Announcing the new PSE policy in the FY22 budget, Sitharaman said a bare minimum of PSEs will be maintained in four areas of strategic sectors, and the rest privatised, while in the non-strategic sectors, all PSEs will be privatized or closed.(File photo)
Announcing the new PSE policy in the FY22 budget, Sitharaman said a bare minimum of PSEs will be maintained in four areas of strategic sectors, and the rest privatised, while in the non-strategic sectors, all PSEs will be privatized or closed.(File photo)

Govt may give CPSEs more autonomy

Finance minister Nirmala Sitharaman in February said India’s new PSE policy had paved the way for the presence of public enterprises in a scaled-up and professionally run manner in strategic sectors.
By Asit Ranjan Mishra, New Delhi
PUBLISHED ON MAY 26, 2021 12:09 AM IST


iThe Union government is in the process of granting greater autonomy to central public sector enterprises (CPSEs), allowing them to be professionally run and giving them a greater say in making business decisions to help them compete with private-sector rivals on an equal footing.

“The cabinet secretariat has been deliberating the matter since January with the ministry of finance, Niti Aayog and the department of public enterprises. A draft note has been prepared based on which inter-ministerial consultations will begin soon,” a government official said on condition of anonymity.

Speaking at a post-budget interaction at IIM-Ahmedabad on February 25, finance minister Nirmala Sitharaman said India’s new PSE policy had paved the way for the presence of public enterprises in a scaled-up and professionally run manner in strategic sectors. “Even if they are one or two or three or whatever bare minimum (PSEs) is for that particular sector, it will be a public sector undertaking of a good, solid presence. So, it is a commitment from our side to make professionalised, well-managed, well-endowed PSEs that will be nimble in their operations,” she added.

Announcing the new PSE policy in the FY22 budget, Sitharaman said a bare minimum of PSEs will be maintained in four areas of strategic sectors, and the rest privatised, while in the non-strategic sectors, all PSEs will be privatized or closed.

The group of strategic sectors identified include atomic energy, space and defence; transport and telecom; power, petroleum, coal and other minerals; banking, insurance and financial services. Later, notifying the policy, the disinvestment department said that in strategic sectors, the bare minimum presence of the existing public sector commercial enterprises at the “holding company level” will be retained under government control.

RS Sharma, former chairman and managing director of ONGC Ltd, said giving decision-making autonomy to CPSEs is a very good idea in principle, provided it is implemented in spirit. “At present, nothing moves in the PSEs without a nod from the administrative ministries because they don’t want to lose control over PSEs. The entire decision-making process should be given to the board of directors. A succession plan should be set in motion in PSEs well before the chairman retires, and potential candidates should be identified well in advance,” he added.

In a report on PSEs for FY19, a parliamentary committee recommended that empowered PSE boards, comprising independent experts will enhance the quality of decisions, overall management supervision and governance, while ensuring that nearly all strategic decisions are taken at the board level and not passed on to the respective ministry, thereby increasing the speed of decision-making.

The panel said while PSEs must adhere to the highest standards of governance, excessive scrutiny from the CVC and the CAG and the fear of the CBI often leads to stalled or over-cautious decision-making.

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