Barriers to skills development in India’s informal economy

Abstract

ABSTRACT India’s informal economy accounts for more than half the country’s GDP but is characterised by low levels of skills, and considerable barriers to skills development for workers. The Government of India has implemented ambitious policy initiatives for upskilling, designed to catalyse ‘formalisation’ of the economy, and improve productivity. However, evidence on skills development remains weak. Drawing on systematic review methodologies, this article reviews and synthesises the literature on the practical barriers to upskilling. It finds that access to, and quality of, training (especially for women) are serious limitations, while skills are often under-utilised in the absence of supportive labour market and wider business environment conditions. Training is often insufficiently linked to labour market and learner needs, and the capacity of the training system is limited. Government should increase investment in training for the informal sector, and consider strengthening incentives for training providers to focus on improving training quality and relevance.