How MSMEs can save the PM internship program

The pilot of the Prime Minister’s Internship Program ended on November 15, 2024, with 6.5 lakh applications for 1.27 lakh internship opportunities. The program aims to provide one million internships in the first five years and improve the employability of candidates. But experts say the policy in its current form has certain limitations that could prevent it from achieving the goal. Scalability, absorption of trainees into the labor market and the need for migration without sustainable income are key issues in the scheme which can be addressed in one move by expanding the scheme to MSMEs, they add.

M. Ponnuswamy, Chairman, CII Southern MSME Region said, “In this regard, CII recommends that the government allocate at least 40% of the pool i.e. 40 lakh youth for MSME internships over the next five years to ensure inclusive growth.”

Under the scheme, young people aged 21 to 24 who are not studying a full-time education course or are not working full-time are eligible to apply. The scheme invites applications from Secondary, Higher Secondary, Polytechnic, ITI Certificate holders, BA, B.Sc, B.Com,BCA, BBA, B.Pharma students. The duration of the internship is twelve months.

Geographical inequality

While opportunities are available in all states and union territories, most of them are concentrated in a few regions, which will require candidates to migrate. According to the dashboard on the official portal, internships are offered in all states and union territories, with Maharashtra having the highest at 14,694, followed by Tamil Nadu at 13,263. The lowest was in Lakshadweep, which had just two offers, while Delhi offered a total of 3,543 opportunities. Companies will make the final selection after the portal sends the shortlisted candidates.

However, this scheme only pays a stipend of £5,000 per month. This is a Direct Benefit Transfer (DBT) scheme where the company first transfers £500 based on attendance and performance, after which the government pays £4,500. Trainees are also provided with a one-off windfall of £6,000 from the government upon entry into the traineeship. The costs of training trainees will be covered by the company’s CSR fund. However, the £5,000 stipend is not enough for trainees to survive in a new city.

“This scheme can only create more opportunities for people who already have resources. Five thousand is pennies. You won’t be able to survive with this money alone. Internship is the time when someone becomes employable. But how they will sustain themselves is an unresolved question,” says Anamrita Roy Chowdhury, a labor economist who teaches at Jawaharlal Nehru University.

This signals the need to create local internship opportunities evenly distributed across counties. Tamogna Halder, a labor economist who teaches at Azim Premji University, says the government should first identify areas where internships have not been provided. He then proposes to identify and collaborate with leading sectors and employers in such counties. “This scheme will help support the local element of supply. There is a need to focus on different types or sectors of industry,” says Mr. Halder.

Mr Halder says that for MSMEs and smaller organisations, the cost of providing internship opportunities may be higher. The government needs to consider providing more support to these relatively small and medium-sized industries so that they can create local internship opportunities. Mr. Halder says working with corporates is good to run the scheme, but limiting it to corporations only will not achieve the goal of even distribution across different districts.

Current Employment Opportunities

Mr. Ponnuswamy said that with a young and growing workforce, with nearly 70% of the population being of working age by 2030, India has a major demographic dividend. Therefore, the youth need to be provided with the right opportunities for on-the-job training. MSMEs contribute about 30% of GDP and 45% of exports. Incidentally, MSMEs, besides large corporates, can provide an ideal platform in this regard.

Mr. Ponnuswamy says this scheme will be a win-win for both MSMEs and youth. “While this will help address the shortage of skilled labor among MSMEs, it will also provide hands-on training to the youth, enhancing their employability.” Mr Halder also says SMEs may be more likely to accept interns than relatively large corporations.

B. Chandrasekharan, founder and chairman of Aghapuram Center for Policy Research and former consultant to the Union Planning Commission, said there is a need for large industry and a realistic government-led movement to train the youth and influence youth employment. “Instead of expecting leading academic institutions to help industry, it is time for industry to lead skills development efforts alongside governments,” he said.

“Helping Fortune 500 companies with internships is a first step in the right direction, but it’s not a well-thought-out scheme. Supporting MSMEs in skills development is essential to help youth find jobs, retrain and upskill,” said Mr. Chandrasekaran.

Scalability

Mr Halder, the labor economist, said 1.27 lakh was initially a low target, but that did not necessarily mean it was unattainable. He says the first year is always a pilot year. People don’t really know what to expect, they’re just testing the waters. “Ten lakhs would be a better figure. But it all depends on admissions and what opportunities arise,” he said.

Scalability issues can also be addressed by expanding into MSMEs. Mr. Ponnuswamy said that large organizations can only accept a certain number of trainees each year and over many years. The answer to solving the scalability problem lies with MSMEs. They can accommodate a large number of trainees not only in specific sectors but also in many other sectors in which they are present.

This scheme does not provide any guarantee of employment, although apprenticeships always include the possibility of full-time employment in the future. Mr Halder suggests that going forward there may be a guarantee that a certain percentage of trainees will be accepted.

Need for skills initiatives

Mr Halder says if companies take this initiative seriously, it will mean an improved supply in the market. But since this is CSR, they are not really doing it for themselves, but spending money for the benefit of society without doing any actual training. He therefore advocates that the scheme should not detract from existing programs and internships, which provide trainees with real-life practical training and future employment opportunities.