Skill Impact Bond - An Innovative Financing Tool | UPSC Notes | Testbook

Understanding the Skill Impact Bond

The Skill Impact Bond is a n novel financing instrument that capitalises on private sector funds and expertise. Unlike traditional approaches that focus on inputs such as training and certification, the Skill Impact Bond emphasises outcomes such as job placement and job retention among India's youth.

• The Skill Impact Bond, the first of its kind in India, aims to benefit 50,000 young Indians over a period of four years, with women constituting 60% of the beneficiaries.
• This initiative has been launched by the National Skill Development Corporation (NSDC) in India.
• The partnership also seeks to enhance India's technical and vocational education system through knowledge exchange, generation of evidence and data, and incorporation of best practices.

How the Skill Impact Bond Works

Source: NSDC

• The Skill Impact Bond's main goal is to transform the way skill training programmes are delivered, focusing specifically on bridging the gap between skilling and employment, with a special emphasis on women.
• The initiative is designed to encourage a results-oriented approach that prioritises job placement and retention over a four-year period.
• The collaboration brings together a diverse group of funders and partners, each bringing their unique expertise in areas such as innovative finance, skill development, gender equality, monitoring and evaluation, and data-driven decision making.

More on this topic: Skill India Mission

Benefits of the Skill Impact Bond

• The Skill Impact Bond aims to create sustainable employment opportunities and enhance the overall health and well-being of skilled individuals.
• The bond will unite various philanthropic organisations, skilling partners, risk investors, and capital providers to bolster the capacity building of India's skilling and Technical and Vocational Education and Training (TVET) ecosystem.
• Enhance skills to meet international standards by involving industry in the development of standards, curriculum, and quality assurance frameworks.
• Act as a 'market-maker' by attracting funding, especially in sectors where market mechanisms are ineffective or absent.
• The Skill Impact Bond significantly contributes to the national goal of skilling India's population, primarily by promoting private sector involvement in skill development programmes and providing necessary funding.