Government considering independent performance assessment for PSU

PSU brass may break free from parent ministry shackles
Dheeraj Tiwari / The Economic Times

NEW DELHI: The government is considering independent performance
assessment for top managers of large state-run companies, as it looks
to reduce influence of administrative ministries in the functioning of
such firms. Performance appraisal of the chairmen and functional
directors of public sector units (PSUs) is currently done by
administrative ministries. A part of PSU salaries is linked to the
employees' performance, giving administrative ministries an undue
influence over the management.

"The appraisal should be conducted by an independent body like the
department of public enterprises (DPE) to ensure transparency in
appraisal and reward system," said an official with the ministry of
heavy industries, which has moved the proposal. DPE is the nodal
agency for all public enterprises. This will give more functional
autonomy to the management, particularly those eligible for the
'maharatna' status. Of the 18 'navaratna' companies, only 5 will
qualify for this status.

Maharatna status requires a three-year track record of annual net
profit of over Rs 5,000 crore, net worth of Rs 15,000 crore and a
turnover of Rs 25,000 crore. SAIL, ONGC, Indian Oil and NTPC are the
only PSUs that meet the criteria. Only listed entities are eligible to
become 'maharatnas'. The proposal is part of a larger government plan
to achieve better corporate governance and provide more autonomy to
public sector companies.

There is also an informal proposal to bring DPE under ministry of
corporate affairs. Earlier, Corporate Affairs Minister Salman Khurshid
had said that the proposal of bringing PSUs under MCA can be
discussed. Maharatna companies are allowed to take investment
decisions involving investment of up to Rs 5,000 crore. Earlier a
committee set up on performance appraisals in PSUs had also
recommended that department of public enterprises (DPE), being the
nodal department for central PSUs, should monitor the performance
appraisal.

"It is felt that the appraisal should also be used as a tool for
career planning rather than a mere judgmental exercise. Moreover, it
will also help to identify the future leaders," said a DPE official,
who asked not to be named. The appointment of top PSU management is
done in a three-stage process, in which the administrative ministries
have a major say.

Source:
Dheeraj Tiwari / The Economic Times
http://economictimes.indiatimes.com/news/economy/policy/PSU-brass-may-break-free-from-parent-ministry-shackles/articleshow/5870336.cms