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GoM to consider ministerial panel’s suggestions on reforms in PSUs

07 Mar 2013 Evaluate

With an aim to push public sector enterprises to meet their capital expenditure targets, Prime Minister Manmohan Singh has approved the setting up of a ministerial panel to consider recommendations for reforms in these companies. Further, the Group of Ministers (GoM) will consider the suggestion of the ministerial panel on reforms in public sector units (PSUs) and finalize its recommendations soon.

Last year, an expert panel had recommended a slew of measures to help turn the public sector units into drivers of growth. The government now wants state-run firms to achieve their investment targets and will be asked to shell out money to the government in the form of special dividends, if they failed to achieve the target. The finance ministry will monitor the investment plans every quarter of those public sector entities that have huge cash surplus.

However, these enterprises have demanded for more financial and managerial autonomy in their operations, after the government last year pressed blue-chip companies to invest their surplus funds to stimulate economic growth. Moreover, the public sector companies had also demanded a single-point accountability system, saying that the current system of being answerable to multiple bodies hampers executive decisions, as there is a fear of undue scrutiny. 

The ministry has already issued letters to the PSUs asking them to submit their investment plans for the next financial year. The whole exercise of government is aimed at re-starting the economic growth engine. The GoM will include the finance minister, deputy chairman of the Planning Commission, Montek Singh Ahluwalia, and heads of some key ministries such as petroleum, coal, steel, mines railways and heavy industries.

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