In a move to give stable tenure to PSU heads, a Group of Ministers (GoM) has approved a minimum tenure of three years for chairmen of state-owned firms, irrespective of their superannuation age.
Currently, all directors as well as chairman of public sector enterprises compulsorily retire on reaching the superannuation age of 60 years. This meant that some would have only a very limited time on the board to shape policies.
"The GoM, headed by Finance Minister P Chidambaram, has approved a fixed tenure of 3 years for Chairman and Managing Directors of PSU," a top official said.
The recommendation of the GoM will now go the Cabinet for approval, he added.
This means that someone like Sudhir Vasudeva who was appointed Chairman and Managing Director of Oil and Natural Gas Corp (ONGC) in October 2011 at the age of 58 years, would continue at head of India's most profit-making firm well past his retirement age in February 2014.
The proposal to fix tenure of CMDs is a part of the recommendations made by a government-panel headed by former SAIL Chairman S K Roongta.
Besides, the government has been asking CPSEs to make efforts to achieve their annual targets to contribute to the country's economic growth.
On May 13, the Prime Minister's Office (PMO) has asked 17 top PSUs, including ONGC, GAIL and NTPC, to undertake targeted Rs 1.42 crore capex for 2013-14 or else pay higher dividends to help boost sagging economy.
Pulok Chatterji, Principal Secretary to Prime Minister, took a review meeting of capital investment in projects by PSUs and decided to add seven more, including Nuclear Power Corp, to the list of those monitored for project implementation and spending.
The PMO has been monitoring capex and investment plans of 17 major CPSEs since last fiscal to enhance investment in the economy, utilising their substantial cash surpluses.
Also, it asked the attending heads of cash-rich CPSEs and secretaries concerned to work towards fulfilling and exceeding the targets as this was "extremely important for the economy".
As on March 31, 2012, there were 260 CPSUs (excluding seven insurance companies) with a total investment of over Rs 7 lakh crore. These companies employ 13.98 lakh people.