Underlying case for a comprehensive internship scheme
In an ageing world, India boasts of an enviable demographic dividend with a median age of just 28 years, in comparison to 38 for China and 49 for Japan. As a result, we are touted to become the world's largest human resource provider – both skilled and semi-skilled - over the coming years. Approximately 10% of our population falls within the age group of 20-24 years, a segment expected to drive our economy towards achieving the coveted “developed economy” status by 2047.
Many large corporations have established in-house training and development centres, known as corporate universities, for providing formal corporate exposure and on-the-job trainings before deploying new hires.
Key features of the recently announced scheme
Last week, as part of the Union Budget, the Hon’ble Finance Minister announced an internship scheme aimed at enhancing the skilling and employment ecosystem in the country. The innovative initiative seeks to train one crore youths at the top 500 companies over the course of the next five years. A long-standing industry demand, the scheme will provide beneficiaries exposure to real-life business ecosystems, with the government sponsoring the majority of the monthly allowance of INR 5,000 and one-time assistance of INR 6,000 at a total cost of INR 63,000 crores to the Exchequer.
As per the budget documents, the eligibility criteria for the programme includes the following:
- Age: 21 to 24 years
- Status: Unemployed and not engaged in full-time education
- Qualifications: Must not hold IIT/IIM/IISER/CA/CMA qualifications
- Exclusions: Ineligible if any family member is a government employee or is assessed for income tax
While the initiative is commendable in both its ambition and timing, it does raise practical concerns. For instance, training one crore individuals across the top 500 corporates translates to an ambitious target of 20,000 interns per corporate over a five-year period or 4,000 interns annually. Hiring, managing, and engaging such a large number of interns could present significant operational issues for companies in the long run.
Our suggestions for achieving the desired levels
The scheme is undoubtedly a step in the right direction, especially in light of the rising level of youth unemployment in the country. Based on our experience of formulating and implementing similar schemes globally, we would like to propose the following suggestions to enhance the scheme:
- Limiting the scheme to unemployed youth who do not reside in metropolitan cities, given that metros already have access to higher skilling and employment opportunities.
- Flexibility to increase the age limit from 24 years to 26 years as unemployment amongst postgraduates is equally high.
- Reassessing the ineligibility criteria of an individual whose family member is liable to be assessed to income tax. In a country where only about 2.2% of citizens pay income tax, this criterion seems unnecessary and almost punitive towards honest taxpayers. Instead, an upper limit of annual income can be introduced to ensure the benefit does not flow to higher-income groups.
- Increasing the number of corporates participating in the scheme from 500 to 1000 to make the annual internship targets more achievable.
In India, while ideas for policy improvement are ubiquitous, implementation can sometimes fall short. To address this, we recommend mandating a dedicated organisation, potentially involving industry chambers such as the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce & Industry (FICCI), under the close supervision of the Ministry of Skill Development & Entrepreneurship and/ or Ministry of Labour and Employment.
Making it a win-win for all
The scheme benefits both our youths and large corporations in the following manner:
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