The government is considering wide-ranging reforms in central public sector enterprises (CPSEs) which,if implemented,will see its role being transformed from an active promoter to a professional portfolio manager or a venture capitalist,with the twin objectives of managing investments and deciding which sectors to invest in.
To achieve this paradigm change,the government may,as a first step,create a single holding structure and then transfer the ownership of select CPSEs,for instance,the maharatnas the biggest and most profitable CPSEs to this holding company.
At present,five CPSEs NTPC,SAIL,ONGC,Indian Oil Corporation and Coal India Ltd have been accorded maharatna status by the department of public enterprises. Further,equity in all future CPSEs will be held by the proposed holding company,and not by the government.
The idea is to ensure that the CPSEs are run without direct interference by administrative ministries in their day-to-day affairs,Arun Maira,Member,Planning Commission,told The Indian Express. The broad contours of the single holding structure were laid out by a panel of experts on reforms in CPSEs set up by the Planning Commission. We will set specific timelines for the process that needs to be followed in implementing the recommendations of the panel, Maira said.
The expert panel included senior government officials such as the Secretary in the Department of PSEs,the nodal department for all PSEs,the Deputy Comptroller and Auditor General and Industries Division Advisor in the Planning Commission,besides chairpersons of at least three maharatnas. Inputs from the report,submitted by the panel recently,will be part of the manufacturing sector strategy of the Twelfth Five Year Plan (2012-17) that is in the works now.
According to the panels recommendations,the chairman of the holding company will be appointed by the Prime Minister. It will have a 12-member board,with six members from outside the government. It would obtain dividends from the units it owned or through divestitures of its stake. It would also undertake investments in some units on the basis of the strategic intent of the government, said the panels report.
The CPSEs whose stakes are held by the holding company will be kept outside the purview of any ministry. They will also not report to the chairman of the holding company. The holding company would only manage the governments stake in the different PSEs and provide a year-end report on the financial performance of each of the invested entities. Its (the holding companys) performance could be monitored by an Empowered Group of Ministers, the report said.