Prime Minister of India - Dr. Manmohan Singh

PM releases Book 'The Indian CEO: A Portrait of Excellence'

"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 organized 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 recognize 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 contextualizes 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 recognize 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. I also appreciate this study's interest in ensuring the proper empowerment of public sector boards and CEOs.

In the past few years far greater attention has been paid to the question of privatization of public enterprises rather than to the reform of public enterprises. While privatization 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, privatization need not be the only solution to inefficiency of public enterprises. Relieving them of problems of boundary management and the burdens associated with them can also help improve their efficiency. And here too I do not minimize the difficulties because the political environment also the overhang of excessive bureaucratization sometimes is not very conducive to creating the appropriate boundary conditions. And this is one area where lot more public education is necessary and public opinion needs to be mobilized so that both the politicians and the ministries conform to this strict rule which are consistent with the observance of good corporate governance on the part of enterprises and good conduct on the part of both in the ministries and those who are political masters of various enterprises.

It should be our endeavor to empower public enterprises by easing the bureaucratic and political hold of Government over them. This requires reform of Government and the procedures we adopt to ensure Parliamentary accountability. This is an issue where there is need for large public consciousness and informed debate to be promoted. Parliamentary accountability should not degenerate into either ministerial or political interference in day-to-day management of enterprises, or bureaucratic stranglehold on managerial decision-making. I would like to see Public Sector Units functioning in a more liberal environment. I would like their boards and top management to be adequately empowered so that they can take decisions mindful of the environment in which they are functioning.

I am aware that the public sector has some very talented and dedicated CEOs. This study recognizes this fact. The study does find that Indian CEOs compare favourably with their counterparts in developed market economies. But, we cannot rest with a few success stories. We need an army of world class managers who can turn our companies around and keep Indian enterprises on the road to high growth.

I am struck by an observation in this study which says "Indian boards can understand that the CEO, while important, is only a part of the success of the enterprise; the talents and energies of many people working together in an organized fashion are what leads to enterprise success". The secret of success of any modern enterprise in a highly competitive world is to learn to work together. As the study suggests, CEOs must place more emphasis on "energizing their teams" and not only on individual excellence. A good CEO must understand that his or her role is to create the conditions in which others can perform at their very best.

I am happy to see that in identifying the way forward this study emphasizes the importance of "empowerment with accountability", recognizing the role of all stakeholders and learning to function in more competitive markets. I have taken note of the fact that your study believes that Indian public enterprises are subject to far greater political and bureaucratic interference than their counterparts elsewhere. And it should be our combined endeavour to promote reform in that area. It will be the endeavour of our Government to change this situation. I hope this study will help us create public opinion in favour of such reform of public enterprises management and public policy."