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Indian Economy / Industry Sector

Memorandum of Understanding in PSEs

    Memorandum of Understanding (MoU) is a relationship between Public Sector Enterprises (PSE) and the Government. It was recommended by Arjun Sengupta committee.

    Memorandum of Understanding

    • It outlines the mutual obligations between the Government and the PSEs.

    • It is a performance evaluation instrument and is an attempt to balance the autonomy and accountability of the PSEs.

    • Within the agreed parameters, the CEO of the PSE is given autonomy to achieve the results.

    • Based on the concept of Memorandum of Understanding, Navratna and Maharatna companies got evolved.

    Navratna Companies in India

    • The concept of Navratna company was evolved during the budget of the financial year, 1997-98.

    • The objective is to allow the PSEs to grow into global giants.

    • Appropriate packages of autonomy were given in various fields of operation. These PSEs can invest upto Rs. 1000 Crore in Joint ventures and can incur capital expenditure.

    • The board of the PSEs can independently go ahead with mergers and acquisitions subject to the above monetary ceiling.

    • The list of Navratna companies in India are -

      • Bharat Electronics Limited (BEL)

      • Engineers India Limited (EIL)

      • Container Corporation of India Limited (CCIL)

      • Hindustan Aeronautics Limited (HAL)

      • Hindustan Petroleum Corporation Limited (HPCL)

      • National Aluminum Company Limited (NALCO)

      • Mahanagar Telephone Nigam Limited (MTNL)

      • National Buildings Construction Corporation Limited (NBCC)

      • National Mineral Development Corporation Limited (NMDC)

      • Neyveli Lignite Corporation India Limited (NLCIL)

      • Power Finance Corporation Limited (PFC)

      • Oil India Limited (OIL)

      • Power Grid Corporation of India Limited (PGCIL)

      • Rural Electrification Corporation Limited (REC)

      • Rashtriya Ispat Nigam Limited (RINL)

      • Shipping Corporation of India Limited (SCI)

    Maharatna Companies in India

    • The concept of Maharatna has been evolved during the year 2009.

    • A Navratna company should satisfy the following conditions to become a Maharatna company

      • It should be listed PSE and should have international operations having significant global presence.

      • There should be an average turnover of more than Rs. 25,000 Crore, net profit after tax (PAT) of Rs. 5000 Crore and networth of the company be Rs. 15,000 Crore in the last 3 years.

    • These Maharatnas will be free to invest upto Rs. 5000 Crore for joint ventures or for wholly owned subsidiaries.

    • The list of Navratna companies in India are -

      • Bharat Heavy Electricals Limited (BHEL)

      • Gas authority of India limited (GAIL)

      • Coal India Limited (CIL)

      • Indian Oil Corporation Limited (IOCL)

      • Steel Authority of India Limited (SAIL)

      • National Thermal Power Corporation Limited (NTPC)

      • Oil and Natural Gas Corporation Limited (ONGC)

      • Bharat Petroleum Corporation Limited (BPCL).