New Delhi: Sanjay Singh, owner of a skilling centre in Delhi, is on the verge of shutting it down. In the last one year, Singh has shut down 19 such centers that he ran across the country — all because he had no money to operate them.
Singh is one of the 2,650 Training Partners or TPs working in affiliation with the Ministry of Skill Development and Entrepreneurship (MSDE). The job of these TPs is to create the wherewithal for skill-training. The funds to run these skilling centres are provided by the central government in three phases based on some parameters.
But the government stopped the cash flow to these centres citing budgetary constraints due to the Covid-19 pandemic and has only started to release payments now, but in installments.
Singh told ThePrint running a skilling centre is a cash-intensive business that requires “deep pockets” to sustain.
Skill-training of youth is part of the ministry’s flagship scheme, Pradhan Mantri Kaushal Vikas Yojana (PMKVY). The second edition of the scheme was launched in July 2016 with an aim to skill one crore youth over four years (2016-20), with a budget of Rs 12,000 crore.
Training Partners said skilling centres were already facing “several systemic problems”, but the pandemic dealt a mortal blow to their functioning, with some even contemplating leaving the skilling industry.
Many of these centres are facing an existential crisis due to paucity of funds. While some have shut shop, others are unable to pay salaries to their staff.
Training partners claim that about 1,500-2,000 such centers, out of the total 8,835 centers in the country running under the scheme, are staring at a shut down.
Talking about struggling with the upkeep of such centres, Singh said: “Setting up a centre takes approximately Rs 50 lakh and an additional Rs 2 lakh for staff and overhead expenditures. After being shut for nine months and lacking government help, how are training partners supposed to sustain?”
“There were several systemic problems that we were struggling with. The added pressure of the last nine months has made the situation worse. It is time to leave the skilling industry.”
Ministry officials, meanwhile, cited budgetary constraints in the initial months of the lockdown and field verification for delay in payments, but claimed things have “smoothened now”.
Some ministry officials, however, said funds were diverted towards skilling of migrant workers, who returned during the lockdown, which affected disbursal of payments for the PMKVY scheme.
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What do these TPs do & how does govt fund them?
Skill training centres, owned by TPs, provide short-term training courses for up to three months, besides reskilling and upskilling of partially trained workers who enroll.
In order to enroll, workers need to sign up for skilling courses of their choice at their nearest skilling centres.
Under the ministry’s scheme, TPs are tasked with raising awareness for skill development to get the desired number of student enrollment in order to conduct their training.
The ministry fixes the student enrollment numbers for each of these centers on the basis of their current and previous performances.
In order to become an affiliated training partner with the MSDE, a private institute has to register on the ministry’s portal when a call for tenders is floated.
The ministry then checks various parameters like physical infrastructure, training capacity, monetary capacity before offering a contract to the institute.
It then disburses funds to such affiliated institutes in three phases. Under phase 1, funding of 30 per cent is given once the TPs enroll the number of students allotted by the government.
In the second phase, 50 per cent of the total funding is disbursed once students finish their courses and get their certificates. The third phase of funding, which is 20 per cent of the total amount, is given three months after the students get employment.
Also read: How Odisha went from skill development nobody to powerhouse in just 4 years
‘Getting difficult to continue functioning’
Yogesh Kumar, who runs the JITM Skills Private Limited in Delhi, is another example of how TPs are struggling to keep their centres afloat amid the raging pandemic and severe fund crisis.
“I am currently paying my staff only half their salaries. There aren’t enough funds to keep running the centre normally. It is getting increasingly difficult to keep up with the rent and other overhead expenditures,” he told ThePrint.
Kumar, who runs 48 skilling centres across the country, said he was summoned by the Himachal Pradesh Police due to his inability to pay rent for his centre in Kullu.
Talking about the incident, he told ThePrint: “Due to shortage of funds, the company wasn’t able to pay the rent on time. The landlord then wrote to the Prime Minister’s Office seeking his rent. The letter was redirected to the local police station. I was summoned to the police station and it was only after several negotiations that the landlord settled it with 50 per cent of the rent upfront.”
“Landlords are sending legal notices and employing all means of coercion to make training partners pay the dues. We do understand their problem but being cash-strapped, how do we find the means to keep up with these expenses?” he said.
Kumar added that he took a soft loan of Rs 1.5 crore from the National Skill Development Corporation (NSDC) after the lockdown in order to sustain his centers.
The NSDC functions under the ministry and looks after the TPs.
Gaurav Mishra, a 40-year-old owner of a skilling centre in Rohini area of Delhi, is also struggling for funds. The institute, which can train about 300 students at a time, has few students now.
“Usually, the government gives us a target number of students to train. Once we get the required registration, the ministry sends 30 per cent of the entire funding as phase 1 funds. This year, those batches that did not have the target number of students were cancelled in March due to Covid. With a small number of students, the fund amount has also reduced and we have received only a small part of this amount so far,” said Mishra.
“After Unlock, we have resumed functioning, but with less number of students and even smaller funding amounts, it is getting difficult to continue,” he added.
According to a government notice, 315 batches with over two lakh students were cancelled in May because of Covid.
Not just owners of the skilling centres, even their employees have been hit hard.
“I haven’t received my full salary for months now. Small-scale skilling centers cannot afford to keep functioning without government support. If we talk to the media, we fear they might suspend our contract,” an employee of a skilling centre in Delhi told ThePrint.
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‘Things have smoothened now’
A senior official in the ministry told ThePrint they’re trying their best to ensure that the funds reach the training partners.
“Those centers, which had their enrollment batches cancelled, will be given a priority under the Garib Kalyan Yojana. The MSDE is set to skill and upskill three lakh migrant workers across 116 districts,” he said.
“During the initial months of the lockdown, we were under budgetary constraints and the additional delay in field verification led to a slight postponement in payments. However, things have smoothened now,” the official said.
ThePrint reached the secretary of the ministry, Praveen Kumar, via phone calls for a comment, but he was not available.
Manish Kumar, CEO of NSDC, in an interview last month, had said: “There is a high risk that training partners may shut down. There is no doubt about that. There are multiple reasons. This closure (the lockdowns in different states) is fairly prolonged.”
“We have tried to provide various kinds of relief. For example, those who have taken loans from us have been given moratorium on both the principal and interest for six months. Similarly, for the good training partners, we have a working capital loan. We want the good ones to survive. The ones who are very small — perhaps they have not managed themselves well in the past — will be the ones at great risk,” he had added.
Diverted funds to skill migrant workers
Notwithstanding the complaints of fund crunch, the MSDE is set to launch the third edition of the PMKVY in January 2021. But this time, the scheme will be a one-year initiative.
A second ministry official told ThePrint this retrenchment of the scheme points to the shortage of funds, which is due to the huge medical expenditures that the central government is bearing on account of the pandemic.
The MSDE in June had shown an interest in skilling 3,00,000 migrant workers across 116 districts in the country under the Garib Kalyan Yojana.
According to official documents accessed by ThePrint, the MSDE has diverted an amount of Rs 450 crore towards skilling of migrant workers, who returned during the lockdown.
A third ministry official told ThePrint: “The government has diverted funds towards the Garib Kalyan Yojana, a voluntary move. It was bound to affect the ongoing PMKVY 2 scheme.”
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