PUBLIC SECTOR PURCHASE PREFERENCE POLICY EXTENDED FOR TWO YEARS

DEPARTMENT OF PUBLIC ENTERPRISES

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YEAR END REVIEW

The Department of Public Enterprises acts as a nodal agency for all PSEs in terms of policy formulation relating to PSEs, issuing guidelines, finalization of performance of MoU with the Government and its evaluation. The Department strives for professionalisation of PSEs Boards, providing operational and financial autonomy, making PSEs accountable, infusing transparency in management, achieving managerial excellence and increasing productivity.

The purchase preference policy in force till 31.3.2002 for public sector undertaking and Government Departments was extended for more two years up to 31.3.2004 with modifications. This was done on the recommendation of the Department Related Parliamentary Standing Committee. During the past three years 51 PSEs have availed the benefits of Purchase Preference Policy.

Under the scheme the 10 per cent purchase preference will be available for products and services for two more years for tenders/NIT of Rs.5 crore and more instead of Rs one crore.Purchase preference will also be available to only those privatised CPSEs where specific government approval has been accorded for a specific period from the date of disinvestment. The respective Ministries/Departments/Autonomous bodies/CPSEs will be responsible for implementing the purchase preference policy.

The provisions relating to purchase preference should be specified in the notice inviting tender (NIT) for Rs.five crore and above. For any deviation inclusion of the purchase clause from the NIT, it will be obligatory for the concerned Ministries/Departments/Autonomous bodies to obtain prior exemption from the Cabinet in consultation with the Department of Public Enterprises.

Department of Public Enterprises has started a scheme for Counselling, Retraining and Redeployment of Voluntarily retired employees of Central Public Enterprises in a modest way. The scheme aims at reorienting the VR optees through short term Training Programmes for purpose of rehabilitating them on self-employment activities. The scheme started operating during 2001-2002 with a modest fund allocation of Rs.eight crore and a target of 8000. The target was achieved and covered 8500 VR optees. For the year 2002-03, a sum of Rs.10 crore has been allocated as plan outlay. Training is imparted by reputed training institutions in the country, and cover almost the entire geographical territory of the country, particularly those where a large number of VRS optees are likely.

In pursuance of the representation received on the condition of 10-year periodicity for wage revision in the Central PSUs, the Government has reviewed the matter. It has been decided, in partial modification of the guidelines on the subject, that the unionised employees governed by IDA pattern, would have the option to opt for either; a ten year periodicity of pay revision with 100 per cent neutralisation of DA as set out in the guidelines of January 1999; or a five year periodicity on the basis of graded neutralisation as was from January ’92 to December ’96.

Professionalisation of Board of public enterprises is a thrust area of the public sector reforms. Non-official Directors can play an important role in formulation of a Company’s strategy and in ensuring that the Board sets its sights high enough. Their contribution to strategy is often through asking well-directed questions, critically but constructively. They also take with them an external set of standards against which to assess the aims and targets, which the functional directors have set for them.

The Department of Public Enterprises has issued guidelines on composition of Board of Directors in order to make them professional. The guidelines provide that outside professionals should be inducted on the Boards of PSUs in the form of part time non-official directors and the number of such directors should be not less than one-third of the actual strength of the Board. In the case of listed companies headed by executive Chairman, the number of non-official directors (independent directors) should be at least 50 per cent of the total. The guidelines also envisage that the number of Government directors on the Board should be not more than two. Apart from this, there should be some functional directors on each Board.

The appointment of non-official directors in Navratna and Miniratra PSEs is made from the panels prepared by the Search Committee consisting of Chairman (PESB), Secretary (DPE), Secretary of the administrative Ministry concerned and 4 eminent non-officials. There are nine Navratnas and 41 Miniratnas. Four Search Committees have selected non-official directors for all the Navratna PSEs and appointments have also been made in all of them. In the case of Miniratna PSEs, appointments, have been made in 21 cases. Search Committee has made selections in respect of the remaining Miniratnas and panels are under process in the concerned Ministries except in the case of a statutory Corporation (CWC) and a joint venture company (FSNL).

For drawing names of eminent persons for selection as part time non-official directors, DPE has built up a data bank of professionals and experts drawn from various sources including premier management and technical institutes, Industrial Associations, Financial Institutions etc.

With a view to give greater autonomy to the Public Sector Enterprises and at the same time to make them accountable for achievement of their specified objectives, MoUs are being signed with PSEs. For the year 2002-03, MoUs have been finalized with 101 PSEs. Overall performance as measured by MoU evaluation in respect of 107 MoU signing PSEs for the year 2000-01 is 50 PSEs were rated as Excellent. MoU awards upto 2000-2001 have been given away. During the MoU negotiation meetings held to finalise the MoUs for the year 2002-03, the PSEs were advised to prepare strategic plans and incorporate suitable parameters in order to achieve both national and international level benchmarks in a specified time-period so that they are able to face the emerging competitive economic environment.