Finance Minister is now final authority to grade CPSEs

A Central Public Sector Enterprise (CPSE) can now be graded with the approval from the Finance Minister. This is part of reworked mechanism for categorisation of CPSEs.

CPSEs are alotted into four categories – A, B, C and D. This has implications mainly for organisational structure and salaries of Board level incumbents. According to Public Enterprises Department under the Finance Ministry, as on June 26, 2023, 71 CPSEs (NTPC, Indian Oil, ONGC, SAIL, BHEL among others) are in A category, while 68 ( Air India Assets Holding, Cement Corporation, Garden Reach, besides others) are on B category; 38 have been placed in C while 5 are in D category. CPSEs are also classified into four – Maharatna (11 CPSEs), Navaratna (12 CPSEs), Mini Ratnas-1 (58 CPSEs) and Mini Ratnas-2 (10 CPSEs). The classification defines financial and organisational powers.

According to a new Office Memorandum (OM), the process for upgradation/downgrading of the existing categorised CPSEs to higher/lower schedule has been simplified. Accordingly, all initially categorised CPSEs would continue to come to Public Enterprises Department for upgradation of their schedule with the approval of their Administrative Ministry/Department based on existing guidelines. DPE will examine and take the decision on upgradation with the approval of the Finance Minister. Such proposal would not be referred to Cabinet Secretariat and PESB (Public Enterprises Service Board).

“Similar procedure would be followed for any proposal for downgrading of initially categorised CPSE to a lower schedule,” the OM added.

Parameters

The proposals for categorisation of CPSEs are to be furnished to the DPE with the concurrence of the Financial Advisor and the approval of the Minister-in-charge of the concerned administrative Ministry/Department. The proposal should contain performance of the concerned CPSE for the last five years on quantitative parameters such as investment, capital employed, net sales, profit before tax, number of employees and units, capacity addition, revenue per employee et al.

The qualitative factors related to the concerned CPSE include national importance, complexities of problems being faced by the company, level of technology, prospects for expansion and diversification of activities and competition from other sectors. Besides all these, information regarding share price, MOU ratings Maharatna/Navratna/Miniratna status and ISO certification are desirable.

Earlier, the proposals were being referred to DPE which used to process in consultation with PSEB. Post processing, approval from competent authority was obtained before notifying the schedule. Now, approval from Finance Ministry has been explicitly mentioned in the OM.



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