The National Skill Development Corporation (NSDC), a public company set up with taxpayer’s money, has been turned into a private entity without the Union cabinet’s approval and offered fat salaries to its top functionaries, a CAG draft report says.
The change in status apparently heeding to the companies act of 1956 happened in June 2011, three years after the government formed it “as a public company” to create an environment for skill training and placements through private sector participation.
Its board has eight nominees from the private sector and six from the government.
“Though the NSDC had been funded with taxpayers’ money, no efforts were made by the government for a concomitant increase in the ownership rights and representation on the board of directors… corresponding mechanism for parliamentary accountability was ‘consciously’ excluded in the design of NSDC,” says the draft CAG report, which was sent to the ministry of skill development and entrepreneurship.
The country’s auditing watchdog points to fat salaries drawn by NSDC top officials, saying the “remuneration package” was “much higher and therefore lacked justification”.
The NSDC CEO drew a pay of Rs 1.07 crore a year along with incentives worth Rs 26.8 lakh, the report says and compares it with the ONGC chief managing director’s Rs 45.5 lakh annual salary.
The NSDC website says its CEO’s remuneration was approved by the President, the Union government and the corporate affairs ministry.
Former CEO Dilip Chenoy who resigned recently said he was not authorised to comment since he was no longer part of the NSDC.
Skill development minister Rajiv Pratap Rudy said NSDC would remain a private entity but undergo a course correction.
“The NSDC may not have had the right vision and over the years may have overstepped its brief. It did not even have an annual plan. It is important to have some sort of government control,” he said.
The National Skill Development Fund, a trust, acts as repository of funds pooled from the government, bilateral and multilateral agencies as well as donors.
The CAG observed that 99.69% or Rs 1,673 crore of funds for the NSDC came from the public exchequer till March 2014, although it was set up with the expectation of attracting private funds.
The audit for 2008-14 points to serious gaps in the company’s governance and accountability mechanism.
“The NSDC failed to ensure achievement of training and placement targets in the majority of cases and further did not enforce the contractual obligations through planning and initiating necessary actions,” the report says.
It alludes to regular overruling of government nominees in the board of directors by private sector representatives.
“There were certain observations by CAG on the NSDC’s performance. Certain institutional issues needed to be addressed and we are happy that the CAG observations came at the right time,” minister Rudy said.
The NSDC, however, says to have provided training to more than 34 lakh people and 22 lakh got jobs between 2010 and 2011.