New yard sticks to measure PSUs soon

NEW DELHI: The government may soon introduce objective criteria for evaluation of public sector companies (PSUs). The new criteria would help to gauge the PSU���s performance in terms of accountability and autonomy.

���The department of public enterprises (DPE) would make amendments in the existing Memorandum of Understanding (MoU) structure and introduce new methodology like introduction of standard deviation method while benchmarking the performance of a PSU. It is also planning to issue new parameters for public enterprises working under the administered pricing mechanism (APM) constraints,��� a DPE official said.

The DPE had constituted a working group to review the MoU guidelines between PSUs and their administrative ministries. The group headed by Ashok Chandra recently submitted its report to the government along with the proposed changes. MoU is a freely negotiated agreement which helps to judge the performance of a PSU.

���The recommendations have been made considering that PSUs are a special group and they have to fulfil many macro-economic and social objectives. The new APM format will take care of PSUs operating in the oil and coal sector,��� the official said.
The proposed evaluation method will introduce changes in the financial and non-financial parameters. While for PSUs working under the APM constraints the weightage of financial parameters will be 40%, for PSUs operating in social sector it will be 30%.

ET had reported that the government aims to benchmark the performance of a PSU vis-��-vis performance of the entire sector in the particular assessment year. The committee has recommended the same in terms of ���offset parameters���, which will be applicable during the time of evaluation to counter the performance or non-performance of a company due to external environment. The weightage of offset parameters has been restricted to 20% of the score card.

���The committee has retained the basic structure of a balance score card, however, changes are proposed in terms of introducing new methodology like standard deviation to benchmark the performance of a PSU. Currently, the administrative ministry and its PSU set MoU targets which are higher than the current year estimated achievements,��� the official said. As of now there are 217 operating Central Public Sector Enterprises with a total investment of Rs 4,21,089 crore.