CDFI
CDFI

Aug 03 2015

A re-look at the Apprentice Protsahan Yojana

A re-look at the Apprentice Protsahan Yojana

The Apprentice Protsahan Yojana, APY scheme was launched in October 2014 amidst fanfare, with advertisements across newspapers, radio and television.  The aim of the scheme was to encourage apprenticeship in Micro, Small and Medium Enterprises, MSMEs with the Central government sharing half the stipend being paid to apprentices for the first two years. The scheme was targeted at all establishments eligible under the Apprenticeship Act, 1961 particularly in the manufacturing sector. An ambitious target of supporting 1,00,000 apprentices in 30 months was set. But a reality check in July 2015, even nine months after the launch of the scheme, showed that only about 1000 apprentice applications had been received, against a per month application target of 3334 applications. Not only was the adoption rate poor, the request for claims had also been minimal. What were the roadblocks to success for the scheme?

To understand that, let’s take a look at the scheme in some detail. The idea behind the scheme was for the government to encourage skill development and employment among the youth, with the Central government paying half of the stipend of an apprentice employed by an MSME, up to a maximum of two apprentices per unit for two years. Of the 28,500 establishments registered for trade apprentices, only 2,11,000 trade apprentices are undergoing training as against the available 3,59,000 seats. The gap of over one lakh seats available for apprenticeship was what this scheme aimed to fill. It was also felt that the APY, if successful, would bring in more enterprises under the Apprentice Act and help build skilled manpower for the industry.

However, among the challenges the scheme has faced is the difficulty in finding the right apprentice, as well as the right employer by the apprentice. The low return on effort, RoE for utilising the scheme has been another hurdle faced by MSMEs. The return of monetary benefits against the employer’s efforts for APY registration at state and regional directorates, and for monthly claim submission, does not seem significant. Also, the relevance of monetary grant as percentage of overall expenses (including salary disbursements) is minimal. Let us take the example of a Delhi based enterprise with 16 employees with average monthly salary of INR 15,000. The monthly salary disbursements would be a total of Rs 2,40,000. The value of monthly APY reimbursement for two apprentices as semi-skilled labour would cost Rs 9,542 in Delhi (50% of semi-skilled labor cost) which works out to a monetary benefit of only 4% of total salary disbursements. Also, RoE reduces with number of employees as indicated in the table below:

Number of Apprentices 2
Wages for Semi Skilled Labour 9,700
Average Per Month Regular Salary 15,000
Number of Employees 16 30 50 100
Total Monthly Salary Disbursement ( in lacs) 2.4 4.5 7.5 1.5
Percentage of Apprenticeship Amount to Total Salary Disbursements 4.04% 2.16% 1.29% 0.65%

In such a scenario, a possible solution could lie in the use of technology for bringing together both the employer and the apprentice in such a way that both benefit. The creation of an online platform for apprentices to search and apply for available positions of apprenticeships at various organizations/MSMEs could be the first step. Industrial Training Institutes (ITIs), Regional Vocational Training Institutes (RVTIs) and National Vocational Training Institutes (NVTIs) could be given access to recommend students for apprenticeship positions, which could further be searched by prospective employers. An online facility for MSMEs to search, find and record start/end dates and stipend with provision to upload self-certified apprentice contracts would simplify the process further. This simplified APY registration process would go a long way in encouraging enterprises to take advantage of the scheme. Also, an additional channel for handholding (filling forms for APY) to MSMEs through Common Services Centre, CSC/other outreach centres would impact positively on the utilisation of the scheme.  Also, an additional channel for handholding (filling forms for APY) to MSMEs through Common Services Centre, CSC/other outreach centres would impact positively on the utilisation of the scheme. . In order to avoid the cumbersome monthly claim submissions process, the digital platform could auto capture salary remittances by employers and trigger Direct Benefit Transfer, DBT of auto credit of APY grants to apprentice accounts. An online channel for receiving grievance From MSMEs and apprentices would also help understand the problems in uptake of the scheme. Increasing awareness levels through campaigns for target beneficiaries to ensure better reach is another measure that needs to be undertaken. With these in place, the path could be made clear for better uptake of the scheme among enterprises and remove bottlenecks that have stymied the absorption of apprentices in MSMEs.

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