PSUs to get more 'room', fewer govt nominees

NEW DELHI: The government is planning to scale down its presence in the boardrooms of profitable public sector undertakings.

Performing PSUs would get greater freedom to take managerial and commercial decisions, such as expanding the existing business and entering new areas.

The Centre may also reduce its presence in the terms of number of nominees on the board of such PSUs to about 2-3.

The heavy industry ministry has moved a proposal before the Cabinet to bring down presence of the Centre’s nominees to about one-sixth, government sources said.

This move could mean that profitable PSUs that do not fall in the category of navratna or mini-ratnas could get as much freedom as the prized entities to take commercial decisions, without moving the administrative ministry and the public investment board for clearance.

Only the navratnas enjoy relatively greater level of freedom to take commercial decisions.
The Cabinet will also take up for approval the creation of Investment Commission, a body that will play the role of wooing domestic and foreign investors.

The panel will have the broad authority of the government to engage, discuss and invite domestic and foreign businesses to invest in India.

The panel is likely to be set up by the finance ministry.

In addition to wooing investment, the commission may also suggest changes required in the investment environment to make the climate more attractive for flow in fresh investment.

Official sources said that the government is committed to granting greater autonomy to profitable PSUs for taking decisions on their business plans, and to this extent it wants to reduce interference in the boardrooms.

The UPA government has committed in the Common Minimum Programme (CMP) that it was committed to strengthening the public sector enterprises, to ensure that they could survive in a competitive environment.

In the past couple of weeks, the government has already cleared a slew of measures for the public sector undertakings. It has cleared a package of Rs 500 crore to enable PSUs to clear their outstandings on wages and salaries.

The PSUs are also to be encouraged to embrace e-governance with greater vigour, and they would be allowed to step up their spending on this front. But greater autonomy would be accompanied with regular financial and physical review of the performance of the PSUs. The new system for review is to be put in place.

At present, performing PSUs enjoy significant level of freedom on matters such as capital expenditure for purchase of new items, entering joint ventures, raising debt from the domestic capital markets and international market (subject to RBI and DEA approval), effecting organisational restructuring, structuring and implementing schemes relating to personnel and human resource management, including VRS.