PESB could become statutory body

Written by Subhash Narayan | Updated: Aug 27 2014, 08:02am hrs
The Syndicate Bank bribery issue, in which the CBI smelt irregularities in the bank chiefs appointment, has brought the focus back on the issue of granting a statutory status to the Public Enterprises Selection Board (PESB).

To prevent recurrence of such incidents, the Narendra Modi government is thinking of making PESB a statutory body whose decisions on appointments would be final, without needing a formal approval

from the administrative ministry or the minister.

The department of personnel and training, which is giving the proposal a final shape, has been asked to expedite the process. The idea is to shield the PSU executive selection process from allegations of favouritism in future. Also, the changes will greatly speed up the process of filling vacancies.

Under the proposal, since the board would have representation from officials of the concerned administrative ministry, the PSE and the Cabinet secretariatand hence all points of view are considered the decision on candidate would not require any further approval and could be implemented without delays.

The PESB currently functions as the selection body for PSU executives under the department of personnel and training. While it identifies executives for filling vacancies (of both directors and independent directors), conducts interviews and finalises candidates, the process is completed only after the name is approved by the administrative ministry and a final clearance is taken from the Appointments Committee of the Cabinet (ACC) headed by the Prime Minister.

Sources said that most delays in filling vacancies take place at the stage of getting the approval of the administrative ministry and the minister. Because of this, not only the PSEs have to suffer from delays in appointments but often political considerations weigh over economic rationale in the selection process, depriving the companies of an able management team.

We need to change the process of appointment of independent directors by removing the role of the administrative ministry in their selection. Under the current system such directors are dependable independent directors whose loyalty is clearly towards the ministry, director-general of the Standing Conference of Public Enterprises (Scope) UD Choubey said. Scope is an apex body of central government-owned public enterprises.

The changes are expected to be revolutionary as PSEs could get both functional and independent directors of the calibre required, and not political appointees. The politically tainted selection process has been faulted for many ills of the public enterprises by observers.

In the absence of critical reforms in the appointment process, several PSUs are running without a head for a long period. NHPC is without a full time head for the last three years and more, while head hunting has also been delayed in the cases of Coal India, DVC, PFC, etc.

Last year, CIL had to postpone crucial decisions in the absence of independent directors, who did not get the coal ministrys approval in time. Power generator NTPC has also found certain projects being thrust upon it by the administrative ministry with the support of independent directors even though the companys management and functional directors did not approve of these projects.