More Autonomy For Psus Proposed

The Disinvestment Comm-ission has suggested pay rises for chairmen cum managing directors of public sector companies, but at the same time made them more accountable for the decisions they take.

These are a part of the steps recommended to restructure and upgrade the public sector undertakings.

The commission has recommended a Rs 50,000 minimum remuneration package for CMDs in A class PSUs, with a similar upgradation of salaries for heads of schedule B & C PSUs. Provision has also been made for periodic review and upgradation of salary in line with industry norms.

At the same time, the commission has also recommended that the appointment of CMDs and directors should be contractual and should provide for immediate termination for proven non-performance.

The commission has also recommended the setting up of a pre-investigation board on the lines of the Bank Frauds Commission to evaluate all questionable decisions at the board of director levels to determine whether the decisions were taken with a malafide or corrupt intent.

If there is proof of abuse, the board should refer the cases to the CBI/CVC. Unlike under the present system, the investigating agencies would not be permitted to institute investigations or proceedings against the board level PSU executives without prior clearance of the board. If decisions are taken at a lower level, the board of directors would be empowered to evaluate questionable decisions before referring them to the investigative agencies.

To strengthen the board, the commission has recommended that all strategic and important decisions concerning the PSUs should be taken by the board and not by the government.

The commission has further recommended that the board should be the final forum for all corporate decisions and the government, as the majority shareholder, should exercise its right only through its representative on the board.

The committee has also recommended the retention of CAG and COPU controls over PSUs. However, it has warned that given the changing environment requiring quick decision making, dialogue should be initiated with these authorities to redefine their roles in keeping with these changes.

In terms of delegation of power, the commission has proposed that the PSUs should be graded in terms of their performance, with maximum autonomy being given to the strong performers, comparatively lesser powers to the moderate performers and greater regulations for the lowest rung.

For the strong performers, the committee has provided that these PSUs should be empowered to form joint ventures without prior approval of the government.

Joint venture with foreign partners should, however, be subject to FIPB approvals, which is applicable to the private sector.

Further, in case of strong PSUs the committee has recommended that they should be granted complete autonomy with respect to investment decisions, subject to the conditions that these projects are appraised and financed by banks or institutional lenders or where the total requirement of funds is met from internal accruals.