Recent National Skill Development Corporation (NSDC) data shows that a mere 35.77 lakh skilled workers, out of the 91.91 lakh trained under the Pradhan Mantri Kaushal Vikas Yojana-2 scheme, have managed to land a job in today’s job-strapped economy.
The Pradhan Mantri Kaushal Vikas Yojana-2 scheme was started as a way to impart skill and practical knowledge to the youth in order to qualify them for skill-based jobs. Sadly, the Indian economy is still unable to create enough jobs for the lakhs of skilled and eager applicants. Former Finance Minister P Chidambaram recently said that the lack of job creation right now is a “silent killer” whose destructive effects will be witnessed later.
For now, the NSDC is diligently pursuing an alternative that will capitalize on latent entrepreneurial talent, and also provide skilled youth with employment.
Nirvana Angel Investment Fund
The ‘Nirvana Fund’ will gather donations made from the private sector and establish a substantial pool of capital funds. These funds will be disbursed as ‘angel investments’ at minimal loan interest to fund the entrepreneurial ventures of those trained under the Pradhan Mantri Kaushal Vikas Yojana-2 scheme who haven’t yet landed a job. “The idea is to target candidates from the bottom 20 per cent of the pyramid. The names can be recommended by the trainers and short-listed candidates may have to undergo a test and further training before they get the loan,” said Manish Kumar, MD and CEO of NSDC.
The fund will be run and managed by Subroto Bagchi, who is currently the Chairman of the Odisha Skill Development Board, and also serves as the Chairman on Mindtree’s Board of Directors.
The driving force behind giving these loans seems to be more to nurture entrepreneurship than to generate profitable returns. This is evidenced by the way the NSDC is approaching the disbursal of funds – “The loan amount may be interest-free in the first year and a minimal interest of about 5 per cent may be charged from the second year. But loan repayment would not be the main concern for NSDC, which is more interested in encouraging entrepreneurial abilities amongst the candidates,” said Mr. Kumar, and added that “Our board has cleared the proposal and we have had some talks with private sector individuals. The idea behind calling it ‘Nirvana Fund’ is that those who have achieved everything they want in life can put their money in the fund and not expect any returns.”
Understanding failure of past entrepreneurship funds
Micro-finance schemes introduced in the past to push entrepreneurship tended to fail because the business units established by entrepreneurs are not always profitable. This meant that borrowers couldn’t always repay their loans on time which led to a lot of bad debt accumulation in the past.
To this end, Mr. Kumar says “Typically, such ventures have a low success rate. We know there is high chance of failure in entrepreneurship. But what we are looking at is the candidate’s repayment behaviour and whether he’s serious about returning it.” Meaning that serious candidates who really put in the work may even be exempt in certain circumstances from paying interest on the loan amount. Such candidates will be eligible for such loans in the future as well.
Make in India
With “Make in India” and in-house manufacturing being one of the government’s top priorities, this scheme will likely be an addition to the MUDRA and Stand-Up India MSME finance schemes. The government seems to be banking on internal job creation by Indians for Indians, and is pushing entrepreneurship to generate employment.