Economics of Skill Formation:A Note on the Need for Proper Manufacturing Base

The skill gap constraints in India are the symptoms of the lack of initiation of division of laborled sophisticated industrial differentiation. The focus on education and institutional initiatives for skill creation have to be integrated with sophisticated industrial differentiation; the subsidies have to target firm-specific skill formation that amounts to subsidies being directed at firms that employ higher labor force and targets larger volume of output. The higher labor productivity should be in terms of intermediate costs reductions that in turn permit higher wages and profits. Such growth process propagates itself in a cumulative way - supporting the coming up of new tasks, new skills without facing skill gap constraints.