In a move which would ensure greater transparency and accountability in the selection and functioning of chairperson and managing directors (CMDs) of state-owned entities, the Government has decided to set a fixed tenure of minimum three years for them as well as extending their retirement age at 63 years against the present age of 60 years.
According to official sources, in a recent meeting of a ministerial panel presided over by Finance Minister P Chidambaram, a slew of measures suggested by a panel of experts set up for introducing reforms in Central Public Sector Enterprises (CPSEs), were finalised and these are expected to be sent for Cabinet clearance by end of this month.
In another move which is expected to go a long way in ensuring greater probity in functioning of PSUs, the present age limit for Independent Directors has been relaxed to 70 years from 65 years.
Independent Directors, who are normally retired bureaucrats, academicians, and professionals (and are normally nominated in boards of PSUs by the Government) play a crucial role as conscience keepers by scrutinising and questioning the various decisions taken by the board. Relaxation in their age limit would ensure their longer continuance in PSUs' boards.
Regarding selection of Navratna and Maharatna companies' CMDs and CEOs, a separate selection committee by the Appointments Committee of Cabinet (ACC) would be set up.
Another key recommendation accepted by the Group of Ministers (GoM) is related to vigilance clearance for appointment of Directors and CMDs. This, the panel suggested, should be similar to the empanelment of Joint Secretary (JS), Additional Secretary (AS) and Secretary-level officers.
Also the internal vigilance clearance would be granted through management of the PSUs in case of MDs and CMDs, while for CMDs it would be given through the PSUs' board.
The GoM has also given its thumbs up to a recommendation that boards of PSUs would be given greater autonomy for selection of technology and joint venture (JV) partners for acquisition purposes.
The experts panel had also called for giving PSUs freedom to forge partnerships with IITs and Council of Scientific and Industrial Research (CSIR) and other such national institutions for research and development (R&D) purposes in their desired technological fields. This too has been accepted by the GoM, sources informed.
Apart from this, it has been made mandatory for state-owned entities to set up a strategy and business development committees, as well as regularly conduct comprehensive manpower planning exercise and make IT plans for technological advancement and updation.
The GoM had been set up on the suggestion of Prime Minister Manmohan Singh, who had initiated the move to introduce greater reforms in the functioning of PSUs in the wake of various controversies springing up in the selection of CMDs of several high profile state-owned entities, with quite a few of them still lying headless.