NITI Aayog backs decentralised skilling even as states flag NEP control

What comes first—the chicken or the egg? That seems to be the dilemma facing India’s skill development journey. A new NITI Aayog report places the responsibility of skilling transformation on states, while the state governments accuse the Centre of coercive funding by linking grants to adoption of the National Education Policy (NEP) 2020 and PM SHRI schools.

The report identifies 8.7 crore Indian youth as NEET (Not in Education, Employment or Training) and calls for a reimagined skilling architecture. States are cast as the “primary drivers of transformation,” tasked with adapting national frameworks to local labour markets, infrastructure and learner realities. The Centre, meanwhile, is to provide broad policy direction.

But with several states accusing the Centre of depriving them of funds for basic school infrastructure, the NITI Aayog report seems a recipe for further deepening of federal tensions.

The NEP 2020 problem

The report, Reimagining Skilling for Viksit Bharat@2047, says the proposed transformation cannot be delivered through a uniform, centrally designed model. Instead, national policies and frameworks will have to be coupled with state-level planning and localised execution.

Also read: 8.7 crore Indian youth stuck between education and work: NITI Aayog

This should come as welcome news to state governments which have argued in the past that national skilling initiatives, such as those run through the National Skill Development Corporation (NSDC), are designed in centralised silos without consulting local industrial ecosystems or matching regional employment demands—a shortcoming NEP 2020 attempts to correct by integrating skill development with school and higher education.

However, NEP 2020 itself has been a bone of contention, with several non-NDA states refusing its implementation because of a variety of reasons. While Tamil Nadu, for instance, views the three-language mandate as a backdoor attempt by the Centre to impose Hindi on non-Hindi speaking states, the NEP’s highly standardized model has also been rejected by many states.

Five core reforms

The report identifies five core reforms around which states are expected to help build the new architecture: Integration of skills in schools; stronger public-private partnership and private-sector engagement in technical and higher education; outcome-linked, industry-backed skilling programmes; expansion of apprenticeships; and continuous guidance and perception-building.

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For tertiary education, states are expected to facilitate stronger industry participation through public-private partnership models and apprenticeship-embedded degree or diploma programmes. The proposed approach includes applied, industry-aligned specialisations, work-integrated learning, apprenticeships and flexible, modular programmes that allow learners to earn while learning.

Skilling, guidance, access

The report also calls for standalone skilling programmes to move away from enrolment-driven delivery towards outcome-linked models. States would need to align programmes with demand in high-growth sectors, including areas such as green industries and electric vehicles, while also supporting reskilling for declining occupations. Delivery through existing public infrastructure and outcome-linked financing have been identified as important elements of this shift.

Apprenticeships are another area where the report assigns an important role to states. It proposes a unified, state-led platform to bring greater visibility and convergence to apprenticeship opportunities, while expanding participation and aligning opportunities more closely with learner demand. Existing platforms such as the Skill India Digital Hub could be leveraged for this convergence.

The state role also extends to guidance and access. NITI Aayog proposes community-based hubs, institutional counselling and digital guidance tools to help learners navigate education, skilling and career transitions. For women, the report envisages safe and women-centric support systems.

Infrastructure talk

A significant part of the proposed infrastructure is also state-level. The report calls for State-level Skills Digital Registries and Exchanges to consolidate learning, jobs and scheme data, alongside a Skills Passport anchored on APAAR (Automated Permanent Academic Account Registry) ID. These systems are intended to support job matching, informed choices and alignment between training and labour-market demand.

Also read: Budget 2026 falls short on jobs, skilling won’t fix unemployment | Interview

Ironically, while NITI Aayog has moved on to skill transformation infrastructure, Opposition-ruled states like Tamil Nadu and Kerala continue to complain about the Centre withholding thousands of crores under the Samagra Shiksha Abhiyan and the PM SHRI school initiative because of NEP non-compliance, which is disrupting even basic school infrastructure and teacher salaries.

On physical infrastructure, NITI Aayog proposes a State or National Shared Skills Infrastructure Network to identify, map, digitise and enable shared use of existing training facilities, workshops, laboratories, hostels and community spaces. Implementation, it says, should follow a “district-first” approach, with accountability at the district Collector level and executional responsibility at the Panchayat or Ward level.

The report points to the Integrated Scheme in Skilling Architecture (ISSA), announced in the Union Budget 2026-27, as a mechanism for linking national frameworks with state planning and localised execution. What’s most glaring is that the State Skills Transformation Pilots it has proposed are all located in BJP or NDA-ruled states—Andhra Pradesh, Odisha, Uttar Pradesh, Bihar, and Assam.