Para 7 — CSMOP
Original Rule Text
7. Public Sector Undertakings – Public Sector Undertakings have been set up by Government in the form of companies or corporations in which the majority shares are held by the President of India or his nominees and are managed by Board of Directors, which includes officials and non-officials (BHEL, NTPC, ONGC etc.). Some of them may have also been formed as a result of takeover, nationalization etc. of erstwhile private companies (Indo Burma Petroleum, Balmer Lawrie & Company Limited, Burn Standards Company Limited, Braithwaite & Company Limited etc.)
What This Means
Para 7 defines Public Sector Undertakings (PSUs) — a category of government-controlled commercial enterprises. PSUs are companies or corporations in which the majority of shares are held by the President of India or his nominees. They are managed by a Board of Directors comprising both official and non-official members. They operate commercially — they produce goods, provide services, earn revenues, and may make profits or losses.
Some PSUs were newly created by the government (like BHEL, NTPC, ONGC). Others were brought into the public sector through takeover or nationalisation of formerly private companies, such as Indo Burma Petroleum or Balmer Lawrie. This means PSUs can have varied corporate histories — some are fully government-created, others are former private companies with state ownership.
For Section Officers in Ministries that oversee PSUs (like Ministry of Coal overseeing Coal India, or Ministry of Power overseeing NTPC), this definition matters for understanding governance norms. PSUs are governed primarily by Company Law and their Articles of Association, not by government service rules. The Ministry exercises oversight through Board nominees and administrative instructions, not direct command authority.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1PSUs are companies or corporations where the majority shares are held by the President of India or his nominees.
- 2They are managed by a Board of Directors with official and non-official members.
- 3Examples: BHEL, NTPC, ONGC (created by government); Indo Burma Petroleum, Balmer Lawrie (nationalised from private sector).
- 4PSUs are commercial entities governed by Company Law and their Articles of Association.
- 5The Government exercises oversight through Board nominees and administrative instructions — not direct commands.
- 6PSUs are distinct from Autonomous Bodies (Para 6) which perform governmental rather than commercial functions.
Practical Example
The Ministry of Steel oversees SAIL (Steel Authority of India Limited), a Navratna PSU. When the Ministry wants SAIL to adopt a new procurement policy aligned with the Government's revised public procurement guidelines, it cannot simply issue a circular that automatically binds SAIL. Instead, the Ministry sends a formal communication to the CMD of SAIL, and the Ministry's nominee directors on SAIL's Board advocate for the policy in the next Board meeting. SAIL's Board formally adopts the policy through a Board resolution. The Section Officer tracking this must monitor through Board meeting minutes, not through SAIL's internal file movement.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
▼
▼
▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.