Saturday, August 16, 2014

Will Modi Govt bury Roongta report on fixed tenure for PSU heads like the Planning Commission?

PM Modi on August 15
WILL the Narendra Modi-led government bury the recommendations of the Roongta Committee in cold storage like giving an untimely death knell to the Planning Commission, to whom the committee submitted its report? Though the earlier UPA government accepted the recommendations of the the SK Roongta Committee fixing the tenures of PSU CMDs, the Modi sarkar doesn't seem to be in any mood to...
implement the same in near future. The SK Roongta Committee on public sector reforms recommended in November 2011 that the tenure of CMDs/Directors in CPSEs be fixed at minimum three years at the time of first appointment.
For this, the committee suggested removing the criterion of minimum two years of remaining service at the time of vacancy. The recommendations were circulated through the DPE Cabinet note. It is being considered by a group of ministers (GoM).
The committee headed by the former chairman, SAIL, in its report also suggested that government should look at listing 50 state-owned PSUs in the bourses in the next five years. The committee in its report suggested that 30 PSEs should be listed in the first three years taking the number to 50 in over five years. It also wants the government to draw up year-wise schedule for the listing of CPSEs on a rolling basis for the next five years. Already more than 50 PSUs many of them ‘maharatnas’, including ONGC, BHEL, SAIL, Coal India are already listed on the bourses.
The committee examined different aspects including corporate governance, effective partnership with private sector and has chalked out a plan for further development of PSUs.
The draft report has already been submitted to the Department of Public Enterprises (DPE) last year for finalising the recommendations suggested by the Roongta Committee.
The Prime Minister Modi in his maiden Independence Day speech from the ramparts of historic Red Fort announced the burial of Planning Commission and its replacement by a new institution.
"In a short time, we will initiate a new institution that will work in the place of the Planning Commission," Modi said. Now, with the burial of the Planning Commission the pertinent question arises here will the Roongta report follow suit?
So when the government is acting fast on various projects will it take its call about the retirement age of the PSU heads? But so far it doesn't look like the government is serious on the issue.
On August 6, the government said it had taken no decision to give a fixed tenure to CMDs or functional directors of public sector undertakings even by extending their service.
Minister of State in the Prime Minister's Office Jitendra Singh gave this information in the Lok Sabha.
He said in a statement that functional directors were appointed on the board of public sector undertakings for five years or till the age of superannuation, whichever was earlier.
If the initial tenure of five years of an incumbent ends prior to his attaining the age of superannuation, the term could be extended till the day of superannuation, the minister said.
This would be subject to the officer meeting the prescribed performance benchmark and on being clear from the vigilance angle, Jitendra Singh said.
"There is no decision of the government to give a fixed tenure to chairman-and-managing director or functional director of any public sector undertaking even by allowing them to continue beyond the age of superannuation," he said.
Roongta Committee's argument is that frequent changes over 2-3 years were detrimental for the organisation. Since programmes related to modernisation and expansion of CPSEs have a high gestation period,the proposal for fixed tenure for CMDs/functional directors merits favourable consideration.
Meanwhile, against the backdrop of Syndicate Bank chairman SK Jain’s arrest in an alleged bribery case, finance minister Arun Jaitley has asked the cabinet secretary and the Reserve Bank of India to look into the recent appointments of public sector bank chiefs, following the Central Bureau of Investigation’s (CBI’s) report highlighting discrepancies and irregularities in the process.
“Time has come to be strict with PSU banks... I have urged the cabinet secretary and the RBI governor to examine recent appointments in public sector banks,” Jaitley said on August 14.
The chiefs of state-owned banks are selected by a panel headed by the RBI governor. The Cabinet secretary processes the applications, which are then placed before the Appointments Committee of Cabinet for final approval.
The CMDs of Canara Bank, Bank of India, Corporation Bank, IDBI Bank, Allahabad Bank have been recently appointed.

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