Excerpts from Prime Minister Manmohan Singh's speech at the release of the book The Indian CEO: A Portrait of Excellence on July 18 in New Delhi.
I am delighted to release this book, which is a product of valuable research. I compliment the research team, the chief executive officers (CEOs) associated with the research and my Principal Secretary Mr Nair, who took the initiative to launch this research programme.
I also compliment the Public Enterprise Selection Board and Bharat Petroleum Ltd for commissioning this study.
I recall participating in a conference that was organised to discuss the results of this research work. As I had said at that time, I am a strong believer in the importance of individual leadership, but I do recognise that there are binding constraints imposed on even the most competent leaders.
It is, therefore, not always easy to judge whether any given outcome is a product of the capabilities of the leader or of the inadequacies of the environment in which he or she must function.
I, therefore, note with approval that this study contextualises the role and performance of CEOs, especially of a public sector corporation, within the environment in which they have to perform. For public sector companies, this environment is defined as much by the government as it is by the market.
I am not surprised that this study comes to the conclusion that dealing with this external environment, dubbed as "boundary management", is the most important challenge facing public sector executives in India. I agree with an important conclusion of this study that the relationship between business and the "government as regulator" needs to become "more transparent, more predictable, less uncertain and less time consuming".
This study shows that opacity and unpredictability of the regulatory process in India are major barriers to entry and a hurdle for growth of our enterprises. I share your view that rather than interfere and control, government should be a stakeholder in the functioning of a public enterprise.
I recall that very early in my tenure as prime minister, in August 2004, I had written to all my colleagues in the Union Council of Ministers that the National Common Minimum Programme makes it incumbent upon us to strengthen public enterprises and make them more efficient. I will be honest enough to recognise that we have a long way to go.
In the same month, I also drew attention of my Cabinet colleagues to the need to ensure that public enterprises adhere to accepted ground rules of good corporate governance and conduct. I do believe that public enterprises should, in fact, be models of good corporate governance for even private enterprises to emulate.
While granting full operational autonomy to public sector enterprises, to enable them to compete and succeed in the global market, the concerned ministries have a responsibility for ensuring that they follow good corporate governance practices.
There is often the complaint that ministries, in fact, encourage the opposite! Such instances should be brought to light and corrective action taken.
I do note with concern the observation in the book that "although the best public enterprise chiefs excel at empowering their people, they themselves are currently largely disempowered by the government". This must change and we must all create an environment that is conducive to this change being brought about sooner than later.
In the past few years, far greater attention has been paid to the question of privatisation of public enterprises rather than to the reform of public enterprises. While privatisation is sometimes driven by fiscal compulsions and also by efficiency considerations, it is also seen by some as a way of relieving Public Sector Units of the burden of "boundary management". Therefore, privatisation need not be the only solution to inefficiency of public enterprises.