The Comptroller and Auditor General(CAG) of India has pointed out several irregularities in the functioning of National Skill Development Fund (NSDF) and National Skill Development Corporation (NSDC). The CAG has observed deficiencies in governance mechanism and activities of these two organisation.
The CAG conducted audit of governance mechanism and activities of NSDF and NSDC for the financial years 2008-09 to 2013-14 and the Report was laid in Parliament today.
The government’s expending watchdog pointed out that NSDF was created to act as a receptacle for financial contributions by Government/Government entities, multilateral and bilateral and private sector. It received Rs. 3,300.74 crore from Government sources between 2008 and 2015 and released Rs. 2,362.90 crore to NSDC during this period. However, no contribution from private/bilateral or multilateral sources was received by NSDF even after five years since its formation. “Out of Rs. 2,368 crore funds received by NSDC since inception, Rs. 2,362.90 crore had been provided from Government sources which amounted to 99.78 per cent of the resources with NSDC as on 31 March 2015,” the Report said.
“Activities of NSDC included providing loans to entities which were covered under the definition of non-banking financial company (NBFC). As RBI is the regulator of the NBFC sector in India, Department of Economic Affairs (DEA)persuaded RBI to exempt NSDC from its regulation on the premise that this work was performed by NSDF. However, no regulatory oversight was provided by NSDF. This regulatory role was outsourced to a private agency in November 2014. Appointment of a private agency for carrying out this regulatory task, after taking it out of RBI’s domain lacked justification,” the CAG said. .
The Report revealed that IL&FS Trust Company Limited had an apparent conflict of interest, as it was part of a business group whose subsidiary company was sanctioned with funding of Rs. 159 crore by NSDC in 2010-11 and disbursed Rs. 89.97 crore upto March 2015. Further, the appointment process was also irregular with restrictive pre-qualification criteria and infirmities in the bid evaluation process, it added.
“NSDC provided financial assistance to partners for meeting their agreed training targets. 57-83 percentages of partners did not achieve training targets during 2010-11 to 2013-14. Majority of them also could not achieve the placement targets for the trained persons. In addition, four partners also defaulted in repayment of loans to NSDC,” the CAG pointed out..
“There were instances of lack of proper due diligence in considering the proposals for financial assistance. The monitoring and control mechanism in NSDC over the funded partners was weak. Number of site visits carried out by the monitoring consultants was very low. NSDC itself started the site visits only in 2013-14, there too, major lacunae were noticed in the way the site visit reports were prepared,” the Auditor said.