India is eagerly awaiting her demographic dividend – the 1.1 billion working age adults that will populate our nation by 2022. 700 million Indians are under the age of 35, a stark contrast to aging Western economies. In ten years time, India will be supplying a full quarter of the world’s workforce. The question of the hour: will these workers be educated, equipped with technical training and soft skills, or will they just get by, limping along in an informal economy or unable to scale their career ladders?
Our current capacity can only train 25% of new workers needed, so the Indian government machinery has creaked into high gear. The National Skill Development Corporation (NSDC) is a public private partnership tasked with the arduous challenge of skilling 500 million people in the next 10 years – a human resources nightmare. NSDC is investing heavily in vocational training institutes, both nonprofit and private sector. With this booster, training schools should be thriving across the country but many are struggling to attract enough students. The cost of training, varied as it is, is a major deterrent. Leveraging the Dividend, a report by strategic philanthropy foundation Dasra, reveals that nearly 30% of the Indian population lacks the financial capacity to invest in skills training.
Who will bear the cost of training for these 400M odd Indians? While a current Reserve Bank of India (RBI) scheme for collateral free loans exists, it has had dubious success and only covers degree education (engineering, medicine, etc.) – vocational training does not fall under its ambit. If a skilled workforce is India’s big ticket to double-digit growth, the government and Indian banks should partner to invest in financial inclusion, especially education lending for vocational training opportunities. However, even if political will changes policy to pave the way, banks will still need default prevention measures to be comfortable, whereas those most in need of vocational training cannot provide banks collateral security.
One solution to tackle this challenge is my organization, Enzi, which offers collateral to banks for financially challenged, high potential Indian students to access bank loans for vocational training. We aim to streamline education lending while removing the financial barrier to education and economic development in India. Enzi is in the company of several fine organizations working for financial inclusion and expanded credit. However, as long as lending, particularly for education, continues to rely solely on the evidence of enough assets for repayment, it fails to realize its true potential to eradicate poverty.
My aspiration for my generation is for a holistic factoring of talent and future potential. My wish for my life is to be part of this revolution.