Abstract
This paper seeks to bring forth the importance of informal sources of learning for skill formation outside of formal educational and vocational training institutions, a phenomenon which is often overlooked in the literature and policy discussions. The discussion in this paper emphasises the need to develop policies and institutions that foster skills in ways that are complementary to, or further extend the impact of activities of formal educational and vocational training institutions. It draws attention to the little-recognised fact that the absorptive capacity of productive workers, albeit with low levels of education, in informal enterprises is nevertheless quite high. Yet, surprisingly little attention has been directed to this issue, in spite of its great policy relevance for India's economic development, particularly in the context of highly competitive global markets. There is still a great deal that we need to know about the processes of skill acquisition and skill upgrading taking place in India's small and informal enterprises, especially of those in the lower tiers of global production chains. This paper emphasises the urgent need to focus policy attention and resources towards strengthening training delivery for firms in the informal economy, as well as recognising and certifying the skills of workers in such enterprises. This issue is crucial in order to attain not only social equity, but economic growth as well.