In a development raising significant questions about implementation efficiency, the Central government has spent only 5% of the funds allocated under its flagship employment and skilling package during the fiscal year 2025-26. This low expenditure has brought the programme's incentive structure, targeting mechanisms, and overall execution under intense scrutiny.
Details of the Flagship Employment Package
Announced by Finance Minister Nirmala Sitharaman in the 2024-25 budget, this special package was designed as a comprehensive initiative to enhance youth employability. The package comprised three major components: a national internship scheme, the upgradation of 1,000 government-run Industrial Training Institutes (ITIs), and various employment generation schemes aimed at skilling the youth and preparing them for the job market.
The ambitious programme set a target to benefit approximately 41 million young Indians over a five-year period, with a projected total cost of Rs 2 lakh crore. It was envisioned as a cornerstone policy to address skill gaps and boost job readiness among the country's burgeoning youth population.
Budget Data Reveals Low Expenditure
Latest budget data released on Sunday paints a concerning picture. In FY 2025-26, the government spent nearly Rs 1,730 crore on the three components of the programme. This figure stands in stark contrast to the total allocation of Rs 33,830 crore made in the 2024-25 budget, representing a mere 5% utilization rate.
Internship Scheme Sees Limited Traction
The internship scheme, a key pillar of the package, has particularly struggled to gain momentum. Having seen only two pilot phases so far, the Centre spent Rs 526 crore of the Rs 10,800 crore allocated for the scheme during FY26. The scheme is currently being finalized, with the Ministry of Corporate Affairs expected to seek cabinet approval soon. Consequently, funding for the scheme has been adjusted to Rs 4,788 crore for the 2026-27 fiscal year.
The performance data from the pilot phases reveals challenges in uptake. In the first phase, nearly 6.2 lakh applications were received for approximately 1.3 lakh internship opportunities. While companies extended over 82,000 offers, only about 28,000 were accepted by candidates. The second round showed a similar pattern, with more than 83,000 offers made against 1.2 lakh opportunities, but only nearly 24,600 acceptances recorded.
Concerns Over Implementation and Targeting
This significant underspending has ignited a debate among policymakers and analysts. Key concerns center on whether the incentive structures are attractive enough for both companies and youth, if the targeting of beneficiaries is accurate, and whether administrative bottlenecks are hindering rollout. The low acceptance rates in the internship pilots suggest potential mismatches between offered opportunities and youth expectations or preparedness.
The sluggish fund utilization also raises questions about the pace of ITI upgradations and the launch of employment generation schemes under the package. With a vast population of youth awaiting skilling and job opportunities, efficient execution of such flagship programmes is considered critical for India's demographic dividend.
Observers note that while the scheme's vision is expansive, bridging the gap between allocation and actual on-ground expenditure remains a formidable challenge. The coming fiscal years will be crucial to assess whether implementation hurdles can be overcome to realize the package's full potential in empowering India's youth.
