Governance Now Masterminds

The five Cs that scare the PSUs

The conference deliberated upon the role and achievements of public sector enterprises and how crucial are they for the Indian economy

GN Bureau | December 18, 2015


#five Cs   #scare   #PSUs   #CVC   #CBI   #CIC   #CAG   #CAG   #Anil Swarup   #Ram Vilas Paswan  


Public sector undertakings (PSUs) are scared of five Cs: namely, the central information commission (CIC), central vigilance commission (CVC), central bureau of investigation (CBI), comptroller and auditor general (CAG) and the courts.

This was stated by Anil Swarup, secretary, ministry of coal, during a debate on the role of PSUs in shaping modern India. Clarifying, he said that while many state undertakings were being turned around and making profits at par with the private sector, they face the possibility of being questioned by any of the Cs.

He was speaking at the third edition of the PSU Awards held by Governance Now in New Delhi on December 17. The ceremony was attended by top officials from government and the PSUs. Union minister of consumer affairs, food and public distribution, Ram Vilas Paswan and Minister of state, Railways, Manoj Sinha distributed the awards to the PSU leaders.

Swarup said the PSUs have social responsibility as well as accountability; therefore, the quality of leadership was important for their success. “That leadership should also provide them protection (against the Cs) and incentives,” he said.

Kailashnath Adhikari, director, Governance Now, highlighted the key findings of the survey conducted by Governance Now in collaboration with M76 Analytics on the public sector. The survey evaluated 235 companies on 13 different parameters.

Moderating a discussion on the role of PSUs, Vikas Aggarwal, executive director, Ernst & Young, said, “For everyone born during the 60s, 70s or 80s, PSUs played an important part in our lives. From job aspirations to buying textile to visiting five star hotels, PSUs have played a monumental role.”

He however said that the opening of economy to the private players in 1991 had changed the role of the PSUs and also thrown a challenge to them. 

However, despite the initial criticism about their working style and low efficiency levels, he said, the PSUs had grown to not only play a vital role in shaping India’s economy but also withstood competition from the private sector.

Are PSUs into sharing the social responsibility or pure business enterprises? The question cropped up during the debate.

On this, Swarup, said that profit-making was not the only objective of PSUs but efficiency was. "The growth of the Westerns Coal Field Limited both in terms creating value and actual CSR happening is an example of good work being done by the PSUs," he said.

Ashishkumar Chauhan, managing director and CEO, Bombay Stock Exchange (BSE), said today’s private sector was making use of the readymade pool of managers and CEOs produced by the PSUs, which had driven India’s growth in the initial decades.

“However, the problem arises when PSUs are not able to keep pace with the rapidly changing technological environment,” he said.

SN Tripathi, additional secretary, ministry of small and medium enterprises, said PSUs also carry additional social responsibility as they have to generate employment and are into nation building. “PSUs are not just about profitability. Given an opportunity they can perform much better than any private sector company,” he said.

Swarup however said neither public nor private sectors should have monopoly. “I think both sectors can coexist with healthy competition. The competition will encourage each sector to increase their efficiency as it has happened in the telecom and banking sectors."

But with private sector at its peak, do people still have faith in PSUs?

“Yes, they do,” said Chauhan. He said this was evident the way in which PSU offerings on the market get oversubscribed within minutes in the market. “So, public trust is high in the sector. If only PSUs are given more autonomy they could become assets rather than liabilities,” he said.

Talking on the changing face of the PSUs, Tripathi said National Small Industries Corporation (NSIC) which had been running in losses for the past seven years has recently made a profit of Rs 21,000 crore.
 
Swarup said for perfect synergy between the government and the PSUs, their roles and responsibilities should be well defined. Explaining this, he said, “We have an arrangement with Coal India whereby they focus on the digging part and the ministry deals with environment clearances. As secretary of coal ministry it’s convenient for me to talk to state governments and central ministries to solve the problems of Coal India. I don't interfere in the digging job. In a way I am adding value to what they are doing.”

He said such an approach had led to increase in coal production by the Coal India Limited – last year’s 32 billion tonnes production was more than the combined production of four years. Also he said, coal production was growing at 8.9 percent. “Today we are in a situation where the power companies have 20 days’ stocks and the imports have fallen. All this happened because the roles were clearly defined,” he added.

In a reflective mood, Chauhan said unlike the private sector, the PSUs lacked ability to communicate their achievements and success stories. He even suggested having a television channel which could highlight success stories of the public sector. Also some of these stories could be part of the curriculum of the MBA courses, he said.

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