Centre moots bringing state-owned PSUs under performance scanner

After tightening the noose on subsidiaries of central public sector undertakings CPSUs,the government is now trying to bring state government-owned public sector enterprises under the performance scanner. The department of public enterprises DPE is in the process of writing to chief secretaries of various state governments to consider adopting the memorandum of understanding MoU process for assessment of PSUs so as to keep a close watch on their performance.

There are number of PSUs engaged in the chemicals and petroleum business at the state-level apart from power corporations. Even though the Centre has no stake in them,the advisory is being sent to state governments in order to avoid any financial irregularities, a senior government official told The Indian Express. An MoU is signed by the PSU with the concerned administrative ministry making a commitment to certain financial and corporate objectives.

The Centre has been using the MoU process to assess all central PSUs on various parameters including financials,corporate governance practices and issues such as dependence on government funds. Recently,the DPE had also made it compulsory for subsidiaries to be brought under the MoU scanner separately. Performance of subsidiaries was earlier evaluated as a part of the parent companys report card.

It is now for the state governments to consider whether they would like to adopt the MoU system as an additional check on state corporations. They,however,also have the option to devise their own system, said the official. Currently,even state PSUs have an inbuilt vigilance mechanism apart from audit.