Student Financing Channels for Technical and Vocational Education and Training (TVET) - An Appraisal

Abstract

India first introduced a formalised framework for skill development in 2009, seeking to build an ecosystem that would enable skilling speedily at scale without compromising on quality, targeting 500 Million persons by 2022. Yet even after 13 years of concerted, organised effort which has even seen the creation of a Ministry dedicated to the cause, progress has been less than ideal. Several studies have been conducted over the course of this time to examine bottlenecks, cumulatively weaving a complex web of interlocked issues, which is unsurprising giving the complexity of the challenge as well as the (relative) nascency of the space. The issue of affordability for the beneficiaries, is one that has received scant attention. It finds salience seeing as the target demography of aspirants for TVET is largely financially underprivileged and Government-sponsored interventions have limited scale and translate poorly in terms of employability. Market-driven skilling relies on the fee-paying capability of aspirants in order to invest into and provide better quality TVET. The study seeks to examine credit channels for TVET aspirants, anchored primarily around the Skill Loan Scheme (SLS), published by the Government in order to facilitate easy and affordable credit for skill development programs. It finds the scheme to have fallen short of its mandates and conducts primary qualitative research in the form of semi structured interviews from stakeholders, being Training Providers (TPs - who facilitate loans for their candidates) and Public Sector Banks (PSBs – being the primary lenders under the Scheme), to understand bottlenecks. Furthermore, the modus operandi of private sector financiers actively engaged in TVET lending, being Non-Banking Financial Companies (NBFCs) and FinTech's, were also qualitatively appraised in order to highlight best practices as well as clarifying the support required to encourage greater, more user-friendly lending. Large-scale and concurrent advocacy together with the prescription of lending mandates are found the be the two primary recommendations for enhancing uptake under scheme whereas eligibility of private sector financers to partake from the credit guarantee fund was found to be a key recommendation in order to encourage greater lending at more preferential terms