Widening the net

PSU reforms necessary to attract global talent

The Union power ministry appears to have cast its net wide to select the best global talent to head NTPC Limited — India’s largest power producer, in which the government owns a stake of around 75 per cent. The ministry has published an advertisement in The Economist seeking applications for the post of chairman and managing director of NTPC Limited. Such a notice from the government in an international publication is extremely rare. The obvious desire is to tap the global talent pool to steer a company which, with over 24,000 employees and an installed capacity of about 45,500 MW, was ranked 431st in the Forbes Global 2000 listing of the world’s biggest companies. The move is welcome. Every effort should be made to get the best talent to head an organisation like NTPC, and a global search will obviously help. It also shows the government’s positive, progressive and open approach towards the selection of top personnel for public sector undertakings, coming as it does after recent successful attempts to rope in private sector professionals to head a few of the state-controlled banks.

There are, however, some problems too. The basic pay that comes along with the responsibility is estimated at $24,000 a year, or about Rs 15.6 lakh at the current exchange rate. As a report in this newspaper has pointed out, this pay package is less than half of what an average American earns. Even when compared to top Indian companies similar to or even smaller than NTPC, the promised pay is insignificant. NTPC has an annual turnover of over Rs 75,000 crore and a net profit that exceeds Rs 10,000 crore. Yet, the total annual compensation including incentives and allowances for one of its former chief executives was only Rs 50 lakh. For the latest move to succeed, therefore, the government must shift NTPC Limited out of the straitjacket of pay scales mandated for different categories of public sector undertakings, allowing the board to devise compensation packages for its personnel in tune with the market. Pay for the top officers of a hugely profitable company like NTPC Limited cannot be the same as for another loss-making or not-so-profitable public sector company, in the same or a different sector. A company’s paying capacity and market realities should determine the salary, not the government.

It may be argued that there is much more that the chairmanship of a leading public sector undertaking offers by way of intangible benefits, and so this salary should be attractive enough for global talent to line up for job interviews at the NTPC headquarters. This is unrealistic. If the purpose of advertising the job in an international publication was to get the attention of top managers globally, the effort should have been more comprehensive. A host of other changes are needed — like providing the chief executive greater operational autonomy and laying down transparent norms of accountability that rule out overt or covert interference by the government. These changes should be the harbingers of an overhaul of the system that governs the management of public sector organisations in the country.