They are a ‘hotbed of crony capitalism,’ says a government-constituted panel

A board member of a government-funded apex skilling agency is also a training partner and a promoter of a skill council.

The son of the chairman of a sectoral skill council is a co-promoter of a training firm as well as an assessment agency that oversees the outcomes achieved on job placements by such firms in the same domain.

These are just two instances of conflict of interest among a dozen highlighted in a damning report on India’s recent skill development initiatives through 40 sectoral skill councils set up under the aegis of the National Skills Development Corporation (NSDC).

‘Crony capitalism’

The Sharada Prasad Committee constituted by the Skill Development and Entrepreneurship Ministry to review, rationalise and optimise the functioning of sector skill councils (SSCs) has termed these councils a ‘hotbed of crony capitalism’ that have tried to ‘extract maximum benefit from public funds.’

Citing several instances of conflict of interest in the councils’ membership base, including those involving three NSDC board members, the committee has recommended that the Centre scrap all existing skill councils, many of which have overlapping roles and introduce an oversight mechanism on the NSDC, preferably from the central bank, as it is registered as a non-banking finance company.

“All these public funds have been used without serving the two basic objectives of meeting the exact skill needs of the industry and providing employment to youth,” the committee has noted, severely pulling up the NSDC for keeping its eyes closed to ‘ignonimous happenings under its nose.’

“In many cases, the NSDC itself has promoted them as the governance mechanism of NSDC fosters such functioning… Power without accountability is a recipe for disaster,” the committee led by former Director General For Employment and Training Sharada Prasad said, adding that it appears that NSDC has failed to discharge its responsibilities and deviated from its original role.

Comprehensive review

“The Committee, therefore, recommends that the Government should review the NSDC’s role and functioning comprehensively with reference to its Memorandum of Association and create a strong oversight mechanism to ensure that such conflicts of interest do not arise in future,” it said, stressing that the situation arose because NSDC is 100% government-funded but accountable to a board that consists of a majority of private sector industry associations.

“In fact, from the time of its establishment, it was kept away from Parliamentary oversight, audit by Comptroller and Auditor General of India and supervision by Reserve Bank of India,” the panel said, about the NSDC, which was a public private partnership for promoting skill development launched in 2008.

Calling for the 40 sectoral skill councils to be dissolved and replaced by just 21 councils in accordance with the national industrial classification of different sectors, the panel has also highlighted the lacunae in the governance of the National Skill Development Fund (NSDF) set up in 2009 to raise funds from both government and non-government entities.

“The Fund meets its objectives through NSDC… (but) its governance structure is flawed. Board of trustees of the NSDF consists of three members which includes secretary (department of economic affairs) and the chairman, NSDC,” the committee has pointed out.

“The NSDF is required to oversee the work of NSDC. How can the supervisory body consist of head of the supervised body as a member? The Committee feels that this governance structure compromises with the supervisor role of the NSDF and therefore, the Chairman of NSDC should be excluded from NSDF…” it concluded.