india Inc. in recent times has received a lot of flak for dubious corporate governance practices adopted by certain companies. The Satyam scandal and the 2G scam are prime examples in this regard. But while fingers continue to point towards corporate India, can one say with certainty that the Indian government is above water in this matter? Not really.
Take the case of the Coal Minister. In a scenario where the government finances are in disarray , his solution to this was apparent in the following statement, "Cash-rich companies like Coal India Ltd can lend to the government whenever the government is in need of funds. For example, enactment of the Food Security Bill would require huge funds. Coal India belongs to the people of this country and an amount of Rs 250 bn can easily be given to the government for implementing social schemes". So the obvious question is, what has Coal India got to do with the Food Security Bill? The Coal Minister appears to have forgotten the simple fact of taking into consideration the interests of the minority shareholders and believes that funds can simply be diverted from public sector enterprises to meet government needs at the drop of a hat. Coal India for its part may not lend money unless it gets interest payments for the same. But again, can the government afford this when its finances are already stretched?
In a country where the government has failed to meet its target as far as power generation is concerned, surely the focus should be on how to improve the availability of coal. It should be noted that despite being home to one of the world's largest coal reserves, the Government has revised upwards its estimated coal shortage for FY12. The same will now stand at 112 m tonnes, up from 83 m tonnes forecasted in December 2010. The entire shortfall is likely to be met by imports.
Hence, it only makes sense that any funds that Coal India has should be utilized towards improving coal productivity and the prospects of the company and shareholders rather than for meeting some government agenda. There is no doubt that government needs to keep an arm's length distance from the way public sector enterprises are run. The management of these companies need to focus on growing and enhancing the overall growth of the economy rather than bowing down to the whims and fancies of the government. And the government for its part needs to seriously take a long and hard look at its corporate governance practices and go in for a big overhaul of the same.
Take the case of the Coal Minister. In a scenario where the government finances are in disarray , his solution to this was apparent in the following statement, "Cash-rich companies like Coal India Ltd can lend to the government whenever the government is in need of funds. For example, enactment of the Food Security Bill would require huge funds. Coal India belongs to the people of this country and an amount of Rs 250 bn can easily be given to the government for implementing social schemes". So the obvious question is, what has Coal India got to do with the Food Security Bill? The Coal Minister appears to have forgotten the simple fact of taking into consideration the interests of the minority shareholders and believes that funds can simply be diverted from public sector enterprises to meet government needs at the drop of a hat. Coal India for its part may not lend money unless it gets interest payments for the same. But again, can the government afford this when its finances are already stretched?
In a country where the government has failed to meet its target as far as power generation is concerned, surely the focus should be on how to improve the availability of coal. It should be noted that despite being home to one of the world's largest coal reserves, the Government has revised upwards its estimated coal shortage for FY12. The same will now stand at 112 m tonnes, up from 83 m tonnes forecasted in December 2010. The entire shortfall is likely to be met by imports.
Hence, it only makes sense that any funds that Coal India has should be utilized towards improving coal productivity and the prospects of the company and shareholders rather than for meeting some government agenda. There is no doubt that government needs to keep an arm's length distance from the way public sector enterprises are run. The management of these companies need to focus on growing and enhancing the overall growth of the economy rather than bowing down to the whims and fancies of the government. And the government for its part needs to seriously take a long and hard look at its corporate governance practices and go in for a big overhaul of the same.
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