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Journalism of Courage
Underlining the UPAs intent to encourage public sector units into the capital market,the government has decided to make it mandatory for all Central Public Sector Enterprises CPSEs to follow guidelines on corporate governance.
On Thursday,the Union Cabinet is likely to give approval to a proposal to make it compulsory for all CPSEs to follow guidelines relating to disclosures,composition of board of directors,accounting standards and risk management and compliance. Once cleared by the Cabinet,all CPSEs will have to conform to SEBI regulations on corporate governance. Only then can they be listed in stock exchanges.
The Cabinet approval also means that the stranglehold which administrative ministries have on the particular CPSE as they exercise control over it,will finally end. As an indication of the things to come,The Indian Express had last week reported on a Department of Personnel and Training order asking government officials to return by March 31 all mobile phones,chauffeur-driven cars,air conditioners,laptops and faxes that have been provided by CPSEs. There are about 240 CPSEs and a large number of them do not make profits because of rampant misuse of resources and infrastructure.
The need to focus on public accountability of CPSE management,according to UPA sources,becomes necessary in the context of the governments decision to divest partial stake in most of the public sector units in the coming months to raise resources from the market.
The guidelines,aimed at protecting interest of shareholders and stakeholders,had been issued in June 2007 on a trial basis for a year when P Chidambaram was the finance minister.
