Time for Next Phase of Reforms - The New Indian Express

Time for Next Phase of Reforms

Published: 16th December 2013 10:44 AM

Last Updated: 16th December 2013 10:44 AM

Public Sector Enterprises (PSE) in the country are ready for another round of reforms in order to enable them to become truly multinational, according to a report by CII and KPMG presented at the Global PSE Summit in Delhi last week.

The report, titled: PSE’s in India: Transformation, Empowerment and Sustainability, highlights examples of the Chinese State Owner Assets Supervision and Administration Commission (SASAC) which helped decentralise certain administrative aspects of several government owned agencies. Similarly in Singapore, Temasek Holdings became the government’s private investment arm and the holding company of Singapore’s PSEs.

Speaking at the summit, Adil Zainulbhai, Chairman, McKinsey and Company said that PSEs would need to reinvent, innovate and achieve scale by adopting good HR and recruitment policies in order to become world class. “A high level of transparency in governance and independence is also essential,” he said.

The views on recruitment were supported by RS Butola, Chairman of Indian Oil Corporation who said that PSEs in the 1970s used to recruit from premier institutions which was no longer the case.

“The compensation structures need to be reworked to compare better with the private sector. Also ownership and management needs to be separated for the company to function more as a commercial entity,” he observed.

Calling for the separation of PSEs’ ownership and management so they could function more as a commercial entity, Butola said this reform would not necessarily be privatising the company. China and Russia have separated ownership and management very effectively, he said.

The foremost challenge of Indian public sector enterprises today is to increase their competitiveness to deal with market forces, President Pranab Mukherjee said inaugurating the PSE summit earlier in the week.

Pointing out that the government had taken a number of measures to help public sector units become more competitive, including grant of managerial and commercial autonomy, the president said more reforms are needed, one of which could be to allow listing of more PSEs on stock exchanges when the market is stable.(With agency inputs)

From Around the Web