First vocational training, greater industry involvement, performance, based funding, extending apprenticeships, and digitally enabled tracking systems are some of the measures that will support India's skilling ecosystem to satisfy the changing needs of the labour market and achieve the dream of Viksit Bharat by 2047, Economic Survey 2025, 26 has mentioned.
The survey notes that India's workforce size of more than 560 million is inherently a strength, but it is also very important to enhance its quality because the growth of the economy depends on the size as well as the capabilities of the labour force. It adds that “opportunities for vocational education at all levels are vital for strengthening the skill ecosystem and realising the Viksit Bharat’s vision.”
Flagging that only 0.97% of 14-18-year-olds have received institutional skilling, while nearly 92% have had none, the survey calls for embedding structured skilling pathways in secondary schools (Classes 9 to 12). It says early exposure to market-relevant skills can boost employability, reduce dropouts, and help convert India’s demographic advantage into productive human capital.
The Central Board of Secondary Education (CBSE) offers skill and vocational education from Class 6 to Class 12, aiming to equip students with practical, industry-relevant skills. It offers short-duration (12-hour) skill modules through National Council of Educational Research and Training (NCERT)’s ‘Kaushal Bodh’ books in Classes 6 to 8. Students can choose skill subjects as electives in secondary (9 to 10) and senior secondary (11 to 12) levels.
Highlighting persistent gaps between training and employability of youths, the survey says that “local skilling remains inadequately aligned with industry needs”, while “weak technical and vocational education and training (TVET) quality” and limited practical exposure often result in certified candidates failing to meet employer expectations.
The survey states that evaluation of skilling initiatives must move “beyond compliance-based metrics such as enrolments and certifications” and instead focus on “whether skilling programmes generate sustained labour-market value in terms of employability, earnings, and job retention.”
To address these challenges, the survey calls for a shift from supply-driven to industry-driven skilling with industry involvement in training, apprenticeships and assessments. The survey also lays strong emphasis on apprenticeships. Apprenticeships should be opened up to the new, age and gig economy sectors such as green manufacturing, logistics, and digital services to meet the evolving industry demands, the survey states together with its recommendations of unified governance of apprenticeship schemes, more outreach at the district level, and bigger incentives for MSMEs (micro, small and medium enterprises) to increase their participation.
On the institutional front, the survey points out the changes that need to be made in order to bring Industrial Training Institutes (ITIs) up to date such as smart classrooms, modern labs, digital content, and courses that are aligned with the industry. These measures aim to “reposition ITIs as modern, industry-integrated institutions that deliver high-quality, demand-driven vocational training.”
On financing, the survey proposes moving towards outcome-based funding models to encourage closer employer partnerships and counselling of trainees.
According to the survey, digital infrastructure is another critical enabler. The integration of Skill India Digital Hub (SIDH), National Career Service (NCS) and the e-Shram portal (national database of unorganised workers) has created “a robust digital infrastructure that can be leveraged for real-time monitoring and assessment, linking training records with employment outcomes, employer demand, and individual skilling trajectories,” the survey explains. This will enable continuous tracking of trainees and support evidence-based policy decisions, it said.
The Economic Survey 2025, 26 review highlights a transition in education from input, based to "learning outcome" assessment framework that evaluates real competencies rather than simply years of schooling or course completion.
It states that, even though the enrolment in schools at all levels has increased, "learning outcomes are still very different among regions, social groups, and institutions, " which is a factor that lowers employability and productivity
In order to meet this challenge, the survey proposes that the National Achievement Survey (NAS), which tests the learning competencies of students in grades 3, 5, 8, and 10, be further empowered, and that "a PISA, like competency, based assessment at the end of Class 10" be introduced to compare the learning of students on a global scale.
The Programme for International Student Assessment (PISA), established by Paris, based Organisation for Economic Co, operation and Development (OECD), measures the proficiency of 15 year, olds in reading, mathematics, and science and their ability to apply these in real, life situations.
Moreover, the survey suggests "a NIRF, like ranking system for schools" along the National Institutional Ranking Framework (NIRF) as one of the ways to ensure transparency, accountability, and performance- driven improvement.
It is the objective of the learning outcome framework to establish measurable benchmarks for a range of skills that include literacy, numeracy, digital skills, problem solving, communication, and job, specific skills. The survey quotes that "assessment systems must change radically if they are to measure cognitive, technical and behavioural skills, " such as through the use of continuous evaluation, practical testing and workplace based assessments. Furthermore, it stresses the need for curriculum design to be aligned with industry standards in order to keep the education system relevant.
