National governments already have a great deal on their plates, but this fact is not going to stop the government of India from taking a hard line on public sector entities that fail to live up to corporate governance standards.  According to Department of Public Enterprises secretary OP Rawat, Central Public Sector Enterprises (CPSEs) will receive negative marks from the next fiscal year if their compliance with corporate governance standards falls below norms. 

Mr Rawat expects CPSEs to do more than merely adhere to the letter of the law.  "The public enterprises will get a negative marking in case they do not comply with the guidelines in true spirit and deliver the best results," he explained. 

A Memorandum of Understanding (MoU)has been prepared for the 2014-2015 fiscal year.  The document outlines an agreement reached between a particular CPSE and the administrative ministry that helps to regulate it.  Under the terms of the agreement, the degree to which a CPSE adheres to corporate governance standards will not be considered as a non-financial parameter.  According to current practice, corporate governance is considered a non-financial parameter, which means that the MoU represents a significant change. 

According to UD Choubey, the director general of SCOPE, solid corporate governance practices are essential for boosting the value that stakeholders can expect.  "There is a need for transition and transformation of all these three layers as they come from different backgrounds; therefore, there is a need to organise orientation programmes so that CPSEs boards are run on a system oriented process," Mr Choubey explained. 

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