Lok Sabha Question No. 3455 (UNSTARRED), answered on 2018-03-16
Subject: Malpractices in CPSEs
Ministry: FINANCE
Asked by: ANJU BALA, B. SREERAMULU, Tejpratap Singh,Yadav

.

## GOVERNMENT  OF INDTA

## UINISTRYOF FINANCE

## DEPARTMENT OF EXPENDITURE

## LOKSABHA

## UNSTARRED LOK SABHA QUESTION NO. 3455 TO BE ANSWERED ON 16h ilarch, 2018/  phatguna  25, 1939 (SAKA) "MALPRACTICES  lN GPSEs".

3/[lilt. Smt.  Anju Bala, Shri B. Sriramulu,  Shri Tej Pratap Singh Yadav

## Will the Mlnister of Flnance be pleased to state :

- (a) whether there have been reports of malpractices  in procurement  and awarding of contracts  and tenderc  by the Central  Public  Sector Enterprises (CPSEs) and if so, the details  thereof and the Govemment's reaction thereon;
- (b)  whether therc is an urgent need for signing  of lntegrity Pacts by CPSEs and complete  digitisation  of procurement  process to ensure transparency and if so,
- the details  thereof and the Govemment's reaction thereon;
- (c)  whether administrative Ministries  often have the last word in the critical  decisions of CPSEs leading to delays,  lack of accountability and innovation  which affec,ts their performance and profitability  and if so, the details thereof;
- (d) whether retiring  senior ofiicials from the CPSEs  joining  lucrative  posts with private  companies with which they have had dealings is a worrying trend for the
- Govemment and if so, the details thereof;
- (e) whether there is urgent need to delink CPSEs from administrative Ministries,  run them by professionals  and list them on stock exchange and if so, the details thereof along with Govemment's reaction thereto;  and
- (f) the conective  steps poposed  to be taken by the Government  for improvement  of functioning of CPSEs in the country?

## ANSWER

## THE MINISTER OF STATE IN THE UINISTRY OF FINANCE (SHRI PON. RADHAKRISHNAN)

- The malpractices  in procurement and awarding of contrac{s and tenders  by Central Public  Sector Enterprises  (CPSEs) whenever  reported  are dealt by concemed Chief Vigilance Officers  (CVOsV  Central Vigilance Commission (CVC) as per extant procedures.
- (a)

.

- (b) CPSEs have been advised to enter into lntegrity Pact in their procurement transactions/ contracts. The nature and threshold value is decided  by CPSEs in consultation  with the concemed administrative  Ministries/  Departments. The practice  of entering into lntegrity Pacls is expected  to reduce  all forms of conuption  in procurement  transactionsii contracts.

All CPSEs have been also instructed in January 2015 to implement comprehensive  end to end e-procurement.

- CPSEs are commercial entities set up as per objectives of their respective administrative Ministries/  Departments.  However, day-today functions  of a CPSE are supervised  by their respective Board and administrative Ministry/ Department. The performance  and profitability  of a CPSE depends upon several  fac'tors such as market conditions,  productivity,  pricing, etc. (c)
- The Govemment has laid down guidelines which inter-alia provide that 'no functional Director of the company including the Chief Executive who has retired/resigned from the service  of the company, after such retiremenU resignation,  shall accept any appointment or post, whether advisory or administrative,  in any firm or crmpany, whether lndian or foreign, with which the company has or had business relations,  within one year from the date of retirement  without prior approval  of the Govemment'. (d)
- (e) and (f) : The Board of Directors of CPSEs are responsible for day-to-day management of CPSEs. The Govemment has introduced Maharatna, Nawatna and Miniratna schemes for empowerment  of CPSEs and has delegated financial  and operational  powers to the Boards of such CPSEs in the areas of capital expenditure, investment  in joint ventures/subsidiaries, human resources management, etc. The Govemment also promotes professionalization of Boards of CPSEs  as well as appointments  in CPSEs on immediate absorption basis. Exemption  from the rule of immediate absorption is given when after aftempt(s)  to fill the posts in CPSEs on regular basis are not successful  or there are mitigating circumstances against  recruitment  on regular  basis.

The Govemment has also taken a decision that unlisted CPSEs with no accumulated losses and having eamed net profit in three  preceding consecutive years are to be listed.

I