Q. Tell us about the role and contribution of Public Sector Enterprises (PSEs) in the Indian economy?
A. Public Sector Enterprises (PSEs) have been making significant contribution to the economic development of the country. With a total investment of just Rs 29 crore, the first five-year plan rolled out five PSEs, and today the country has 320 PSEs with an investment of Rs 11.71 lakh crore. The total turnover/gross revenue from operations of all the operating Central Public Sector Enterprises (CPSEs) (244) during 2015-16 stood at Rs 18.54 lakh crore. The overall net profit of all the 244 CPSEs stood at Rs 1.15 lakh crore. PSEs contributed over Rs 2 lakh crore to the central exchequer every year for the last three years i.e. during 2013-14, 2014-15 and 2015-16.
The contribution of PSEs to the social cause has been immense. Over the years, they have developed backward regions and are involved in social welfare activities such as education, healthcare facilities, women’s empowerment, environment protection, creating rural infrastructure etc. In line with the nation’s vision of “Swachh Bharat”, they have taken various initiatives, including construction of toilets.
Q. What has been the role of SCOPE?
A. SCOPE, as an apex body of PSEs, has been promoting excellence in them. Its activities are aimed at strengthening the PSEs by enabling them to be competitive and at the same time encouraging them to explore new horizons in the global market.
From time to time, SCOPE has been organising programmes, International HR summits, Global Leadership Programmes, brainstorming sessions, conclaves for the financially stressed PSEs, and interactions with policymakers, to deliberate on issues concerning the PSEs. Issues that emerge during the deliberations are forwarded to the policymakers in the government.
Q. What is the objective and kind of training provided in the SCOPE Academy?
A. SCOPE has set up an Academy of Public Sector Enterprises (APSE) with the objective of providing a platform for manpower development at a centralised point for capacity and competency building of the PSEs. The Academy is different from other dedicated training centres in PSEs as it provides a broad picture of all PSEs under one roof through a suitable training module. The module shall familiarise them with the genesis of the public sector, policy aspects, succession planning, governance structure and leadership aspects.
SCOPE has successfully completed five programmes in a span of a few months.
Q. Tell us about corporate governance norms being compiled by the PSEs?
A. Compliance management is the key to ensuring good corporate governance. The PSEs have been the forerunner in adopting a constructive mechanism to ensure greater conformity with the rising standards of corporate governance. They comply with several rules and regulations under elaborate parliamentary and government control.
Apart from the Parliament, PSEs are accountable to other authorities like the Comptroller and Auditor General of India, Central Vigilance Commission, and the Right to Information Act. They are also required to adhere to new accounting standards like Statutory Audit, Internal Audit and other mechanisms required in the Companies Act. The PSEs have even gone the extra mile and have taken structured initiatives beyond mandatory stipulations. Over 100 PSEs have also signed the Integrity Pact with Transparency International. Though these regulations have resulted in better image of the PSEs and greater investor confidence, there is a need for convergence of these heterogeneous regulatory mechanisms, as somehow it is felt that compliance and conformance have overtaken performance in PSEs.
Q. How are the PSEs fulfilling the development needs of the country through Corporate Social Responsibility?
A. CSR is an important aspect of Corporate Governance. The Companies’ Act has specifically addressed the issue of Corporate Social Responsibility. It has made a specific provision that companies with a net worth of Rs 500 crore or turnover of Rs 1,000 crore or net profit of Rs 5 crore have to spend at least 2% of their average net profit for the minimum preceding three financial years on CSR activities.
Schedule 7 of the Companies’ Act specifies the activities for CSR which, inter alia, include poverty alleviation, education, health and medical care, sustainability, gender equality and vocational skill development, which companies can choose with preference to the local areas they are operating in. The PSEs have been demonstrating strong commitment towards CSR and sustainable development. Since inception and much before the mandatory provision of CSR came into being, they have been taking significant initiatives and innovative CSR activities and programmes to meet the development needs of the country. Their CSR initiatives have helped in creating a good image for the PSEs.