With PSUs facing interference from administrative ministries, SAIL Chairman C S Verma today mooted the idea of setting up a holding company on the lines of Singapore's Temasek to give autonomy and better manage state-owned firms.
By virtue of the government owning a substantial stake in public sector undertakings, the administrative ministries appoint bureaucrats to the boards of these companies.
In the Temasek model, the government's stake would be transferred to a holding company, thereby not requiring the appointment of bureaucrats who are often accused of interfering in the day-to-day functioning of PSUs.
Verma, who also heads the Standing Conference of Public Enterprises (SCOPE), said many PSUs would have fared better if they had been allowed to function independently.
"What is the role of a ministry in owning and controlling a company in a sector that has been deregulated?" he asked while speaking at a CII event today.
An ownership structure that gives government-nominated directors unbridled power without accountability while professionals running the company are held responsible for the board's actions often leads to confusion, he said.
"Government directors...Are bothered about their ownership without wanting to take any responsibility," he alleged.
Temasek was incorporated in 1974 to hold and manage investments and assets previously held by the Singapore government, leaving the Ministry of Finance to focus on its core role of policymaking and regulations.
"We want to separate the ownership from the management for better managing the PSEs in a professional manner. Let there be a holding company and the board of which would be run by reputed persons," Verma said.
"To start with, maharatna and navratna companies, totally around 20, could be made subsidiaries of the holding company.
"At the beginning of the financial year, the holding company would chart out targets for these companies," he said.
Verma said as SCOPE Chairman, he had sent out the holding company proposal several times to the government.
NTPC Chairman Arup Roy Choudhury said the government has a queer way of rating chief executive officers.
"You are the best CEO if you are a non-performing CEO," he said.
PSEs are expected to perform and compete with global and private firms while being controlled by the government owners at every level -- from investment decisions to the appointment of directors on the board, he said.
"The problem is not about who is the owner, but whether the owner is willing to take the responsibility. Have you been selected or elected?" Choudhury said.
