Nothing can be more indicative of the paralysis afflicting the Government's public sector policy than the fact that currently the country has 22 public sector enterprises (PSEs) which do not have a full-time chairman. There are 41 which have one or more directors less than the full strength of their boards. The Steel Authority of India Ltd (SAIL), one of India's largest PSEs, has remained headless for almost a month now after the last chairman, M.R.R. Nair's term expired. So too the high-profile Air-India and Indian Airlines: it's now almost a month since Russi Mody resigned his chairmanships.
Are these empty slots at the top due to a lack of suitable candidates? Hardly. There is a full-fledged Government entity, the Public Enterprise Selection Board (PESB) entrusted with the task of selecting and recommending candidates for top posts in PSEs. The PESB has not been remiss in its duty at all. It is the Government—whether Congress-led or not—which has made it informal policy over the years to ignore the PESB's recommendations, or to sit on them for months. Consider the SAIL case. The PESB forwarded the name of Vice-chairman Arvind Pande for the chairman's post as early as September 20, two months before Nair's term ended. The Government, however, chose to instal Akhileshwar Prasad, additional secretary in the Steel Ministry as acting chairman and managing director (CMD), a part-time job in addition to his duties in the ministry. For the Indian Airlines and Air-India posts too, the PESB has forwarded its recommendations, but received no response from the Government as yet.
In addition, there are about 10 other PSEs where instead of a regular chief executive, additional or joint secretaries to the Government of India have been officiating as CMDs. Take, for example, the critical PSE, Airports Authority of India: a Ministry of Civil Aviation Joint Secretary, Ranjan Chatterjee, is officiating as CMD. Or the National Thermal Power Corporation where Ajay Dua, joint secretary in the Ministry of Power, was asked to officiate as CMD Rajinder Singh was on long medical leave. Or the British Industries Corporation—holding company of Elgin Mills and Cawnpore Textiles—where a joint secretary from the Textiles Ministry, Rukmini Haldea, is holding the reins. In all these cases, the PESB recommendations had reached the Government well in time.
So why have the PESB at all? Is the PESB becoming redundant? Is the Government no longer in need of such a body and can let the ministries handle these highly-placed appointments on their own? But the Government simply seems apathetic to the situation, since it neither follows the PESB's recommendations nor does it very often appoint anyone else to the vacant positions.
In the last two decades, at no point of time have all the PSEs had a full quorum of chairmen and directors. According to available data, there are at least 63 top posts vacant at present. This is a slight improvement over the figure of more than 80 six months ago and over 100 at the end of last year. But according to data collected by the Government itself, about 40 more posts are slated to fall vacant in the coming six months.
Says PESB Chairman N.Vittal: "We complete our selection process over three months before the vacancy actually takes place and make our recommendations. But our power ends there and we can't enforce any appointment and it's up to the Government to accept or reject our selections." And in successive governments, ministers and politicians regularly disregard the politically neutral suggestions of the PESB. "Appointment to the PSEs' top slots is today a political issue and not reward for services or merit," says a Bureau of Public Enterprises bureaucrat.
The limited powers of the PESB have been systematically played around with by politicians. When the Board was set up in 1974 under a Ministry of Finance resolution, it was given exclusive rights for top appointments to the PSEs. The resolution said: "No such appointment or extension will be made save on the Board's recommendation." That resolution was soon being flouted, with governments using the carrot of a top PSE job to get the incumbent to contribute PSE funds to parties' election funds.
In 1987, the Rajiv Gandhi government shifted the PESB to the Department of Personnel and cut the number of members from four to three. The aforementioned clause was also deleted from the functions of the PESB, thereby removing its exclusive powers over appointments and opening the flood-gates for discretionary and often arbitrary appointments. Politicians now had a carte blanche to make political appointments to top PSE echelons, and efficiency and experience be damned. In 1996 alone, PESB selections were overruled more than 15 times.
While overruling PESB selections shows Government indifference towards the Board, the inordinate delays caused in clearing its candidates acts as a disincentive for the Board's efforts. According to Vittal, most of the delays caused in final appointments in the PSEs are due to administrative reasons and bureaucratic red tape. Also, because the administrative ministries wake up late to start work on filling the vacancies, they cause prolonged vacancies in these posts.
What also causes significant delay is the vigilance clearance of candidates recommended by the PESB despite the fact that most candidates are chosen from within the public sector itself. If the Board clears them for important posts in the PSEs, they must have been cleared by vigilance already, says Vittal. There is also the failure of the respective administrative ministries to refer the names of shortlisted candidates to the Central Vigilance Commission (CVC). In the last two years, the PESB had sent 68 candidates for the post of CMD and 104 for directors in various PSEs out of which only 16 CMD candidates and two directorial candidates were finally referred to the CVC.
Interestingly, the 1987 resolution gave the Board a number of other functions which included—apart from selection of CEOs for PSEs—advising the Government on the structure of the Board and senior management for each PSE;advising the Government on suitable performance appraisal system for the PSEs and maintaining a data bank on their performance. It was also to advise the Government on the formulation and enforcement of a code of conduct and ethics for managerial personnel in PSEs and suitable training programmes for them. Unfortunately, most bureaucrats and PSE managers are unaware of the existence of such powers with the PESB and even the Board has not been very active in these. Vittal himself admits: "I wonder whether apart from the process of selection, the PESB has been effective at all in other areas?"
What exactly is the Government, or the Board, doing to improve things? Vittal claims he is trying to streamline the appointments process through the PESB and has made a representation to the Government for a reinstatement of the exclusive right of the Board over top PSE appointments. The Board also claims it has begun the new practice of starting the hunt six months before the vacancy occurs, even before the administrative ministry refers the case to it. As a result, the PESB now, claims Vittal, sends in its final recommendations to the respective administrative ministries two to three months before the vacancy actually takes place.
Not only this, alarmed by the PESB'S powerlessness in selection matters, the Standing Committee on Public Enterprises has given a five-point recommendation for the improvement of the selection process through the PESB to the Department of Public Enterprises. This, among other things, calls for making the Board an independent statutory body similar to the Union Public Service Commission—give it more teeth and make its recommendations binding on the Government.
But does the Government really care? Depoliticisation of the leadership of our PSEs, many of which are hardly moribund, and could actually give global giants a run for their money, is the key first step to turning our public sector around. Otherwise, all that talk of professionalisation and revamping will remain only so much hot air, business as usual.
