Committee On Public Undertakings | Additional Study Material for UPSC PDF Download

The character and functioning of Government underwent a radical change in our country after independence. With the increasing participation of the state in industry and trade. A large number of public undertakings have come into being. Public undertakings are important instruments of planned development. In December, 1990, there were 245 public undertaking with an investment of over Rs. 100 thousand corers. Since public enterprises are financed from public funds, it is essential that they must function within the confines of public accountability. The essential feature of this accountability in a democracy is direction and surveillance by Parliament. There is, however, no regular programme with a specific time schedule for discussion and review of the performance of public undertakings by the Parliament the most effective forms of Parliamentary surveillance over public sector is the examination by a Committee of Members of Parliament which is designated as the Committee on Public Undertakings.

The Committee on Public Undertakings, set up for the first time in 1964, is the youngest of the three Financial committees of Parliament. During its existence of twenty seven years, the Committee has significant achievements to its credit.

How the committee is constituted

The Committee on Public Undertakings is constituted each year. It consists of 22 members comprising 15 members elected by the Lok Sabha every year from amongst its members, according to the principle of proportional representation by means of single transferable vote and 7 members of Rajya Sabha nominated by that House for being associated with the Committee. Thus, the membership of this Committee is drawn from almost all parties in Parliament in proportion to their respective strength and the system of election by proportional representation ensures this. Thus the Committee constitutes a cross-section, not only of each House but of Parliament as a whole.

A Minister is not eligible to become a member of the Committee. If a member after his election to the Committee is appointed a Minister he ceases to be a member of the Committee from the date of such appointment. The Chairman of the Committee is appointed by Speaker from amongst the members of the Committee belonging to Lok Sabha.

Functions of the Committee

The functions of the  Committee have been laid down in Rule 312A of the Rules of procedure and Conduct of Business in Lok Sabha. These Are:

(a) to examine the repor ts and accounts of the public undertakings specified in Fourth Schedule of the Rules;
(b) to examine the repor ts, if any, of the Comptroller and Auditor General of India on the Public Undertakings;
(c) to examine in the context of the autonomy and efficiency of the public undertakings whether the affairs of the public undertakings are being managed in accordance with sound business principles and prudent commercial practices;and
(d) to exercise such other functions vested in the Committee on Public accounts and the Committee on Estimates in relation to the public undertaking specified in the Fourth Schedule as are not covered by clauses (a), (b) and (c) above and as may be allotted to the Committee by the Speaker from time to time.

The Committee is, however, precluded from examination and investigation of any of the following:-

(i) matters of major government policy as distinct from business or commercial functions of the public undertakings;
(ii) matters of day-to-day administration; and
(iii) matters for the consideration of which machinery is established by any special statute under which a particular public undertaking is established.

Jurisdiction of the Committee

In terms of Rule 312A of the Rules of Procedure and Conduct of Business in Lok Sabha read with Fourth Schedule to the Rules every government company whose annual report is placed before the Houses of Parliament comes within the purview of Committee on Public Undertakings. Thus all government companies incorporated under the Companies Act, 1956 in which Central Government is a member could be examined by the  Committee. This is not the case with the public undertakings established by special Central Acts. Only those undertakings set up under Central Acts have been specified in Part I of the Fourth Schedule to the Rules can be examined by the  Committee. Other undertakings can be brought within the purview of the Committee only through amendment to the schedule recommended by the Rules Committee and approved by the Lok Sabha as has been done on some earlier occasions. Some organisations like the Reserve Bank of India, State Banks, National Bank for Agriculture and Rural Development and the Unit Trust of India are not included in Part I of the Schedule.

How the committee works

The Committee selects from time to time for examination, such Public Undertakings or such subjects as they may deem fit and as fall within straints of time and staff, the Committee normally selects 7 to 10 undertakings for examination each year. The Committee may select for examination such undertakings where comprehensive appraisals appear in the Audit Reports of the Comptroller And AuditorGeneral  of India who assists the Committee in such cases in examinations of the undertakings. The Committee may select on its own certain other undertakings/subjects for independent examination.

It has been a problem for the Committee to cope with the growing number of public undertakings. With a view to widen its scope of coverage, the Committee, in addition to the taking up of individual undertaking for examination, has taken up a horizontal study of one or more aspects of problem which are common to all the undertakings. The committee had taken up the horizontal study on ‘Cost and time overrun of projects undertaken by Public undertaking during the year 1990-91, but due to dissolution of Lok Sabha, the examination of the subject could not be
 completed.
 The Committee on Public Undertaking acts as the eyes and the ears of Parliament as far as the Public Undertakings are concerned. The reports of the Committee cover a wide gamut of activities and reveal the manner in which the  public undertakings are functioning and suggest the areas where there is a tremendous scope of improvement.

The distinctive feature of the Committee’s Reports is that they are concise, comprehensive and bring out in sharp focus the accountability of not only the Public Undertakings but also of the administrative ministries as well for efficient functioning of the undertakings. The Committee has tried to establish a nexus between the Plans of the Government and Public Undertakings. Shortfalls in physical, economic and financial terms are highlighted through the reports from time to time.

Besides, the Committee’s appraisal is not only confined to financial performance of the Undertakings.

Project formulations and implementation has been a perpetually weak area in the management of public Undertakings on which attention has been focused by the Committee from time to time. The Committee has been recommending a vigilant control both by the management as well as the Government over factors causing time and cost overruns in the implementation of various projects. For instance, in its 55th Report (Eighth Lok Sabha) “on Indian Oil Corporation Ltd. —Installation of two LPG Bottling Plants at Bangalore”, the committee had recommended that steps should be taken to ensure that projects are formulated realistically and completed by the scheduled dates and within estimated expenditure. They had desired that the Ministry should maintain unremitting vigil over the projects undertaken by the undertakings under their administrative control.
 While the Government had accepted the recommendations of the Committee and had advised all oil companies to strengthen their system of project planning and implementation, the committee after having taken into consideration the importance of monitoring system reiterated its earlier instructions again in the Seventh Report on action taken by the Government on the above report.

The Committee’s Reports have been unanimous and exposures of weaknesses and shortcomings have always been made in a constructive manner. The Committee not only criticises the Undertakings/ Government for their deficiencies but also suggests corrective measures side by side. For instance, in the 44th Report on Shipping Corporation of India the Committee had taken a serious note of the fact that there was no scheme for cargo support for Indian vessels at India Ports, as was the practice followed in many countries in the world. It had, therefore, rec-ommended that in order to get the Indian shipping enough cargo there was an urgent need to ensure compulsory support to Indian shipping industry should remain in business. The Ministry while replaying to this recommendation had stated that though the Ministry of Surface transport was in favour of Parliamentary legislation but apprehensions had been expressed in certain quarters that this may adversely affect Indian export trade the committee, however, expressed strong displeasure for not having taken any action to bring about the proposed legislation and re-emphasised the enactment of the same without any further delay in their 5th Report of Action Taken on Shipping Corporation of India.

The Committee appreciates the difficulties and constrains faced by the public undertakings and recommends suitable remedial action to be taken at the Government level. On the other hand the Committee is also critical about irregularities committed by any officer of the Undertaking/Ministry, however, highly placed, he or she may be. To cite an example, the Committee in its Ninth Report on ONGC—Avoidable payments of Rs. 89.06 lakhs made to a foreign contractor beyond the terms of the contract-had expressed unhappiness over the manner in which the Member (Off-shore) had transgressed his authority and did not even care to inform the competent authority of the final results of negotiations carried out by him with the contractor. He was allowed to resign and the ONGC was not even aware of the irregularities committed by him. In the Committee’s view this had cast a sad reflection on the working of ONGC and the Government. The Committee had, therefore, recommended that the responsibility for accepting the resignation of the Member (Off-shore) without having taken any action against him for irregularities committed by him should be fixed and the Committee apprised of the outcome.
 The Committee also suggests corrective action where it finds that certain uncalled for deviations have been made from the laid down Acts or procedures.
 For instance in its 10th Report on ‘Air India — Undue Benefit to Private Operators‘, the Committee observed that under the Air Corporation Act it is unlawful for any one other than the Corporations (Viz. Indian Airlines and Air India) or their associates to operate any scheduled air transport service which is provided by either of these Corporation. The Committee noticed that air taxis operations are being permitted to all airports in the country which are open to scheduled operations. The taxi operators have also got fixed time schedule for their flights. The Committee, therefore did not consider these services under Air Taxis scheme as non-scheduled operations and have recommended a further examination of the matter in light of the provisions of the Air Corpora-
 tions Act.

How the recommendation are implemented 

The Committee is not satisfied with only presentation of Reports. It has devised a system of watching implementation of its recommendations/observations. The Committee calls for replies from the Government within 6 months of presentation of Reports showing action taken by the Government on its various recommendations. A sub-Committee of the Committee scrutinises these replies and prepares. Action taken Reports which, after approval by the main Committee are presented to both Houses of Parliament in the same manner as original reports. In the Action Taken Reports, the Committee may accept the replies of the Government or may not accept. The Committee in the latter cases may reiterate its  earlier recommendations and offer its remarks/observations as is deemed fit.

Impact of the committee’s Report 

Going by the comments that appear in the national press from time to time, it can safely be said that Committee has been able to create an impact on the public sector, Government and the public. The Committee on public Undertakings has not succeeded merely in its primary task of facilitating effective parliamentary oversight upon the functioning of public enter prises,but has  undoubtedly filled a need. Its many Reports provided at one convenient point the fruits of critical and constructive examination of the vast and multifarious experience that has already been gained in public enterprise administration and management.

The Committee on public Undertakings is the only device available to the management whereby they are able to meet representatives of the people directly and in-confidence giving them the opportunity to explain their problems and difficulties not only in management but vis-a-vis Government. But for this mechanism their point of view have to be put to Parliament through the agency of a Minister which is possible only to a limited extent. The Committee on Public Undertakings is again the only forum where Parliament, Executive and the management directly meet each other, face to face, as it were, and moved by a common purpose they endeavour to analyse the problems of public enterprise, and find out acceptable solutions for the better planning and management of these enterprises.

In short, the Committee on Public Undertaking has performed very useful function in giving substance to the concept of accountability of the public undertakings to Parliament. It is for that reason that the Committee is regarded as one of the most important and influential Parliamentary Committees.