I’ll loot NTPC, you can do BHEL

Essentially, then, the way the system will probably operate is that at the political/bureaucratic level there will be intense bargaining, possibly also based on one’s strength in terms of members of Parliament, to decide whose candidate is to be placed as the head of which PSU. So, the heavyweight politicians will get to place their nominees on the boards of lucrative PSUs (like, say, ONGC whose budgets are really huge), while their lesser brethren will have to content themselves with the insignificant ones.

It’s not as if, till now, the selection process for PSUs was always on merit. There have been enough instances of the politicians simply not accepting the PESB’s recommendations, and letting the panel of names lapse, or ordering a new selection process on some pretext, of choosing the second person on the PESB list instead of the first, and so on. The po-int, however, is that this was the exception, not the rule. And, in several cases of not appointing a ca-ndidate selected th-rough the PESB’s process, people ha-ve gone to court. The Cabinet’s decision now legalises all this.

A few years ago, for instance, a public interest litigation was filed against the government’s practice of appointing bureaucrats to head a total of seven PS-Us including Air India, Power Finance Corporation and the Rural Electrification Corporation. The petitioner pointed out that instead of appointing professionals with a fixed tenure to head PSUs, the government just appointed any bureaucrat, changed them whenever they liked, and was wreaking havoc on the performance of the PSUs, more so since these bureaucrats had no permanent stakes in the PSUs anyway all of Indian Airlines’ last few chiefs, for instance, have been bureaucrats.

As this newspaper has pointed out, for example, Air India came up with its infamous Performance Linked Incentive scheme which was largely responsible for its additional losses till date, during the time that an IAS officer was summarily put in charge of its performance. And the REC had bure-aucrats who headed it for under six mo-nths before they we-re replaced with ot-her bureaucrats. Si- nce it couldn’t really justify the moves, to avoid the court’s opprobrium, the government then told the court it would consult the PESB in future. Clearly that’s a non-issue now.

Of course, the issue is not just of appointing bureaucrats to head PSUs, it’s that any favoured candidate can now be appointed. This paper reported last fortnight that the petroleum ministry was trying to bypass the PESB to appoint a fa-vourite to the critical post of Director Op- erations in ONGC, when the current incumbent A.S. Soni moves out in July. Well, just some days back, obviously aw-are of the impending Cabinet decision, the ministry asked the PESB to delay the process of looking for a successor to Soni! A few other ministries are also believed to have adopted the same technique.

What will this do to the PSUs themselves? Well, today, most of the top brass of almost any PSU spend large parts of their time just keeping bureaucrats and politicians happy, to ensure that their promotions and appointments (generally through the PESB) are not kept in abeyance. So, ONGC officials don’t dare protest when babus and ministers want cellphones, cars or laptop computers. BPCL officials quietly pay several lakhs for renovating the petroleum minister of state’s office, not once but twice in the past. And NHPC officials pay lakhs for the state-of-art television sets in the rooms of important power ministry bureaucrats and for renovating the rooms of various politicians. Now with these very bureaucrats and politicians given complete and unhindered power, one can imagine the kind of grovelling that PSU chiefs and senior officials will have to resort to on a daily basis.

Since generally applied standards of performance will not be the main criterion for selection anymore, it also means the authority of PSU chiefs will get seriously eroded. After all, how does it matter if you get a bad performance appraisal, which is really the only tool the PSU chief has?What makes the government decision to hand more power to itself to strangulate the PSUs is all the more surprising, considering it keeps professing its commitment to give them more autonomy. But then that’s the beauty of government. What it gives with the one hand, it can take with the other. Besides, reforms were about allowing people to make more money, weren’t they? This will allow politicians and bureaucrats to do precisely that!