Govt may increase salary of Senior Executives at PSUs to retain top talent

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The government is considering a proposal to significantly raise the compensation of senior executives at central public sector enterprises (CPSEs) with a turnover exceeding Rs 100 crore. The aim is to retain top talent and bridge the gap with private sector peers. The proposed increase, which could be as high as 100%, would be performance-linked, based on parameters such as asset monetization, speed of project execution, profit, and other benchmarks.

Rationale for the Proposal

According to officials from the Department of Public Enterprises, the current compensation drawn by CPSEs’ top executives is significantly lower compared to the private sector. This disparity is making it challenging to retain talent. It has been suggested that the compensation for these executives be doubled to address this issue.

Timeline and Consideration

The proposal could be presented for consideration by the Cabinet Committee of Economic Affairs ahead of the budget presentation later this month. Additionally, the performance-linked incentives for CPSEs may vary depending on the targets set by the administrative ministry and their respective boards.

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Support and Feedback

The Public Enterprises Selection Board has also recommended increasing compensation, citing difficulties in attracting candidates for leadership positions. There is a consistent feedback that the packages must be lucrative enough to attract the right kind of candidates.

Broader Vision and Approach

The current proposal does not entail a blanket increase in salaries for CPSE staff, as this would require a wider debate and detailed study. This move is part of the government’s broader vision to make the strategic public sector undertakings (PSUs) more competitive, efficient, and technology-friendly. The NITI Aayog is separately working on increasing the competitiveness of the PSUs, and there will be a multi-ministerial approach to achieve this goal.

This proposal reflects the government’s efforts to ensure the competitiveness and efficiency of CPSEs while addressing the challenge of talent retention.

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