Skilling Crisis in India & National Skill Development Corporation (NSDC)

Syllabus: GS2/Government Initiatives; GS3/Economy

Context

• The ongoing crisis like financial irregularities, weak oversight, and structural misalignment in the National Skill Development Corporation (NSDC) has revealed deep flaws in India’s approach to public-private partnerships (PPPs) in skill development.

About the National Skill Development Corporation (NSDC)

• Origins and Purpose of NSDC: It was established in 2008 under the Ministry of Finance, and now operates under the Ministry of Skill Development and Entrepreneurship (MSDE) as a not-for-profit public-private partnership (PPP).
  • The Government of India holds 49% of its equity through the Ministry of Skill Development and Entrepreneurship (MSDE), while the private sector holds 51%.
  • Its initial mandate was to act as a financial body supporting training institutes that could equip workers with employable skills.
• NSDC Vision: To become ‘World’s largest platform for Skills for All, Opportunities for All, Anytime, Anywhere’.

Expansion of NSDC

• NSDC’s role expanded with the launch of the Skill India Mission by 2015, making it the nodal agency for a wide range of schemes.
• Key Schemes under NSDC:
  • Pradhan Mantri Kaushal Vikas Yojana (PMKVY): Upskilling and reskilling through 2,500+ centres.
  • National Apprenticeship Promotion Scheme (NAPS): Supporting training costs for over 49,000 employers.
  • Craftsmen Training Scheme: Operated through industrial training institutes.
  • Overseas Placement Programmes: Facilitating employment abroad, e.g., construction workers in Israel.
• It stretched its limited resources and exposed governance weaknesses and patchy placement records, inadequate quality assurance, and widespread dissatisfaction among trainees.

Current Crisis in NSDC

• Operational Challenges and Skill Gaps: A recent NSDC study revealed a staggering gap — India needs 103 million skilled workers, but the current supply stands at only about 74 million.
  • Only about 50% have found employment, despite training over 40 million individuals.
• Structural and Strategic Issues: Overlapping mandates (government and PPP) and lack of streamlined coordination between ministries and training partners have led to inefficiencies.
• Information Asymmetry: Job seekers, training providers, and employers operate in silos.
  • Individuals often lack clear guidance on which skills are in demand, while employers struggle to find candidates with verified competencies.
• Coordination Failures: Educational institutions and training centers frequently offer courses that don’t match industry requirements, leading to a mismatch between supply and demand, wasting resources and time.
• Present Bias: Governments and institutions tend to prioritize short-term metrics — like enrollment numbers — over long-term outcomes such as sustained employment and career growth.
• Fragmented Funding and Oversight: Multiple ministries and agencies run overlapping skilling schemes, diluting accountability and creating inefficiencies.

Government Response

• Skill India Digital Platform: In response to mounting challenges, the government launched a digital platform to streamline skilling, education, and employment efforts.
  • It aims to improve transparency and ease of access for trainees.
• Revised Skill Loan Scheme: A new model offers financial support for higher education and skilling, including interest subvention for eligible students (Union Budget 2024–25).
• National Skill Development Mission (NSDM): The mission continues to provide strategic direction, but its ambitious target of training 300 million people by 2022 remains unmet.

What Needs to Change: Streamlining for Impact

• Create a Unified Digital Skills Platform: A centralized, AI-powered platform can connect job seekers, employers, training providers, and financiers. It should offer:
  • Real-time labor market insights;
  • Verified skill credentials;
  • Personalized learning pathways;
  • Transparent funding options like scholarships and grants;
• Rethinking the PPP Model: PPPs can bring in cutting-edge curriculum, industry expertise, and scalable infrastructure.
  • Models like the National Apprenticeship Promotion Scheme — where private enterprises provide direct, on-the-job training — appear more effective and sustainable than NSDC’s centralised approach.
• Standardize Credentials and Assessments: A national framework for skill certification — recognized across industries — can improve trust and mobility in the labor market.
• Focus on Outcomes, Not Inputs: Shift the emphasis from enrollment numbers to employment rates, wage growth, and career progression. This requires robust tracking and feedback mechanisms.

Source: BS