Expert body on PSU autonomy

Panel to look at functional and operational independence for public sector units

The government will set up an expert group under the ministry of heavy industries to examine the issue of functional and operational autonomy for public sector units.

The group would hold consultations in conjunction with the Board for Reconstruction of PSEs to spell out the autonomy issues, officials in the department of public enterprises told Business Standard.

Among the members of the group would be Arjun Sengupta, Chairperson of the national commission for the unorganised sector, and Anwar-ul Hoda, member, Planning Commission.

Last fortnight, the Union Cabinet had asked the ministry of heavy industries to submit papers on the various issues regarding PSEs, including those related to enhanced powers for autonomy, mergers and acquisitions, manpower rationalisation and purchase preference.

The government has decided to delegate powers to the boards of public sector units to empower profit-making PSUs. This is in keeping with the commitment made in the national common minimum programme.

The expert group will discuss delegation of powers in areas like incurring capital expenditure on purchase of new items or replacements without any monetary ceiling, to enter into technology joint ventures or strategic alliances and to purchase or obtain through other arrangements technology and know-how, said an official.

The powers will also relate to effecting organisational restructuring and raise debt from the domestic capital markets, as well as borrow from the international market, subject to the approval of the Reserve Bank of India (RBI) or the department of economic affairs and the concerned administrative ministry.

In 1997, following the government's decision to grant autonomy to PSUs, the Navratnas had sought a clarification. They sought to know whether the delegation of powers meant that they were no longer required to obtain government approval, including approvals from the public investment board, for setting up new projects or for expansion.

Subsequently, the finance ministry said that the boards of the Navratnas were given authority to incur capital expenditure subject to guidelines and that it was not necessary for them to obtain government or PIB approval for setting up new projects or for expansion.

At present, Category I mini-ratnas can incur capital expenditure on new projects and modernisation without government approval up to Rs 300 crore or equal to their net worth, whichever is lower.

For Category II PSEs, the capex is limited to Rs 150 crore or 50 per cent of the net worth of the PSE.