Budget 2025 | Skilling India: a budgetary imperative for global leadership

As India aims to emerge as the Skill Capital of the World, a vision fuelled by the potential of its youth and the aspirations of the National Education Policy (NEP) 2020; it’s a journey that must be driven by shared effort. With over 65% of our population under 35, the opportunity to unlock the potential of this demographic dividend is immense. Yet, realising this potential requires a decisive push toward equipping our workforce with the skills needed to thrive in a rapidly evolving global economy.

The Union Budget 2025 presents an opportunity to align financial priorities with this objective, enabling India to set new benchmarks in human capital development.

Why skilling is non-negotiable

India’s journey toward becoming a $5 trillion economy rests on the ability of its workforce to adapt to the demands of automation, artificial intelligence, and emerging industries. However, the skills gap remains—only half of India’s graduates are said to have employable skills. This gap affects individual aspirations and limits the competitiveness of industries striving to excel in global markets.

The Union Budget 2024-25 reinforced the government’s commitment to education and skilling as key drivers of economic progress. Initiatives like Pradhan Mantri Kaushal Vikas Yojana (PMKVY) continued to focus on emerging skills in AI and green technologies, while Skill Acquisition and Knowledge Awareness for Livelihood Promotion (Sankalp) aimed to empower 500 million individuals by 2025. The newly launched Prime Minister’s Internship Scheme promised practical exposure for one crore youth, while employment-linked incentives and skill loans highlighted efforts to build an industry-ready workforce.

As promising as these initiatives have been, they also bring anticipation to understanding their real-world impact. The upcoming Economic Survey 2025 presents an opportunity to delve deeper into how these schemes have translated into tangible outcomes and whether they align with India’s skilling ambitions. Equally important is an impartial assessment of the cumulative impact of skilling programmes over the past decade. Do we need a course correction to narrow the employability gap further? Scaling these efforts is imperative, especially in industries such as renewable energy, advanced manufacturing, healthcare, and tourism, where the need for specialized skills is pressing.

Investment imperative

Globally, education and skilling have been acknowledged as engines of economic progress. The Education 2030 Framework for Action, endorsed by Unesco, recommends allocating 4-6% of GDP to education. India’s NEP 2020 echoed this vision, advocating for an increase in public investment in education to 6% of GDP, reflecting the global aspiration. This aspiration, first highlighted by the Kothari Commission (1964-66) and reiterated in subsequent policy documents, remains an important goal which has never been met.

A greater emphasis on public spending can complement private sector contributions, ensuring a balanced focus on accessibility, inclusivity, and quality. As a public good, education benefits from sustained government investment to align with national skilling and economic goals. Currently, India’s expenditure stands at 2.9% of GDP. In the Union Budget 2024-25, ₹1.48 trillion was allocated to education and skilling initiatives, indicating progress. With continued focus, the potential for education to transform lives and contribute to India’s development story remains immense.

Expanding access to vocational training in underserved regions, strengthening digital infrastructure for hybrid learning, and supporting scalable public-private skilling models can unlock significant potential. Specialized training in green technologies and AI could also help industries effectively meet global demands.

Laying strong foundations

Skilling cannot be an afterthought—it must be embedded in our education system from the very beginning. The NEP’s emphasis on holistic, multidisciplinary learning is encouraging, but its success lies in execution. Schools must integrate critical thinking, problem-solving, and creativity into their curriculums, equipping students to navigate a dynamic and complex world.

Additionally, introducing modular skill-building programmes in areas like entrepreneurial thinking, advanced production technologies, and robotics at the secondary level can spark interest in emerging fields. Incentivizing industries could further enhance these efforts to adopt school-to-work pipelines, where students transition seamlessly from classrooms to structured apprenticeship programmes.

Budget 2025: a catalyst

The upcoming Union Budget is not just a fiscal exercise but a chance to lay the groundwork for a transformative shift in India’s education and skilling landscape. Building on the government’s Academic Bank of Credits (ABC) initiative, a Skills Passport Initiative could enable individuals to track and leverage academic and skill-based credits, promoting continuous learning and adaptability in a rapidly changing job market.

Additionally, enhancing teacher training and digital connectivity can bridge urban-rural divides, ensuring equitable access to education and skilling resources. Fostering lifelong learning and creating innovative public-private partnerships (PPPs) will ensure scalable, sustainable results.

Shared vision for a skilled India

As India strides toward becoming the Skill Capital of the World, it must align its policies, investments, and innovations to empower its youth. The NEP 2020 has laid a strong foundation, and the Union Budget 2025 has the potential to accelerate its realization.

However, without strategic investments and decisive action, the vision of a skilled and employable workforce could falter, delaying India’s progress in the global economic arena. Education and skilling are not optional. Education is a public good, and it remains the government’s responsibility to ensure everyone has the tools and opportunities to build a future-ready workforce. Allocating 6% of GDP for education and skilling is a prerequisite to achieving this vision.

Rajendra S. Pawar is the chairman and founder of NIIT.

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