A K Bhattacharya: The rise of PSU chairmen

RAISINA HILL

In the early 1980's, Andrew Yule used to have a chairman and managing director by the name of KSB Sanyal. Andrew Yule, mind you, was (and it continues to be so) a central government public sector undertaking. Sanyal was once asked by this writer how autonomous he was as a public sector CEO in a structure where he was also answerable directly to the minister and the babus in the ministry. Sanyal's answer was an eye-opener: "A public sector chief can enjoy as much autonomy and power as he wishes to."

Sanyal did not have a very long tenure as a public sector CEO. But there were many other public sector chairmen who managed to secure for themselves fairly long stints as heads of different PSUs. Some of them paid a price for obtaining long tenures by striking a compromise on their autonomy. Some of them used their political connections effectively and enjoyed unfettered power.

V Krishnamurthy, a veteran CEO of several PSUs including BHEL, SAIL and Maruti Udyog, knew how to use the existing system to get reasonable autonomy for himself. Even ministers and the bureaucrats, who lorded over chairmen of other PSUs, would think twice before dealing with Krishnamurthy. That he was among the few whose performance was being directly monitored by then Prime Minister Rajiv Gandhi helped him increase his clout. But by and large, most PSU chiefs had a sorry tale to narrate: their ministers and the joint secretary in-charge of the PSU would have a final say on what they ought to do on key policy matters.

Has this order changed in the United Progressive Alliance (UPA) government of Manmohan Singh? Are PSU chairmen becoming more powerful and autonomous than their predecessors? A few recent examples would seem to suggest that the joint secretaries and their ministers are losing their grip over PSU chairmen. The reasons may vary in respect of different PSU chiefs. But the ministry's stranglehold over the PSUs and their chief executives is no longer as tight as it used to be.

The case of ONGC Chairman Subir Raha is well-known. His battles with Mani Shankar Aiyar are also well-publicised. Whatever may be the precise reason, Aiyar had to leave the ministry. And Raha seems to have become more powerful. Now he wants complete freedom from the government-approved pay structure for his employees, on the ground that he has to compete with the private sector in the job market as well.

Some months ago, SAIL Chairman V S Jain was reportedly in trouble with his minister Ram Vilas Paswan over a decision on the award of some contract. Paswan's relations with Jain had soured to a point that SAIL watchers were almost certain that the SAIL chairman's days were numbered. But it seems that more powerful forces in the government have intervened on behalf of Jain and the SAIL chairman can complete his existing tenure without any further problem.

NTPC Chairman C P Jain was known for his proximity to the NDA government. So, when the UPA government was formed and P M Sayeed as the power minister made his displeasure over this issue known to those who matter in NTPC, there was little doubt that Jain's tenure would have to be cut short. But Jain survived that threat. A similar development took place with regard to T N Thakur of Power Trading Corporation. Here, too, the minister and the bureaucrats made a hasty retreat and the PSU chairman remained unharmed.

What has changed? It seems PSU chief executives have recognised their new-found relevance and importance in the current system. Note that almost all of the PSUs, whose chief executives won their battles with ministers, were listed on the stock exchanges. No minister or bureaucrat, it seemed, was willing to disturb a CEO if he was doing well and the markets recognised that performance.

Many of these chairmen also realised that they were sitting on huge business empires. With the economy opening up, job options for these CEOs had also increased. Most CEOs of profit-making PSUs had, thus, become more confident of themselves as their market value increased. And most importantly, the Prime Minister's Office became a powerful ally in the case of many of them. Some PSU chiefs also exploited the powerful political equations that had emerged in the UPA government. For instance, the Left became a powerful lobby that some of the PSU chiefs used to their advantage.

The rise of the PSU chairman is a new phenomenon. It remains to be seen for how long this lasts.