PSUs demand more autonomy after govt asked blue-chip firms to invest surplus funds for growth

NEW DELHI: State-run enterprises have once again demanded more financial and managerial autonomy in their operations after the government last month exhorted blue-chip companies to invest their surplus funds to stimulate economic growth.

The companies raised this issue with the department of heavy industries after Prime Minister Manmohan Singh met the heads of 25 PSUs last month to hear out their concerns.

An official of the ministry of heavy industries said the government is already looking into the issues raised by these PSUs, which hold an estimated Rs 3 lakh crore in surplus funds.

“A high-level secretaries’ committee has been set up to look into PSUs’ issues such as autonomy and regulatory clearances, besides investment of surplus funds,” the official said, adding that Cabinet Secretary Ajit Kumar Seth heads the panel.

The government has been trying to goad state-run companies into investing their surplus funds, which it says will boost economic growth. Singh had said last month that companies should use their surplus funds for their own benefit and for the benefit of the economy.

“They should use it for driving investment, growth and jobs.” Based on the investment plan of about 20 blue-chip companies, the country could see close toRs 1.76 lakh crore being pumped into development work this fiscal.




But, according to the official, the bureaucratic setup is a bit of a bugbear. “PSUs are answerable to multiple bodies and this clouds executive decisions, as there is fear of undue scrutiny, which has a demoralising effect,” the official said.

State-run firms have now reiterated their demand for greater autonomy and sought a single-point accountability system. Companies have also demanded an empowered group of secretaries for every sector so that PSUs can approach this group on strategic decisions.

“Some demands like PSUs be taken out of the ambit of Article 12 require greater deliberations,” the official added. In 2005, a panel on ‘ Empowerment of CPSEs’ had recommended that issues related to amendment of Article 12 of the Constitution could be revisited at an appropriate time.

As per the Sengupta Committee report, some judicial pronouncements have declared public enterprises to be an extension or arm of the State under Article 12 of the Constitution, which … “undermines the entrepreneurial and commercial functioning of public enterprises and puts them at a disadvantageous position vis-àvis their private sector counterparts and competitors.”

The PSUs have also demanded a fixed tenure of five years for chairman of a state-run firm and three years for board directors. “If there is a fixed tenure, there will be greater accountability on the CMD who can also give direction to the company,” the chairman of a state-run firm said.