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February 20, 2007 15:30 IST
Seeking to make accountability a culture in central public sector enterprises, the government has directed all such firms to sign a memorandum of understanding with their respective administrative ministries setting out targets for the coming fiscal.
It has fixed March 31 as deadline for signing of MoUs and delay or failure by a CPSE to sign it would invite a 'poor' rating that would be reflected in the Annual Confidential Reports of chief executives, sources said.
The decision to get tough with the central public sector enterprises was taken by the high power committee on MoUs, which is headed by the Cabinet Secretary. Earlier, a PSE had an option of entering into an MoU with its ministry but after this directive even the loss making companies and those under construction would have to do so from 2007-08.
The subsidiaries of the government-owned companies would enter into an MoU along with the parent company. Only 112 CPSEs had set up targets for themselves in consultation with the ministry for 2006-07 but for 2007-08 around 155 companies and their subsidiaries would sign MoUs.
The high power committee has also allowed different parameters for signing MoUs for the sick PSEs, whose revival plan have been approved.
These parameters will be developed by their administrative ministries. The government has decided to make PSEs more accountable because huge amount of public funds have been invested in them, officials said.
According to PSE Survey for 2005-06 the cumulative investment in all of them is Rs 3,93,057 crore (Rs 3930.57 billion) and their contribution to GDP is 11.12 per cent.
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