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Financial cost of government giveaways through state-owned enterprises may become public, if a Parliamentary Panel has its way.
The Standing Committee on Finance, headed by Yashwant Sinha, has recommended that the financial impact of all government directives on a public sector undertaking should be disclosed in the Board of Directors’ report of the PSU.
Such a move would be in the interest of functional autonomy and operational efficiency of the PSU, the panel said in its report on the Companies Bill, 2011.
The Panel also felt that such disclosure would also minimise government interference in the management of PSUs.
Real picture
If this recommendation were to become a reality, the financial impact of any government largesse such as loan write-offs, interest subvention and food-fuel-fertiliser subsidies would get truly reflected in the annual reports of the PSUs, say economy watchers.
Basically, the Standing Committee has backed a similar suggestion made by the Comptroller & Auditor General of India in this regard.
The Parliamentary Panel recommendation comes despite opposition from the Corporate Affairs Ministry and the Department of Public Enterprise to any such move.
The Corporate Affairs Ministry contended that a large number of disclosures have already been provided for inclusion in the Board report.
Adding further requirements for a particular class of companies in a general enactment on companies does not appear to be justified, the Corporate Ministry had said.
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