Grant autonomy to PSUs for growth

The reported tussle between Bharat Petroleum Corporation chairman and managing director R K Singh and Shiv Sena MP Chandrakant Khaire — Mr Singh complaining that he was arm-twisted to award a contract to a company of the MP’s choice but refused to budge — brings to the fore a long-standing malaise. The government should grant PSUs operational and financial autonomy to grow. This is imperative to revive India’s growth. The ideal way to grant autonomy is to snap their ties with the parent ministry and bring all PSUs under one public sector holding company. It will give them financial and functional autonomy and block one avenue of corruption.

The point is that ministers and political representatives, especially those nominated on PSU boards, have long regarded companies under their oversight as personal fiefdoms and shown scant regard for professionalism. The lack of autonomy inhibits the ability of PSUs to invest and grow, resulting in their tardy performance. This must change. Autonomy and investment are closely linked. And, as taxpayers, we need to ensure that PSUs are run professionally.

The status of PSUs as Maharatnas, Navratnas or Miniratnas is only on paper. Their parent ministries have a say in everything: starting from the appointment of CMD and directors on the board and award of contracts. A few exceptions include companies such as the erstwhile Maruti Udyog and Bhel that enjoyed more autonomy right from the beginning, on par with their counterparts in the private sector. There is no reason why others cannot be in the same league. An arm’s-length relationship between the government and these companies will ensure distancing on operational matters, marking an end to tussles between bureaucrats and politicians.