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GoM to decide on functional autonomy to PSEs

June 22, 2006 17:37 IST

The Union Cabinet has decided to refer the proposals of the ad-hoc group headed by Arjun Sengupta for granting greater functional autonomy to Cenral Public Enerprises to the Group of Ministers.

"The proposals of the Ad-Hoc Group of Experts on Empowerment headed by Arjun Sengupta has been referred to the Group of Ministers," Finance Minister P Chidambaram said after a meeting of the Cabinet.

Last year, the government had accepted the proposals of the group on financial autonomy to the profit-making PSEs.

On functional autonomy, the department of public enterprises had moved a Cabinet note incorporating the radical suggestions of the ad-hoc group.

The note was discussed at Thursday's Cabinet meeting but because of the nature of proposals, the matter was referred to GoM.

The Arjun Sengupta-headed group had recommended bringing down the powers of the adminisrative ministries to meddle in the day-to-day affairs of a PSE.

The group had recommended that the supplementary audit by the Comptroller and Auditor General of India of the PSEs should be an exception rather than rule as it delays the publishing of audited accounts as required by the Securities and Exchange Board of India.

It had suggested that only malafide intentional mistakes and frauds should be part of the audit observation.

In the course of building a consensus on the issue of enhanced functional autonomy, the department of public enterprises had sought the views of the CAG, which has opposed the reduction in its powers. 

The group had also recommended reworking the accountability of PSEs to the Parliament so that the questions raised on their functioning do not compromise sensitive trade data and work as impediments in functioning as commercial enterprises.

The group of experts was of the view that the inclusion of PSEs as an arm of the state under the Article 15 of the Constitution impedes their commercial functioning.

As they have to function as a government department, their decisions can be questioned in courts by an aggrieved employee or a contractor.

This matter has earlier been discussed by the Law Commission, which was of the opinion that the present arrangement should continue. The group, however, was of the view that the issue needs to be revisited by the government.

The group was also of the view that the role of vigilance in PSEs should be redefined.

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