The move will apply to the five navratnas -- IndianOil, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, Oil and Natural Gas Corporation and Gas Authority of India - and is a clear indication that the ministry is not entirely satisfied with their style of functioning. A section of the companies concerned, however, feels that their navratna status has now been reduced to a farce and that they are operating under an autocratic regime.

Three years back, the Centre had announced that these companies along with five others - National Thermal Power Corporation, Bharat Heavy Electricals, Mahanagar Telephone Nigam Limited, Videsh Sanchar Nigam Limited and Steel Authority of India - would be conferred the navratna tag. This would give them the right to invest up to Rs 200 crore in any project, without seeking approval from their ministries concerned.

There were other privileges too, which paved the way for greater autonomy to these PSUs and was an acknowledgement by the Centre that they had a crucial role to play in the overall economic development. The only criterion that needed to be fulfiled was the appointment of navratna directors, who would be government nominees, to oversee effective functioning of these companies.

Big names like Mr SM Datta, former chairman of Hindustan Lever and Mr RK Pachauri of the Tata Energy Research Institute were roped in on the boards of these companies. They were accompanied by top-class academicians from the Indian Institutes of Management, as well as retired CEOs of oil PSUs. It is, of course, another matter that nearly two years were wasted scouting for appropriate personnel to fill these slots, and in the case of GAIL and ONGC, the wait was particularly exasperating.

The companies were delighted with their newfound status and some of them were fortunate to have extremely affable navratna directors, who seldom interfered in their plans for expansion/development. There were, of course, others who decided to throw their weight around, which has only resulted in some of the PSUs being derailed in their growth track. On an average, however, there was no question that bureaucratic interference had come down.

The latest directive from the ministry has changed all that and observers wonder why this has occurred in the first place. There is a school of thought that some PSUs have gone on a needless expansion spree paying little attention to the interests of their majority shareholder, the Government of India. A case in point is IOC, which has been accused of getting into a "rabid role of a predator and literally gobbling up whatever is in sight".

The Fortune 500 company has, over the last two years, made it known that it is keen on becoming an integrated oil company, except that the way it has gone about achieving its objective has left analysts dumbfounded. Analysys feel that there has been no logic in its desire to buy out Indian Petrochemicals Corporation or diversify into new areas which call for a high degree of investment. Specifically, IOC has been castigated for showing a needless degree of buoyancy for projects which analysts feel are only a drain on the company's finances.

This could explain why the ministry is keen on keeping the ambition level of these PSUs to manageable levels. The move will, of course, be counter-productive to the extent that the government-nominated navratna directors will also do their bit in interfering with crucial decisions. It now remains to be seen where all this will lead to except that the navratna status has now been relegated to the wastepaper basket.