The Hindu Business Line : Empowering the enterprises

Welcome as Dr Manmohan Singh's observations on public sector enterprises are, it is unclear if they are hints of a policy statement on the subject or just one of those statesmen-like homilies that the Prime Minster is prone to making before certain audiences. Inaugurating the annual conference of public sector chief executives, Dr Singh raised a number of issues that governments should have addressed years ago as part of an organised attempt at injecting "professionalism" in these enterprises. Given the burden of his theme, it would have been far more appropriate for him to have outlined it to his party colleagues and United Progressive Alliance partners which seem to differ in substance from the views he expressed at the conference. The Left, in particular, has at one point or another stalled the implementation of precisely those issues the Prime Minister thinks are of great importance; as it happens, addressing the chief executives was like preaching to the already converted.

All the same, a public reference in the same breath to corporate governance norms and market strategies can constitute a strong hint for both party members and those in key economic Ministries; hopefully these hints will get the Commerce and Finance Ministries for example, setting the guidelines for some of the issues the Prime Minister spoke about with his usual elegance. Empowerment was the underlying theme of Dr Manmohan Singh's speech; the capacity of a public sector unit, listed or not, to seek value through mergers, acquisitions and the creation of new joint ventures depend on its empowerment which in effect is measured by its distance from the government, its current owners. For this empowerment, the Prime Minister suggested two methods: One, listing on the stock exchanges, a move that would enhance professionalism, and, two, the induction of independent directors on the boards that would ensure greater efficiency in decision-making processes. Good governance and high professionalism, he concluded, must become an integral part of the business strategy.

Many public sector units are listed and have adopted charters for better governance. But that has not prevented the political masters from interfering when threatened by that very governance the Prime Minister extols; the experience of ONGC and the Petroleum Ministry in the recent past should illuminate the difficulties in separating ownership from management. Rhetoric will not work as much as legislation that empowers empowerment, so to say. The recent Cabinet guidelines for governance in public sector units, one of which expands the number of independent directors on their boards should help in distancing the owners from the operations. But increasing public ownership through equity still remains the most effective road to professionalism in the public enterprise.

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