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Skill Gap Assessment Report for Odisha

1. Study background

Skill development has never been in the discourse across the country as it has been in the last few
years. It stems out of the realization that the skill base in the country is not strong and India will not
be able to reap the benefits of its demographic advantage if this area is not strengthened. As per
the Annual Report to the People on Employment (Ministry of Labour, Government of India, 2010), it
is estimated that only 2 percent persons in the age group of 15-29 years having received formal
vocational training and around 8 percent reported to have received non-formal vocational training,
indicating thereby that higher proportion of youth population actually enter the world of work
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without formal vocational training. In order to enhance the employability of the youths, concerted
efforts have to be made to enhance the skill development infrastructure in a manner that all those
who enter the labour force acquire relevant skills beforehand.

Some countries including USA, Australia and EU undertake advanced systematic assessments of
future skills demand using statistics and with the involvement of industry. Similar human resource
planning is still at its nascent stage in our country. NSDC has conducted studies to identify skill gaps
across different sectors. It has mapped 20 high growth sectors to identify what is the skill
requirement for the respective sector.

47,302

35,000

16,800 17,340 17,727

9,277
3,223 4,639 4,608 4,250 3,418 3,642
1,357 1,878

Incremental Manpower Requriement in 000's

Figure 1: Manpower requirement in 2022 across Sectors

The target of creating 500 million skilled workers by 2022 will be achieved with the active
involvement of policy makers, skill training institutions and employer organizations. Sustainable
development can be achieved by developing strategies that fit with the local context. Therefore as
one of its strategies NSDC is now keen to conduct studies across geographies so that local
economic and development policy analysis can be undertaken to get a demand side perspective. At
the same time there it would understand the supply side factors so that appropriate interventions
can be planned. Odisha is one such state where it intends to carry out a skill gap analysis.

1
NSSO data for 2004-05

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Skill Gap Assessment Report for Odisha

1.1 Objectives of the study


„ Review the socio-economic profile of Odisha

„ Identify developmental opportunities keeping in mind factor endowments and stakeholder


perspectives

„ Identify specific developmental initiatives/projects which have an impact on employment


generation

„ Identify the current and future (next 5 years) skills requirements and estimate the gap that
exists

„ Study the existing VT infrastructure both in the private sector and the government domain

„ Suggest suitable interventions/recommendations to address the skills gap

„ Recommendations have to be specific and actionable

„ Recommendations should also include specific initiatives that NSDC can take based on the
mandate of the organization

„ Create an action plan with indicative timelines

1.2 Approach and Methodology


The study entailed primary and secondary data collection and analysis. The key aspects that
defined the contours of the study were as follows:

„ The study covers all the 30 districts in the State.

„ Sectors: 19 broad sectors identified by NSDC and agriculture

„ Skilled job types considered : Highly skilled, skilled and semi-skilled

„ Tenure: 15-year period broken down into three phases of five year each

„ Secondary data analysis to project skilled workforce required over the next 15 years

„ Primary research undertaken to add peoples’ perspective

Secondary data analysis

The available secondary data was analysed in the following work steps.

► Computation of incremental workforce demand: The available data on broad categories of


workforce has been primarily mapped into three economic activities — agriculture, industries
and services. This workers’ data by economic activity has been further subdivided into the given
sectors. The sector growth numbers have then been arrived at by doing a state-comparable
analysis to identify the growth ranges and Odisha’s standing. Scenario analysis has been used
to arrive at the growth of the sector. The concept of labor elasticity factor (labor growth with
respect to sector growth) has been used to arrive at labor growth projections. The labor growth
numbers have then been used to arrive at the labor demand in the next 15 years. The
differential labor demand data, with respect to previous year data, has then been used to
compute the incremental labor demand.

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Skill Gap Assessment Report for Odisha

The skilled human resource requirement is further classified as

► Semi-skilled human resource: Diploma holders, graduates other than engineers, vocational
training (ITI pass-outs)

► Skilled human resource: Engineers (including diploma engineers), Doctors, technologist-


graduates etc) and;

► Highly skilled human resource: MBA/MCA/CA/ICWA/M.Tech or any other post-graduation.

► Computation of incremental workforce supply: The incremental supply for the various skill sets
has been arrived at, based on the intake of various students in institutes of the district. The
intake has then been multiplied by the utilization rate (computed from vacancy data) to arrive
at the actual workforce supply being generated. The level of qualifications offered by the
institute has been categorized into three skill types to arrive at the incremental supply of
workforce for these three skill-types. Again, scenario analysis has been used to derive supply
side numbers.

► Incremental workforce demand-supply gap: The difference between incremental workforce


demand and incremental workforce supply for these three broad skill sets has been considered
to calculate the incremental requirement gap in skilled jobs. This gap has then again been
broken down by the sectors.

The above approach was followed to arrive at the incremental demand-supply gap in. Along with
data analysis some key policies related to the state were also examined to get a perspective about
the future growth plans. Policies related to agriculture and industries were reviewed.

Primary data collection

A lot of emphasis was given to primary data collection to get the perspective of different
stakeholders including the government officials, members from the industry, vocational training
providers, NGOs and most importantly members from the community especially youth and women.
The information shared by them has enhanced the level of qualitative information gathered. It
helped to gauge the aspirations of people which are important while making recommendations for
the study so that these are more relevant for people for whom planning is done.

1.3 Limitations of the study


„ There were delays in conducting field visits since almost 20 districts were affected by floods.
Since the district level officials had been involved with relief work, the visits had to be delayed.

„ It was a challenge to undertake secondary data analysis since there was paucity of data – both
current and past. In addition, many a times there was a mismatch between data on a particular
indicator taken from two different sources. Therefore only reliable data sources were used to
collate information (Census 2001, Provisional report of census 2011; Economic Survey of
Odisha 2010-11; District Statistical Handbooks published by the Directorate of Economics and
Statistics, Government of Odisha, Reports of Economic Census-2005, Reports published by the
Directorate of Industries, Government of Odisha, Reports published by State Council of
Vocational Education and Training & Directorate of Technical Education and Training, Reports
and data published by the Department of Higher Education and Odisha Primary Education
Program Authority etc.)

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Skill Gap Assessment Report for Odisha

„ It is possible that a number of individuals have acquired skills through traditional means (family)
or learnt through experience. Since the numbers of individuals in this category are not
available, we have not included this in our analysis. The available data sources like Economic
Survey of Odisha 2010-2011, Economic census of Odisha 2005, etc. give information either by
different occupation establishments or by qualification. The information on jobs by
skill/designation is not provided by such reliable sources.

„ The unskilled category in the study includes all those who have received education upto school
level (including never enrolled, drop outs). There is no data available of this category of
individuals, which is why it has not been possible to provide analysis of the unskilled category.

„ The information contained in the Report is based on judgmental estimates and assumptions,
about circumstances and events. Accordingly, we cannot provide any assurance that the
projected results will be attained in this ever changing dynamic market environment. We
neither represent it to comprehensive or sufficient for making business decisions nor as
replacement of professional advice.

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Skill Gap Assessment Report for Odisha

2. Socioeconomic profile of Odisha

The state of Odisha (earlier called Odisha) was established in the year 1936. There were 13
districts which were increased to 30 in the year 1992. It is the ninth largest and eleventh most
populated state of the country with a population of three crores of which more than 22 percent are
tribals. The state has over 51000 villages. Its official language is Oriya but there are several
dialects. The state shares boundaries with Jharkhand in the north, West Bengal in the north-east,
Chhattisgarh in the west and Andhra Pradesh in the south.

Figure 2: Map of Odisha

The climate of the state is hot and moist. The state is also prone to natural calamities – flood,
cyclones and drought – which have caused a lot of damage to the people. The state has ample
natural resources. The landscape has forests, lakes, rivers and rich flora and fauna. The landmass is
1, 55,707 sq km. It has an uninterrupted coastline of about 480 km and a mountainous area in
many districts. Almost one third of its land is covered with forests. Odisha is known for its rich
culture, art and craft. The Jagannath temple, Konark and Simlipal wild life sanctuary are some
important and well known tourist destinations.

Socio- Economic Profile

Odisha has taken strides to improve its social indicators. There has been improvement on many
fronts, while some areas are still a matter of concern. There has been a marked improvement in
the literacy levels in the State. The literacy levels have increased from 63.08 percent (2001)
to73.45 percent with a male literacy of 82.40 percent and female literacy of 64.36 percent (2011).
A lot of emphasis is being given to improve the literacy levels of SC and ST communities,
particularly girls. According to the Economic Survey 2010-11 the state government has been
annually establishing 1000 hostels with 100 seats for ST and SC students. The following table
presents information on some key indicators:

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Skill Gap Assessment Report for Odisha

Indicator Odisha
Literacy rate 63.08 (2001) The corresponding increase at the national level has been
68.3% (2007-8) 65.38% (2001) and 71.7% (2007-8)
Dropout rate (primary level) 41.8% (2000-01)
2.83% (2009-10) Contributing factors – mid day meal, hostels for SC/ST
Dropout rate (upper primary) 57% (2000-01) children, improvement in infrastructure
8% (2009-10)
Birth rate 21.4% (2008) Corresponding figure at national level is 22.8%. Result of
improvement in infrastructure, delivery and accessibility.
Infant mortality rate Urban – 49% (2008) The overall IMR at national level is 53percent whereas for
Rural – 71% (2008) Odisha it is 69percent. Main reasons – poor availability of
birth attendants, high%age of low birth weight babies, lack
of professional pre and post natal care.
HIV positive cases 312 (2002) The steep rise in HIV cases is a matter of concern
16,733 (2009-10)
Source: Economic Survey of Odisha, 2010-11
Table 1: Socio Economic Indicators of Odisha

The human development index of Odisha


has increased from 0.404 in FY01 to
0.537 in FY06. The poverty rate has
decreased from 47.2 percent in FY2000
to 28.2 percent in the year FY2008. The
literacy rate has increased in excess of
15 percent in the last decade. The
improved performance on the social
development indicators may be
attributed to increased Government
spending on various social sector

schemes. It is evident from the Figure 3,


that between FY2005 and FY2011, the
Figure 3: Social Sector Spending- Odisha
expenditure on social services increased at a CAGR of 21.1 percent. Similarly, the proportion of
revenue expenditure on social services gradually increased from 32.2 percent in FY2005 to 38.6
percent in FY2011.

Over the last few decades, Odisha has witnessed rapid changes in its population. The growth rates
in rural areas have shown a decline. There is rapid growth of cities and migration to urban areas in
search of better livelihood. The status of women has improved only marginally. The combined
SC/ST population which is about 39 percent have remained largely been deprived which has made
the state government give special focus to the areas inhabited by these social groups. The rural-
urban poverty gap is larger than the all-India average. According to the 61st Round of NSS, poverty
has shown a sharp decline in the coastal areas while it is still a matter of concern in the northern
and southern districts. 19 out of its 30 districts are covered under the Backward Region Grant
Fund (BRGF).

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Skill Gap Assessment Report for Odisha

Economic

The state of Odisha, in the last couple of decades has witnessed a considerable upswing in terms of
the growth trajectory. From being one of the poorest states in 1990’s it has witnessed significant
Gross Domestic Product (GDP) growth in the past decade. In the last quinquennium the state GDP
has grown annually (Annual Average growth rate) at 9.4 percent. This growth in the state GDP is
congruent with the social sector spending and development. The growth in the state GDP is
particularly due to growth in the secondary (industry) and the tertiary sector (services). The service
sector constitutes around 54 percent of the state GDP (in FY2010), followed by industries sector at
28 percent and agriculture sector constitutes the remaining 18 percent. In the last six years,
contribution from industry and service sector has increased 4 percent and 2 percent respectively,
indicating a higher growth in these sectors.
S.No. District Literacy rate Per capita income at 2004-2005 at current prices
1 Angul 78.96 55,937
2 Balasore 72.51 14,331
3 Bargarh 83.25 13,135
4 Bhadrak 65.5 12,280
5 Balangir 75.16 15,981
6 Boudh 80.66 14,467
7 Cuttack 84.2 20,335
8 Deogarh 73.07 13,947
9 Dhenkanal 79.41 16,540
10 Gajapati 71.88 14,975
11 Ganjam 54.29 14,686
12 Jagatsinghpur 78.36 24,213
13 Jajpur 80.44 15,090
14 Jharsuguda 87.13 38,747
15 Kalahandi 87.51 13,088
16 Kandhamal 69 20,547
17 Kendrapara 60.22 12,245
18 Keonjhar 65.12 26,211
19 Khurda 49.87 24,578
20 Koraput 85.93 25,171
21 Malkangiri 49.49 12,973
22 Mayurbhanj 63.98 13,292
23 Nabarangpur 48.2 11,358
24 Nayagarh 58.2 11,549
25 Nuapada 79.17 13,224
26 Puri 85.37 14,918
27 Rayagada 50.88 19,326
28 Sambalpur 76.91 21,577
29 Sonepur 74.42 12,667
30 Sundargarh 74.13 24,581
Source: Economic Survey of Odisha, 2010-11
Table 2: District-wise literacy rate and per capita income

The annual growth rate in the 10th five year plan was 9.51 while in the first three years of the 11th
Plan the state economy has grown at an annual rate of 9.57 percent (at 2004-5 prices). The real
per capita income in the state, although still behind the national average has shown an upward
trend. There are variations in the annual growth rates across districts. The average growth rates
are higher in Jajpur, Keonjhar and Sundargarh, Angul and low in Malkangiri and Nabarangpur.
There are regional disparities. Some districts despite having high literacy levels do not have a high
per capita income which shows that there are limited opportunities for employment. Kalahandi, for
instance, has high literacy rate but its annual growth rate is only 4.9 percent as a result of which

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Skill Gap Assessment Report for Odisha

the per capita income is lower than some other district with lower literacy rates. Uneven
opportunities of employment result in migration of people to other states. Ten major cities
including those of Surat, Kolkata, Delhi, Mumbai, Chennai, Bengaluru, Hyderabad,
Vishakhapatanam, Jamshedpur and Bhilai absorb about one third of the total migrant population
from Odisha. The most favoured destination states for search of work/employment are Gujarat,
West Bengal, Maharashtra, Chhattisgarh and Andhra Pradesh. Many people from southern and
western parts of Odisha work in and around Raipur as daily wage earners in brick kilns, as rickshaw
pullers, as casual workers in spinning mills etc. Most people from Odisha have been found working
as diamond cutters in the diamond industries of Gujarat. In other cities they are engaged as
domestic help, hotel boys, plumbers and security guards. Besides inter-state migration there is
intra state migration from the interior areas of districts like undivided Koraput, Phulbani, and
Keonjhar to big cities in search of work.

Agriculture

Although about 65 percent of the State’s workforce is dependent on the primary sector –
agriculture, fisheries, animal husbandry, fisheries and forestry – it contributes only 18 percent
towards State’s GSDP. Inadequate and erratic irrigation still remains a major constraint for
improving agriculture and agricultural productivity. The share of cultivators and agricultural
workers has sharply declined between 1991 and 2001. There has been a shift of main workers
away from agriculture and allied activities. However, it is the mainstay of Odisha’s economy as it
provides employment to majority of the state’s population. Crop production, animal husbandry,
fisheries and forestry are the major sub-segments in agriculture.

The economy of the state is largely agrarian. Being largely rural agriculture is an important source
of livelihood both for owner cultivators and daily labourers. Mixed farming (crop and livestock) has
been the most predominant farming system for over 80 percent of rural households and 30 percent
of their incomes are derived from livestock. The long coastline and other fresh water resources
have provided opportunities for fisheries. The state is ranked 7th in fish production. According to
the Fishery Survey of India there is scope to increase it from 342.7 thousand metric tonnes (FY07)
to 513.7 thousand metric tonnes.

The livestock infrastructure in the state is poor considering the livestock population and its
potential to supplement household economy and contribution to the farming system in a subsistent
economy setting of rural Odisha (Atlas of Development Trends Odisha, Foundation of Ecological
Security). The ratio of the number of institutions is quite low. This ratio is lower in districts having
more inaccessible villages like those of Gajapati, Kandhamaal, Deogarh, Rayagada etc. The number
of local aid centres with artificial insemination facilities is 2209 which is half the corresponding
number in the neighbouring state of Andhra Pradesh. The per capital milk production is only is only
about 26 kg as against the national average of 82 kg.

Odisha formulated its first agriculture policy in the year 1996 which augmented a shift in
agriculture from subsistence to commercial and accord it a status of industry. The policy was
revised in 2008, giving it a more futuristic form to address the emerging trends, chalk out an
agenda for agricultural improvement in the next 10 years. The policy aims to enhance productivity
of major crops, facilitate investment in agriculture through public private partnership particularly in
areas like modern farming, post harvest management, marketing, agro processing and value
addition. The policy also outlined a strategy to improve horticulture and floriculture. A significant

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Skill Gap Assessment Report for Odisha

aspect of the policy was to encourage integrated farming which would help in reducing dependence
on any one area. This would mean that capacity of the farmers would be enhanced to practice a
combination of agriculture, horticulture, livestock, poultry, agro forestry, sericulture, pisciculture,
whatever was possible for them. The policy made provision for strengthening marketing linkages,
access to credit and the use of ICT to promote information and communication with regard to
agriculture. Myriad of schemes have stemmed out of these policies, most significant of these is the
establishment of APICOL which was set up to promote entrepreneurship in the area of agriculture.

Industries

The economy of Odisha has been on a growth trajectory in the recent years. In the industries'
sector, the growth in GDP is led by large scale industries, followed by medium and small scale
industries and traditional industries such as handloom and handicraft. The state is inviting heavy
investment in mining and power sectors giving rise to high levels of industrialization and
urbanization.

Odisha has had increased focus on infrastructure development in the state in terms of increase in
road and rail network, proposed expansion of airport. Communication facilities have been stronger
in coastal districts of Cuttack, Puri and Ganjam. There has also been significant growth in the
construction of gram panchayat and forest roads. Paradip is one of the major ports of India. A new
port facility between Haldia and Paradip is being developed.

Key Policy Initiatives

The first major policy document for industrial growth in Odisha was developed in 1996 which
outlined its intent to develop industries by attracting investments, developing infrastructure and
harnessing the advantages of its vast natural resources. At the same time there was considerable
emphasis on advancing agro based industries, strengthening rural economy. The policy gave special
focus on skill development and strengthening entrepreneurship.

In 2001 the state government announced policy resolution with the aim to transform Odisha into a
vibrant industrial state. It resolved to create an enabling environment to attract private players to
invent in the state. A few priority sectors were identified where it would give greater focus –
electronics, telecommunication, IT enabled services, agro and marine based industries, craft,
tourism, mineral based industries including gem cutting and polishing and fly ash based industries.
The policy resolution reemphasized the need for human resource development particularly by
enhancing the role of private sector in setting up of specialized institutes and training facilities.
Incentives were given to set up industrial units in some of the backwards districts – Kalahandi,
Nuapada, Bolangir, Sonepur, Koraput, Malkangiri, Rayagada, Nabarangpur, Gajapati and Deogarh.

In 2005 the state government enacted the State Employment Policy 2005 with the aim to create
large scale self and wage employment opportunities. The policy once again emphasized its intent
to create self employment opportunities in agriculture and allied sectors, handicraft, cottage
industry and IT industry. One of its objectives was to facilitate launching of training programmes for
the educated and uneducated unemployed persons to upgrade their skills. Recognising the potential
of the primary sector to generate employment opportunities the policy laid special emphasis on
sectors like forestry, watershed development and horticulture with associated land and rural
communication development. Special focus was given on the development of SC/ST/OBC,
Minorities and women’s empowerment.

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Skill Gap Assessment Report for Odisha

More recently in 2007 a public private partnership policy has been introduced to facilitate the
partnership between the government and private players. Its objectives include putting a legal and
institutional mechanism in place to encourage PPP.

In 2008 the state government enacted the Odisha MSME development policy that focused on
revival of sick MSMEs, maximizing the growth of existing MSMEs, broad basing their growth in all
potential sectors of economy. The policy too has laid special emphasis on skill development and
linkage between industries and technical institutions.

Service Sector

The major contributors to the growth of the service sector are trade, hotels and restaurants,
construction and real estate and transport storage and communications. These constituents of the
service sector also provide the opportunity for both employment generation and self employment.

Service segment contributes a significant 54 percent to the state’s GSDP. Trade, hotels and
restaurants are the main contributors. Other sectors are construction and banking. Odisha has the
advantage of having almost 60 percent of its bank branches in rural areas.

As per quick estimates 2009-10, the trade, hotels and restaurants sub-sector contributed about 23
percent, followed by `other services’ (21percent) and transport, storage and communication (18
percent) in the State GDP service sector. Although banking and insurance sub sectors contribute
only about 6 percent of the service sector, it provides indirect benefits in the form of strengthening
the financial infrastructure. Tourism has huge growth potential since it involves labour intensive
activities; yet, it has shown less growth as compared to other states.

Infrastructure

Odisha is deficient in infrastructure development although concerted efforts are being made to
improve it. On the positive side the power sector reforms have been carried out which makes power
easily available although its distribution and transmission losses are still a problem. Road density in
Odisha is better than the all-India average but the state lags in surface density. This is being
improved with the support of programmed like Pradhan Mantri Sadak Yojana and Bharat Nirman. A
number of bridges and all weather roads are being constructed to improve connectivity with the
remote habitations. Railway density in the state is 15 km per thousand sq km of area which is lower
than the national average of 20 km per thousand sq km. The cargo shipment activity at Paradip too
has shown consistent improvement. The tele-density is yet to catch up with the national average,
although postal density is higher than the national average. The state is taking several steps to
improve the use of information technology. E governance is being encouraged to improve
governance at all levels.

Thus, the state is taking steps in several directions to bring about improvement in its economy as
well as human development indicators. The factor endowments for growth of industry and giving a
better quality of life to the populace are making progress albeit slowly. Since majority of the
population is dependent on agriculture, greater steps need to be taken to take it beyond the
subsistence level. Furthermore, there is a great need to develop the capacities of people so that
they practice integrated farming involving other primary sectors like horticulture, fisheries, animal
husbandry and undertake value addition through food processing so that the overall contribution of
the agriculture sector to the economy of the state shows rapid improvement.

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