Companies Prima Facie

The well-argued article on ‘Board Level Remuneration in Central Public Sector Enterprises: Myth and Reality’ (May 3) by R K Mishra and A Sridhar Raj merits wide notice in official circles in order to correct a long-standing anomaly in the remuneration packages offered to executive directors of central public sector enterprises. The salient incongruence in this respect has been well brought out. It is however not the first time that this and other related issues regarding the remuneration of the board level executives have been educed.

In the said context, three issues were raised earlier. One, there is no point in making these enterprises subservient to the dictates of the government if they were expected to manage for results. Two, discrimination of various types has been writ large in the salary and perks of these executives, not only among such executives, as between the public and the private sector, but also within the central government itself. Three, government has not been logical in mentioning these enterprises generically as central government enterprises, while they have among them departmental undertakings, public corporations and government companies, private and public limited, each a discrete class in itself. Some lack of knowledge was also noticed earlier, for instance, in the Bureau of Public Enterprises’ annual reports. The erstwhile Oil and Natural Gas Commission (ONGC) used to be stated as a company and its high profits were merged into those of the government companies as defined under section 617 of the Companies Act, 1956, even when ONGC was a public corporation and there was a discrete act passed by Parliament for its establishment. Later on, the ONGC was converted into a company, apparently because of the luringly high profits it earned. The authors refer to W A Robson who called the public corporation as the find of the century (20th) due to the inherent flexibility that this form entailed in England. In India, even the government companies remained shackled and a cult of distance management evolved.