Explain how balance can be struck between accountability and autonomy of Public Sector Enterprises in India?

PUBLIC ENTERPRISES
The financial autonomy and accountability of PEs occupy an important place in a democratic country such as ours. However, as things stand, these are treated as two separate facets of the personality of PEs and often the perceptions of the government and PEs on the issues relating to
autonomy and accountability differ.
An important problem in this context is the government’s insistence to get matters referred to it on the various financial issues and the aversion of PEs to disclose the requisite financial information to their principals i.e. the respective administrative ministries. Since, the government continues to treat these enterprises as its extensions, the PEs do not or cannot make concerted efforts to come out of
the gravitational pull of the government.
The parliament, the administrative ministry, the CAG and the Courts are considered as the trustees of public funds and are prompted, therefore, to impose a variety of controls on these enterprises. They do not want to take any risk with the public money, but prefer safety and security.
Prof. Ramaswamy Iyer in his book “A Grammar of Public Enterprises Exercises in Clarification” has identified some frequently heard complaints regarding government’s interference in public enterprise managements. These include:

The circulars issued by the Bureau of Public Enterprises at times relate to certain unimportant and even trivial matters.

1. Excessive monitoring by the government is also another problem.
2. Also during the course of the annual plan discussions, the entire investment programme of a PE comes under review and questions are raised about investment decisions which are within the corporate powers of the public enterprise.
3. And the economy instructions which are issued from time to time by the government applies to PEs abridging their powers.
   There is a gap between the powers that are formally possessed by PEs and those that are actually exercised by them.
   BALANCING AUTONOMY AND ACCOUNTABILITY:
   Autonomy and accountability are the most conflicting problems of PSEs. PEs should run efficiently on commercial lines and they should be granted sufficient autonomy in their operation. But, as public money is invested in PEs, the question of complete autonomy does not arise. Likewise the controlling authority should not be conscious for its day to day operation but only for major business policy guidelines, etc., for management.
   There is a need for an exact definition of autonomy and accountability but no such definition has been developed. It has been remarked in an U.N. Report that “the balance between financial freedom of an enterprise and central control is a delicate one and few countries could claim a paramount solution”.
   The recommendation of COPU appreciates the concept of the Memorandum of Understanding (MoU) as it would result in better efficiency of the concerned undertaking. MoU is an agreed document entered for three to five year period between the Government and Company. The MoU would be drawn up on the basis of agreed plans -for investment, production, profits etc. The performance plan is prepared to evaluate the objectives of MoU at the end of the year.
   Within the purview of this document, PEs are free to operate because the government will not interfere in these matters. But in default, the PEs will be answerable to the Government and the legislature. So we conclude that the idea of MoU is suitable to maintain a balance between autonomy and accountability

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