Parliament nod must for PSU stake sale, divestment panel tells Centre

NEW DELHI: The UPA government has got the go-ahead to disinvest its controlling stake in public sector biggies from its own panel. The ad hoc group on public sector autonomy has told Prime Minister Manmohan Singh that the government has to get a prior approval from Parliament, a step necessary even for non-statutory companies. But short of that, the Arjun Sengupta panel has said that disinvestment in profitable companies must largely be a company-driven phenomena. It said that since a PSU is almost synonymous with the state, Parliament must decide on a presidential reference, when control of the company is to be ceded. However, in other cases, it is the board of directors of the navratna and miniratna public sector companies, who should decide on changes in their share capital, including making a public offer in the stock markets, without any ministerial intervention. If as the largest share holder, the government wants to have a say, it would have to be communicated through its nominee director on the board. But the final decision would be made by majority of the directors. The wide-ranging suggestions have sought to give an air of finality to the on-off question of disinvestment in PSUs by successive governments. Navratnas like NTPC, IOC and ONGC should get the right to decide on mergers and acquisitions, without any reference to the controlling ministries, the panel said. Similarly, decisions on setting up joint ventures and subsidiaries overseas would not be a government-driven initiative. Explaining the rationale, a source associated with the committee said, the relationship of the government with top of the line PSUs, must be determined by a set of few clear parameters, including profitability and return on capital employed. If implemented, one of the immediate implications of these would be a cut back of the powers of the government's Public Investment Board to decide on investment proposals in PSUs. At present, all such investments of over Rs 200 crore are decided by the board. The Arjun Sengupta panel was set up by the Union Cabinet to decide on yardsticks to give more autonomy to the profitable companies, last year. According to its recommendations, the top PSUs should be delegated the right to recruit and set salary scales for their employees, below board levels. This could include bonus and other perks to attract talent. In addition, to maintain a hands off relationship with the companies, the Sengupta panel has asked for setting up six sectoral boards. The ten-member bodies would settle disputes between the government and the PSUs on any matter. Currently, any CEO facing the wrath of the minister has little leeway. The bodies would ensure more freedom for the boards to stick to their plan, sources said.

Parliament nod must for PSU stake sale, divestment panel tells Centre

The UPA government has got the go-ahead to disinvest its controlling stake in public sector biggies from its own panel.

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