In News:

• India is at the cusp of a demographic transition, with a young workforce expected to drive its goal of becoming a $30 trillion economy by 2047.
• Yet, only ~4% of India’s workforce is formally skilled, and nearly 30% of trained individuals remain unemployed. Traditional skilling schemes have struggled, especially with job retention.
• Against this backdrop, Skill Impact Bond (SIB), launched in 2021, marks a paradigm shift in India’s skilling ecosystem by linking financing to actual outcomes.

What is the Skill Impact Bond (SIB)?

• Launched: November 2021.
• Implementing Agency: National Skill Development Corporation (NSDC) under Ministry of Skill Development & Entrepreneurship.
• Partners: British Asian Trust, Children’s Investment Fund Foundation (CIFF), HSBC India, JSW Foundation, Dubai Cares.
• Target: Train 50,000 youth (60% women), ensure sustained employment.

It is India’s first development impact bond focused on employment, not just certification.

How Does SIB Work?

1. Risk Investors (Private/Philanthropic): Provide upfront funds to service providers (training institutes).
2. Service Providers: Deliver skill training, placement support, and post-placement mentoring.
3. Outcome Funders (Govt/Donors): Repay investors if measurable outcomes are achieved (job placement + retention).
4. Third-Party Evaluator: Verifies outcomes.

Key Distinction: Funding is tied to placement and retention, not mere enrolment/certification.

Progress So Far

• 23,700 youth trained across 13 sectors & 30 job roles.
• 72% women participation – one of the highest in any skilling programme.
• 75% placed in jobs, and 60% retained beyond 3 months, exceeding national averages (<10% under older schemes).
• Jharkhand, UP, Delhi are leading states in enrolment.

Significance

• Women-led Growth:
  • 72% women trainees; many first-generation formal workers (tribal, rural, conservative households).
  • Skilling gives women not just jobs but also agency, confidence, and identity.
• Outcome-Based Financing:
  • Ensures accountability of training providers.
  • Attracts private/philanthropic capital into public welfare.
• Addresses Retention Challenge:
  • Traditional skilling: 84% complete training, but <10% stay in jobs beyond 3 months.
  • SIB model pushes for long-term impact.
• Replicable Model:
  • Can be scaled to health, education, social welfare.
  • Example: Project AMBER (apprenticeship-based skilling) also uses this financing.

Challenges Ahead

• Scale vs Depth: Training 50,000 is significant, but India needs millions of skilled youth annually.
• Social Barriers: Women face mobility, safety, and cultural challenges in sustaining employment.
• Monitoring & Evaluation: Requires robust third-party systems to measure outcomes fairly.
• Private Participation: Sustaining investor confidence demands continuous success stories.

Way Forward

• Expand outcome-based financing to more sectors.
• Strengthen ecosystem for women (hostels, childcare, safe mobility).
• Continuous mentoring & alumni networks to ensure retention.
• Use digital platforms for scalable skilling and tracking.