been rising but our skill levels have been abysmal. The skill levels of the labour force are lower than what we need for 9% growth". Suman Bery, Director-General, National Council of Applied Economic Research, India

In recent years, India has clearly been one of the most successful economies in the world in attracting the attention of global business strategists and drawing in foreign investment (see Figure 1). According to official figures, FDI in the financial year 2006-2007 totalled US$ 19.5 billion, up from US$ 7.7 billion the year before. The government expects US$ 30 billion for 2007-2008, an ambitious target that is still only about half the inflow to China. The Planning Commission forecasts that the economy will grow by 8.5% to 9% over the current financial year to March 2008. The goal going forward: sustained 9% growth that is inclusive.

"We need skills development as a major initiative". Sunil Bharti Mittal, Chairman and Group Chief Executive Officer, Bharti Enterprises; President, Confederation of Indian Industry (CII), India

To get there will require addressing serious constraints. At this and previous India Economic Summits, participants have identified and debated the widely recognized challenges confronting India as it seeks to boost its global competitiveness and achieve China-level growth rates (see Figure 2). These familiar obstacles to raising productivity include poor infrastructure, differences in regulatory and policy regimes across states, the absence of a single national market, the need to develop the manufacturing sector, bureaucratic red tape and corruption. Each pressing problem requires urgent attention. The divide among states, for example, is already leading to dangerous social tensions and anti-government protests. According to a recent study by Lehman Brothers, the poorest five states, where about 40% of the total Indian population lives, account for just a quarter of national output, while the five richest, with only about 26% of the population, produce more than 40% of the output.

"Young people want to learn and become skilled". Ambika Soni, Minister of Tourism and Culture of India

At this Summit, a spotlight was trained on one glaring deficiency that has not received as much attention in previous meetings: the need to increase vocational training and technical skills in the workforce. India’s achievements in IT and pharmaceuticals, as well as the cadres of top managers who have spread across the world are testament to the talent that India has produced. What India lacks are people with the skills to keep its economy humming - the masons, carpenters, hotel waiters and armies of workers who are the foundation of any economy. "Labour productivity has been rising but our skill levels have been abysmal", said Suman Bery, Director-General, National Council of Applied Economic Research, India. "The skill levels of the labour force are lower than what we need for 9% growth".

Much has been made of India’s youthful demographics where over half the population is under the age of 25 (see Figure 3). According to Goldman Sachs, the number of people of working age (15-60 years old) will peak at about 64% around 2020. This can be a significant global competitive advantage, but only if the jobs are created to accommodate the bulge in the workforce. It all starts with education, Indian Finance Minister Palaniappan Chidambaram told participants. "India can reap the benefit of its demographic dividend and avoid it turning into a demographic liability by ensuring that every child can access quality education and stay in school for at least 10 years".

It also requires a concerted effort to provide skills training. The government acknowledges this critical task. "For every one of our people to benefit from new employment opportunities being created across the economy, we must ensure that every Indian is educated and skilled", said Prime Minister Manmohan Singh in his Independence Day message to the nation in August this year. Singh announced the launch of a Vocational Education Mission to open 1,600 industrial training institutes and polytechnics, 10,000 vocational schools and 50,000 skills development centres. Every year, he said, over 10 million students will receive vocational training, four times the number today. "We will seek the active help of the private sector in this initiative so that they not only assist in the training, but also lend a hand in providing employment opportunities".

"The government needs to let go of its control over the education system", said Shiv Nadar, Founder, HCL; Chairman and Chief Strategy Officer, HCL Technologies, India. Syllabus-driven state schools do not give students the skills they need to compete. "We need skills development as a major initiative", Sunil Bharti Mittal, Chairman and Group Chief Executive Officer of Bharti Enterprises and President of the Confederation of Indian Industry (CII), agreed.

Colette Mathur, Senior Adviser at the World Economic Forum, offered a practical proposal with respect to the development of special economic zones: require investors to set up a training institute for workers in their sector. Ambika Soni, Minister of Tourism and Culture of India, supported the idea. "Young people want to learn and become skilled", she said, noting the need for training facilities in such fields as tourism, hotel management and healthcare. There are opportunities for investors, the minister concluded.