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Targets for PSUs: New norms ready, HPC to take final call

Last Updated: Tuesday, May 21, 2013 - 16:03

New Delhi: The Department of Public Enterprises has finalised new guidelines for providing greater operational flexibility to PSUs in achieving their annual targets and the same would be sent to the High-Power Committee (HPC) for its consideration this week.

A Working Group on MoU norms for CPSEs, headed by P G Mankad, was set up by the Department of Public Enterprises (DPE) in May 2012 to examine the current system of setting targets and suggest measures to improve the MoU system.

Recently, the Group had submitted its draft report.

"We have finalised it (report). This week, the MoU report will be submitted to the HPC which is headed by Cabinet Secretary Ajit Kumar Seth," Secretary in DPE O P Rawat told reporter.

The MoUs are signed between the Central Public Sector Enterprises (CPSEs) and their administrative ministries/departments and is facilitated by DPE.

The move comes in the backdrop of problems faced by public sector units (PSUs), mainly Maharatnas and Navratnas, in achieving targets fixed under MoUs.

"PSUs feel that there should be more flexibility in meeting their targets, given the present business environment," Rawat said.

"CPSEs believe that targets should be achievable and not impossible. So, the new norms will provide more flexibility to them which will help these companies to achieve their goals," he added.

Under the present MoU system, equal weightage (50 percent each) is assigned to financial and non-financial parameters.

While the financial parameters focus on profit and productivity related criteria, the non-financial ones are divided into dynamic (project implementation and R&D investment), enterprise-specific (safety and pollution) and sector-specific parameters (macro-economic factors like change in demand and supply and interest rates variations).

Currently, the annual target system does not factor in issues and fluctuations like prices of petroleum products and the difficulties power and coal sectors are facing.

CPSEs have made a case for more weightage to sector- specific parameters so that they could focus more on completing projects on time.


First Published: Tuesday, May 21, 2013 - 16:03
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