The Ministry of Skill Development and Entrepreneurship (MSDE) launched a revamped ‘model skill loan scheme’ for skill development courses with a fresh maximum loan limit of Rs 7.5 lakh backed by a government-promoted fund.
- Previously, the maximum loan amount was ₹1.5 lakh.
Background
- Previous Scheme Performance
- Low Uptake: Launched in 2015, the old scheme saw limited success with only Rs 115.75 crore loaned to 10,077 borrowers by March 31.
- Constraints: The maximum loan limit of Rs 1.5 lakh and rising course fees led to low utilisation, as many high-cost courses were excluded.
- Availability of Formally Skilled Workforce in India: Only 5% of the so-called skilled workforce is formally skilled and hence there is a huge skilling gap that needs to be filled.
Model Skill Loan Scheme
- About: The new Model Skill Loan Scheme builds upon the Credit Guarantee Fund Scheme for Skill Development (CCFSSD), launched in 2015, addressing the challenges of financing high-skill training amidst rapid technological advancements.
- Benefits: This initiative will help candidates from urban and semi-urban areas access affordable finance for specialised training, enhancing their placement opportunities and potential for international mobility.
Revamped Scheme Features
- Increased Credit Guarantee Cover: Loans disbursed will be backed by a guarantee against default up to 75% of the loan amount.
- Higher Loan Limit: The maximum loan amount eligible for credit guarantee cover has been increased from INR 1.50 lakhs to INR 7.50 lakhs.
- Expanded Lending Framework: Earlier, only private, public and foreign banks which were members of the Indian Banks’ Association were eligible for facilitating loans.
- The new scheme includes non-banking financial companies (NBFCs), NBFC-MFIs (micro-finance institutions), and small finance banks as eligible lenders, beyond just private, public, and foreign banks.
- Broadened Course Access: The revised scheme will now allow access to more skill courses, against only national skill qualification framework (NSQF)-aligned courses under the old scheme.
- Also, non-NSQF courses that are on boarded on the Skill India Digital Hub platform will come under the scheme.
- The loan will provide better access to advanced-level skill courses, overcoming financial barriers to many aspiring students in acquiring futuristic and in-demand industry skills
Government’s Vision
- Future Challenges: There is a need to prepare for future technologies and job market demands. This scheme is a step in that direction.
- Strategic Planning: The government is focusing on long-term strategic planning for 2047, aiming to improve the impact of skill development on employment and the job market.
Government Initiatives for Skilling India:
- Pradhan Mantri Kaushal Vikas Yojana (PMKVY): It aims to enable Indian youth to take up industry-relevant skill training that will help them secure a better livelihood.
- Skill India Mission: It aims to provide skill training to millions of youth nationwide.
- It focuses on sectors such as manufacturing, construction, healthcare, tourism, and information technology.
- National Skill Development Corporation (NSDC): It plays a role in fostering skill development initiatives by collaborating with training partners, industry bodies, and vocational training providers to enhance skilling efforts.
- Standard Training Assessment and Reward Scheme (STAR): STAR ensures standardised training and assessment processes, leading to certification and better job prospects.
- National Skill Development Mission (NSDM): It aims to create an end-to-end implementation framework that provides opportunities for quality short and long-term Skill Development (SD), leading to productive employment and career progression that meets the aspirations of trainees.
- Skill Acquisition and Knowledge Awareness for Livelihood Promotion (SANKALP): It aims to strengthen institutional mechanisms for skill development and increase access to quality and market-relevant training for youth across the country.
- Sector Skill Councils (SSC): These were set up as interfacing organisations between the industry and the Government.
- National Migration Policy (NMP): The government is working to develop a NMP to protect the rights of migrant workers and facilitate their mobility as well as access to resources.
- The number of Indian workers migrating to other countries for work has increased by 20% in the past five years.