Why the PM Internship Scheme Budget Cut Reflects India’s Skilling Implementation Crisis

The PM Internship Scheme (PMIS) allocation cut in Budget 2026 reflects deeper challenges in India’s youth skilling and employment policy. The Union Budget 2026 has cut the amount of the Prime Minister Internship Scheme (PMIS) to Rs4,788 crore in FY27, which is a reduction of 56% of the actual amount of the previous year. Although the cut seems abrupt, official fiscal data indicate that it is an act of long-standing underuse, rather than a policy retrenchment.

Data from the Controller General of Accounts (CGA) and the Ministry of Corporate Affairs (MCA) show that India’s flagship internship scheme has struggled with fund absorption. The available figures provided by the Controller General of Accounts (CGA) reveal that funding by the ministry of corporate affairs (MCA) that manages PMIS have been way below the approved levels in the past two financial years. This brings more serious concerns behind the ability of the state to operationalise the large scale employability programmes, despite elevating the youth creation of employment as a high political agenda.

What the numbers reveal about skill development policy

This pattern raises concerns about India’s broader skill development policy and its ability to scale employability programmes. According to the budget documents (FY26), the MCA was allocated more than Rs11,500 crore with almost 94% or approximately Rs10,831 crore set aside for PMIS. CGA data however shows that the actual spending till November 2025 was slightly more than Rs500 crore.

Better still is the amended figure: the scheme had its allocation reduced to Rs526 crore against Rs10,831 crore during the same fiscal year. During FY25, the real expenditure was only Rs32 crore. Reports of the Parliamentary Standing Committee indicate that funds surrendered had mostly been associated with low uptake in PMIS.

These numbers indicate that the Budget 2026 cut is no fiscal contraction but acceptance that the implementation of the scheme has not lived up to its promise.

From allocation to absorption: PM Internship Scheme missing link

The gap between allocation and execution exposes a structural weakness in workforce policy in India, especially for first-time job seekers. PMIS was designed as a transition between the social life of school and work through organising youths to establish organised internships in both the state and the privately owned business. However, institutional issues seem to have put the pipeline on hold.

Disclosure to Parliament by the government points out the bottlenecks in the partner onboarding, verification procedures, and involvement of the employer. In contrast to scholarship or DBT schemes, internships are based on real-time coordination among ministries, corporates and training bodies - a governance model that is complex in nature.

In the case of a programme that is supposed to be on a national level, this will mean that low absorption of funds equates to slow onboarding.

Strategic implications for workforce policy

Programmes like Make in India and PLI depend heavily on a reliable youth skilling pipeline created through structured internships. The underperformance of PMIS coincides with India aggressively establishing itself as a manufacturing and services centre on the globe. The flagship programs like Make in India and the PLI programs presuppose a steady flow of talent prepared to work in the industry - this is what internships are supposed to do.

However, unless it is executed, the skilling policy will not be systemic; it will be symbolic. The reduction in the allocation of Budget 2026 can indicate a change in the priority: spend what can be provided in practice.

To the public finance perspective, this is also in line with the fiscal discipline. Ministries are also being punished on the issue of parking unspent money.

PM Internship Scheme at crossroads

Observations from the Parliamentary Standing Committee show that weak employer onboarding has slowed PMIS adoption. The future of PMIS is probably relying on redesigning it and not headline funding. Policy advocates believe that the scheme should be integrated with institutions of higher learning, made easier to join as an employer, and correlation of internships to digital credentialing would restore adoption.

At the moment, Budget 2026 serves as an expression of a bitter reality: the policy on internship in India is being determined not by a lack of funds, but by capacity limitations.

With the government getting twice as many initiatives on digital skilling and AI-ready talent, PMIS can be used as an example of how outcomes are determined not by intent, but by implementation.

Disclaimer: This article is based on data from Union Budget documents, Controller General of Accounts (CGA) expenditure statements, and Parliamentary Standing Committee reports. All analysis is factual and does not represent the author’s personal views.