They're our PSUs

If you’re looking for yet another reason why the government cannot be trusted to own and properly manage companies and banks, the UPA’s decision to nominate Congress politicians as “independent directors” of banks (more are apparently in the pipeline) is a good one.

Coming as it does so soon after the attempt to foist unqualified party nominees on the boards of the oil sector PSUs (and these are not penny companies but giant corporations), it is obvious that the Congress party has no qualms about going back to the old days when the boards of PSUs and public sector banks (PSBs) were routinely packed with political appointees.

As a logical corollary, dealerships of PSUs also used to be handed out to the party faithful, or at least to those cleared by the party high command.

To some extent, this practice was at least frowned upon during the NDA’s tenure, if you leave aside the blatant scandal in the allotment of petrol pumps to friends and relatives of BJP/NDA members and the well-known nomination of a young lady to the board of a telecom PSU.

Indeed, there were also instances of relatives of senior BJP leaders/ministers being nominated to the boards of PSBs. But the practice was not as blatant or as rampant as is now becoming the case.

It is interesting that the two guilty ministries (finance and petroleum) today are headed by people who would in the ordinary course be expected to stay clear of such shenanigans. That encourages the conclusion that it is not the ministers who are initiating these changes, it is the party high command—and no minister can apparently refuse to oblige.

Coming as this does when the UPA and the committee that it has set up under Arjun Sengupta are busy swearing by public sector autonomy, some obvious questions need to be answered: autonomy from whom, for what purpose, and in what manner?

Autonomy has usually meant managerial autonomy, so that government and/or political pressure do not bring extraneous considerations to bear on a public sector company’s performance. And since the traditional perception of a PSU’s role goes beyond maximising profits and encompasses a variety of other financial and social considerations, it has usually been considered necessary to have some public personalities nominated to the board of directors—not only as a check on the management but also in pursuit of the larger objectives that a PSU is expected to serve.

However, this cannot possibly be interpreted to mean that party faithful should be given sinecures, with obliging managements holding board meetings in exotic locations with all facilities laid on. Independent directors have an unambiguous and serious role to play, and to believe that semi-educated politicians can play that role with no prior experience of the corporate world, is to take credulity to the extreme.

The more likely reason, though, is that the politicians simply do not understand the role that an independent director is supposed to play, and don’t see anything particularly wrong in appointing novices to the corporate world.

Since the UPA has already put an end to the policy of privatisation of PSUs, under pressure from the Left parties, it was hoped that it would at least move forward on the issue of granting them more managerial and other autonomy And if that is not to be, why keep these companies in the public sector?