3E policy: From more cooks in the kitchen to a different recipe

The contours of an appointment with India’s destiny built on three Es—education, employment and employability—is emerging
Education may be the most important of the 3Es because in the modern world of work, the most important vocational skills are reading, writing and arithmetic and you can’t teach kids in six months what they should have learnt in 12 or 15 years. Photo: Pradeep Gaur/Mint

Philosopher Thomas Paine wrote in Common Sense: “We have it in our power to begin the world over again.” The world of India’s 3Es (education, employment and employability) needed to begin all over again because we have too much informality, too few cities, too little manufacturing, too many farmers, too weak K-12 learning outcomes, too many unemployable graduates, too few apprentices and too much regulatory cholesterol.

Additionally, 3E policymaking needs to make a leap similar to what classical physics made to quantum physics—discrete systems to everything is interconnected—because the job of the government in jobs and skills is not to set things on fire, but create the conditions for spontaneous combustion. In the past two years, this reboot has begun; the report card would be great progress in employment, reasonable progress in employability, and need more boldness in education. Let’s look at all three areas individually.

In employment, we overestimate what policy can do in the short run and underestimate what it can do in the long run. Making India a fertile habitat for jobs needs many interventions; the massive divergence of the past five years between real wages (what employees care about) and nominal wages (what employers care about) in big cities needs the quality urbanization that the Smart Cities programme will create.

Regulatory cholesterol will come down substantially with the replacement of the 27+ numbers for every enterprise with the Unique Enterprise Number from 1 April 2017 and the move to online and paperless labour law compliance (employers currently use 500 crore sheets of paper for this).

As soon as Parliament is ready, 44 labour laws will be consolidated into five labour codes, but action on labour reform has begun with the decentralization of funds, functions and functionaries to state governments. Most importantly, fiscal self-discipline and prudent handling of the oil windfall is creating conditions for macroeconomic stability and lower interest rates that will kick off a job creation cycle by multinationals and domestic entrepreneurs.

Of course, the goods and services tax (GST) has been a miss—my guesstimate is that delays cost us 100,000 formal jobs per month—but hopefully, we will see its unique entrepreneurial upsides later this year.

For decades, the only meritocracies have been the IITs, IIMs and civil service exams, but the churn in nationalized banking, the focus on ease of doing business and the tone of zero tolerance around corruption is changing how business is done in New Delhi by shifting power from connected businessmen with regulatory access to entrepreneurs with nothing other than the sweat of their brow, the strength of their backs and the courage in their hearts.

In employability, the biggest innovation is a new ministry of skills. Skills is a horizontal in a government that is organized vertically; the past decade has seen continuous traffic jams between two central human capital ministries, at the intersection of two central human capital ministries and 19 other central ministries involved in skills, and between the central and state governments. A single neck to catch creates accountability and urgency. The amendment of the Apprentices Act whose reform was the 20th point in Indira Gandhi’s 20-point programme in 1975 is a huge move that enables raising our apprentice numbers from 300,000 to 10 million. State skill missions are being given more room and funds; every state’s opening balance is different and the path dependence needs them to craft their own agendas at the margin.