Revision Notes: The Committee on Public Undertakings | Indian Polity for UPSC CSE PDF Download

The character and functioning of the government changed significantly after independence.  With the state's growing role in industry and trade, many public enterprises have been established.  Public enterprises are crucial tools for planned development.  As of December 1990, there were 245 public enterprises with an investment exceeding Rs. 100 thousand crores.  Since public enterprises are funded by taxpayer money, they need to operate with public accountability.  A key aspect of this accountability in a democracy is oversight by Parliament.  However, there is no regular schedule for Parliament to discuss and review the performance of public enterprises. 

•  The most effective way for Parliament to monitor the public sector is through a committee of Members of Parliament, known as the Committee on Public Undertakings. 
•  This committee was established for the first time in 1964 and is the youngest of the three financial committees in Parliament. 
•  Over its twenty-seven years of existence, the committee has achieved many important milestones. 

How the committee is constituted?

• The Committee on Public Undertakings is formed every year.
• It has a total of 22 members.
• Out of the 22 members:
  • 15 members are elected by the Lok Sabha each year.
  • These members are chosen based on the principle of proportional representation using the single transferable vote.
  • 7 members are nominated by the Rajya Sabha to join the Committee.
• The members come from almost all political parties in Parliament in proportion to their strength.
• This method of election ensures that the Committee reflects a cross-section of both Houses of Parliament.
• A Minister cannot be a member of the Committee.
• If a member is appointed as a Minister after being elected to the Committee, they will stop being a member from the date of their appointment.
•  The Chairman of the Committee is selected by the Speaker from among the members of the Committee who are part of the Lok Sabha.

What are the functions of the Committee?

• The roles of the Committee are outlined in Rule 312A of the Rules of Procedure and Conduct of Business in the Lok Sabha. These roles include:
  • Reviewing the reports and accounts of the public enterprises listed in the Fourth Schedule of the Rules.
  • Looking into any reports from the Comptroller and Auditor General of India regarding the public enterprises.
  • Assessing whether the management of public enterprises is following good business practices and prudent commercial methods, considering their autonomy and efficiency.
  • Carrying out additional tasks assigned to the Committee on Public Accounts and the Committee on Estimates related to public enterprises in the Fourth Schedule, as directed by the Speaker.
• The Committee is not allowed to examine or investigate:
  • Major government policies that are different from the business or commercial activities of the public enterprises.
  • Daily management issues.
  • Topics that are handled by a specific process established by any law that created a particular public enterprise.

What is the Jurisdiction of the Committee?

• According to Rule 312A of the Rules of Procedure and Conduct of Business in the Lok Sabha, and the Fourth Schedule of these Rules, every government company whose annual report is submitted to the Parliament falls under the jurisdiction of the Committee on Public Undertakings.
• This means that any government company set up under the Companies Act of 1956, where the Central Government is a member, can be reviewed by the Committee.
• However, this rule does not apply to public undertakings created by special Central Acts. Only the undertakings established under these Central Acts that are listed in Part I of the Fourth Schedule can be examined by the Committee.
• Other undertakings can only be included in the Committee's review if there is an amendment to the schedule, which must be suggested by the Rules Committee and approved by the Lok Sabha.
• In the past, there have been instances where this has occurred.
• Some organizations, such as the Reserve Bank of India, State Banks, National Bank for Agriculture and Rural Development, and the Unit Trust of India, are not mentioned in Part I of the Schedule.

How does the committee work?

•  The Committee periodically chooses certain Public Undertakings or topics for review based on their importance and available resources. 
•  Typically, the Committee examines about 7 to 10 undertakings each year. 
•  They may choose to examine those undertakings that have in-depth evaluations in the Audit Reports from the Comptroller and Auditor General of India, who assists them in these evaluations. 
•  The Committee can also independently select other undertakings or subjects for examination. 
•  The Committee has faced challenges due to the increasing number of public undertakings. 
•  To expand their coverage, the Committee not only reviews individual undertakings but also conducts horizontal studies on common issues affecting all undertakings. 
•  For example, they started a study on the cost and time overruns of projects from 1990-91, but could not finish it because the Lok Sabha was dissolved. 
•  The Committee on Public Undertakings serves a critical role in monitoring public undertakings for Parliament. 
•  Their reports cover a wide range of activities and highlight how well public undertakings are operating, along with areas needing improvement. 
•  A key feature of the Committee's reports is that they are clear and thorough, emphasizing accountability for both public undertakings and the administrative ministries responsible for them. 
•  The reports also link Government Plans with the performance of public undertakings, noting any shortfalls in physical, economic, and financial aspects. 
•  The Committee's evaluations go beyond just financial performance, focusing on the formulation and implementation of projects, which have often been weak in public undertakings. 
•  They recommend strict oversight from both management and the Government to address issues causing delays and cost overruns in projects. 
•  For instance, in their 55th Report regarding the Indian Oil Corporation Ltd., they advised ensuring projects are realistically planned and completed on time and within budget. 
•  The Committee has urged the Ministry to closely monitor projects under their control and has reiterated this need in subsequent reports. 
•  The reports are consistent and provide constructive criticism, highlighting weaknesses and suggesting improvements. 
•  For example, in the 44th Report on the Shipping Corporation of India, the Committee noted the lack of a cargo support scheme for Indian vessels and urged immediate action to support the Indian shipping industry. 
•  Although the Ministry expressed concerns about potential negative effects on exports, the Committee was dissatisfied with the lack of progress on the proposed legislation and stressed its importance in later reports. 
•  The Committee recognizes the challenges faced by public undertakings and recommends appropriate actions at the Government level to address them. 
•  Conversely, the Committee does not hesitate to criticize any officer, regardless of their position, for irregularities. 
•  An example is found in the Ninth Report concerning ONGC, where the Committee expressed discontent over avoidable payments made to a foreign contractor due to the misconduct of a high-ranking member. 
•  They recommended holding accountable those responsible for allowing the resignation of this member without addressing the irregularities. 
•  The Committee also points out any unnecessary deviations from established laws or procedures. 
•  In the 10th Report regarding Air India, the Committee noted that it is illegal for anyone other than the national corporations to operate scheduled air transport services. 
•  They observed that air taxi operations were being allowed at all airports, which they did not consider non-scheduled services, recommending further examination of this practice.

How the recommendations are implemented?

• The Committee is not content with just receiving reports.
• It has created a system to monitor how its recommendations and observations are carried out.
• The Committee requests responses from the Government within 6 months after the reports are presented.
• These responses should detail the actions taken by the Government regarding the various recommendations.
• A sub-committee reviews these responses and prepares Action Taken Reports.
• After the main Committee approves these reports, they are submitted to both Houses of Parliament just like the original reports.
• In the Action Taken Reports, the Committee can either accept or reject the Government's replies.
• If the replies are not accepted, the Committee may repeat its earlier recommendations and provide its comments or observations as it sees fit.

What is the impact of the committee's Report?

• The comments in the national press suggest that the Committee on Public Undertakings has made an impact on the public sector, the Government, and the public.
• This Committee has not only managed its main goal of ensuring effective parliamentary oversight of public enterprises, but it has also fulfilled a significant need.
• Its numerous reports provide a comprehensive analysis of the experiences gained in public enterprise management and administration, all in one place.
• The Committee on Public Undertakings serves as the only way for management to meet with representatives of the people directly and privately. This allows them to discuss their challenges in management and their relationship with the Government.
• Without this mechanism, management would have to present their views to Parliament through a Minister, which is only possible to a limited extent.
• The Committee is also the only platform where Parliament, the Executive, and management can meet face-to-face. Together, they work towards understanding the issues faced by public enterprises and seek effective solutions for better planning and management.
• In summary, the Committee on Public Undertakings plays a crucial role in ensuring that public enterprises are accountable to Parliament.
• This is why it is seen as one of the most important and influential Parliamentary Committees.