NEW DELHI, July 2: The Government has watered down a step taken by the United Front government to professionalise the boards of public sector units. In a recent decision, the Government quietly disbanded the `search committees' set up to select non-executive directors on the boards of PSUs. While independent directors will still be appointed on the boards, the decision will be made by minister of the ministry under which the PSU operates.Government officials say that the decision to disband the committees was taken by the Cabinet where it was felt that a crucial task of selecting directors should not be left to a `bunch of bureaucrats.' The selection should be done by the ministers, the Cabinet felt. The search committees were set up to identify professional directors for the Navratna PSU and the 97 Mini-ratna (profit-making) PSUs. The committees were headed by the Chairman of the Public Enterprises Selection Board. Its members were Secretary, Department of Public Enterprises, Ministry of Industry;chairman of the Standing Conference of Public Enterprises, the secretary of the concerned ministries and the heads of the PSUs.
Interestingly, this also means that the independent directors who have been chosen for some of the navaratna PSUs -- appointment letters have been issued for directors for only two PSUs, BHEL and IPCL -- may now not be selected at all. The reason is simple: now that the committee has been disbanded, their recommendations don't really have to be taken seriously. In any case, ministers have been sitting on the recommendation of this committee since late last year.
Professionalisation of PSU boards has been identified as a key area of reforms by many experts including the Disinvestment Commission. It was felt that unless the PSU were led by the boards and unless the board had enough talent, the company could not be run on commercial lines.
PSU sources say that this is a retrograde step as the search committees were transparent and a non-partisan way of selecting directors.Ministers could now revert to filling the boards with political appointees instead of professionals who would have added to the expertise of the board. Former Civil Aviation Minister C M Ibrahim, for instance, had put three of his own nominees on the joint board of the Indian Airlines and Air-India. These nominees -- Muhammad Ali, Yusuf Ali and Ajay Bhatia -- were not professionals and did not add to the talent of the board. The new Civil Aviation Minister Ananth Kumar removed these men from the board last month.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
