State-owned firms should be subjected to governance standards on par with private players to ensure a level-playing field as "excessive scrutiny" by the CVC, CAG and the threat of a CBI probe often leads to stalled or over-cautious decision-making in PSUs, according to industry body CII.
The suggestion is part of the Competitiveness Model developed by CII Research comprising six key elements to enable central public sector enterprises (CPSEs) to compete successfully in the global marketplace.
"CPSEs must be subject to the same governance standards as private players. Excessive scrutiny from the Central Vigilance Commission (CVC) and the Comptroller Auditor General (CAG), coupled with the threat of Central Bureau of Investigation (CBI) often leads to stalled or over-cautious decision-making in CPSEs. Further, distinction must be made between mala-fide action and taking a business risk," the chamber said.
The model also calls for clarity on the road-map for CPSEs, highlighting that given the current environment of divestment uncertainty, it is critical to appraise their top management in advance about a decision in this regard.
"India's public sector enterprises can become globally competitive," said Chandrajit Banerjee, Director-General, Confederation of Indian Industry (CII), referring to its research report 'The Rise of the Elephant: Enhancing Competitiveness of Central Public Sector Enterprises' due for formal release on Monday.
One of the elements in the report relates to clear role demarcation, noting that a well-documented policy defining and separating the roles of the owner (government), management and board is essential in order to help avoid passive ownership or excessive interference.
The report highlights that there are examples internationally and a few in India to demonstrate that efficient operations and fulfilment of social obligations are not contradictory.
Related to this are the elements of operational independence and instituting an independent and empowered board.
Operational independence comprises independence in operational decision-making and in personnel related matters such as recruitment, promotion, compensation and other terms of employment.
"An independent and empowered board will transform CPSEs from being ministry-driven to Board-driven. The intent is that the board, comprising independent experts, would take all strategic decisions, thereby increasing the speed and efficacy of decision-making," the chamber said.
The Competitiveness Model also entails the need for PSUs to become future-ready by developing internal competencies in technologies such as Artificial Intelligence, Internet of Things, blockchain, and big data analytics, amongst others.