Without any doubt Nagaland is blessed with natural resources and there is a large-scale consensus among the people in the State, and rightly so, that the natural resources of the region if tapped would boost our economy like other resource rich regions. However, the State may suffer from “Dutch disease” if it plans to only rely on natural resource and resource-extractivism for economic development and neglect other sectors. Resource-extractivism will also lead to ecological destruction and other collateral social and economic damage. Given our fragile ecology, geographical disadvantage and political instability, human resource development can play a critical role in economic development of the State, especially when means of production are not just resources intensive but also knowledge intensive. A cursory look at the State’s human resource development paths tells us that the State is building human resource by imparting education through schools, colleges and universities, polytechnics, etc at the institutional level. On the other hand, there is huge untapped potential of knowledge economy operating in different areas of the State. Not stereotyping this as just confined to the traditional crafts but a whole economy that is emerging based on skill, innovation and entrepreneurship in different niche areas across the State. The question arises why this potential of human resource-based economy is not translating into a success story of its own. What are the challenges and how they are being addressed? One of the biggest challenges is the mismatch between the education/training and the market demand. Every year thousands of students graduate from universities and colleges with bachelors, masters and PhD degrees, but majority of them are not able to find jobs either due to non-availability of jobs in the State or lack of skills that job market demands. While the Government cannot be expected to offer jobs beyond a limit, private sector demands skilled labour. It is important to identify what skill is relevant to the industry and link it with the training delivery of technical and vocational education programmes. The crucial step here is this identification and the possible approach to address the same through skill gap surveys at different levels. These surveys will not only capture the supply base of the trained candidates but can provide information on the skills required. In contextualising with the education set up, the problem of this mismatch goes even deeper where in some instances, the highest qualification required as eligibility for top level positions in Government jobs is a graduation degree. The middle or lower run position in the public sector, baring few technical positions, mostly need non-degree –10+2 — or in fewer cases bachelor’s degrees. The situation is not different in the existing, even though negligible, private sector either in the State, where the basic eligibility for entry level position is graduation or a relevant professional degree. As there are not many jobs available that can commensurate their education degrees, degree holders apply and take the jobs that are meant for non-degree holders. What comes out is that it pushes down or pushes out less educated from the job market and it creates a lot of educated people doing “less privileged” jobs who may neither be satisfied with the work nor with salary they get. The classic case of higher degree holders going for low rung jobs cannot be solved by only doing skill gap surveys and matching demand and supply gaps but the education system as a whole needs restructuring and transformation. Those interested in research, innovation and teaching can pursue higher education in the universities and those who are pursuing education for jobs can opt for professional and market-oriented education programmes. Otherwise, instead of building a productive human resource, the existing education system is becoming part of the problem and creating an educated jobless lot. With youth under the age of 35 comprising the majority of our population, the State can reap the benefits of demographic dividend, if this huge army of youth are made job-ready. With market driven skills our youth can not only address the unemployment problems of the State but can also bridge the labour deficit of other labour scarce states and countries.