Republic of India - Corporate Governance of Central Public Sector Enterprises

The Government of India (GOI) has taken a number of steps over the years to improve the efficiency and performance of its Central Public Sector Enterprises (CPSEs). Corporate governance has been an important part of GOI’s broader CPSE and economic reforms, aimed at improving the performance and competitiveness of some of India’s most important national assets, allowing companies easier access to the capital markets, and making companies more transparent and accountable. The underlying goal is to reorient the state’s role away from a market player to a market regulator and away from day-to-day management of CPSEs towards exercising its core ownership rights based on sound corporate governance principles.

To this end, the Department of Economic Analysis (Ministry of Finance) and the Department of Public Enterprises (Ministry of Heavy Industry and Public Enterprises) requested World Bank support in assessing CPSE corporate governance in light of good practice based on the OECD Guidelines on Corporate Governance of State-Owned Enterprises, and in light of India’s own Guidelines on Corporate Governance of State-Owned Enterprises issued in 2007. This report carries out the review and offers recommendations for improving CPSE governance. It is based on a review of the legal and regulatory framework, the findings and reports carried out by various government commissions and expert groups on CPSEs, background research on CPSE performance, discussions with key stakeholders, and case studies of two leading CPSEs—the Oil and Natural Gas Corporation and the National Thermal PowerCorporation.