PIONEERS IN GOOD

GOVERNANCE PRACTICES
GOOD GOVERNANCE ENTAILS
• Sound Public sector management.
• Efficiency
• Effectiveness
• And Economy

• Accountability.

• Exchange and free flow of information.

• Transparency

• And a legal framework for development .

• Justice
• Respect for human rights and liberties.
-World Bank
GOOD GOVERNANCE IS DEFINED
FOCUSING ON

• Legitimacy
• Government should have the consent of the governed.

• Accountability
• Ensuring Transparency.
• Being answerable for action and media freedom.

• Competence
• Effective policy making.
• Implementation and Service delivery.

• And Respect for law and human rights.

 PUBLIC ADMINISTRARTION
1. Major constituent of state
2. Instruments to achieve state’s goals and
objectives
GOAL OF STATE-’Governance’
1. Traditional Concept
2. Recent prominence

INFLUENCE ON
Government ADMINISTARTION –NPM
1.Managerial orientation GLOBALIZATION
2. Managerial reforms 1. Removal of trade barriers
3. Larger collaboration 2.Entry of MNCs
between state, market and 3. Intensive application of IT
civil society-PPPs

STATE+CIVIL GOOD GOVERNANCE

Governance
SOCIETY+MARKE
T
COMPONENTS OF GOOD
GOVERNANCE

•Public sector management

• Public expenditure management(public investments,
budget planning, budget processes)
• Civil service reform(to manage less but manage
better)
• Reform of public enterprises(privatisation ,
strengthening management of PSEs, improving
competitive conditions ,Improvement in efficiency of
public institutions)
•Accountability
• Constituted an innovation in the Bank’s sphere of
action
• Described as being “at the heart of governance”.
• Described as “holding public officials responsible for
their actions
• Horizontal (internal) and vertical (external)
accountability
• Concept of exit (access to other service providers) and
voice (participation).
• Legal framework for development.
• Important contribution to equitable and just
society and thus to prospects for social
development and poverty alleviation
• Focus on judicial reform, legislative reforms,
and the improvement of legal education and
training(Rule of law represents the legal
dimension of good governance by a country).
• Transparency and information
• Economic efficiency
• Prevention of corruption
• Analysis, articulation and acceptance of
governmental policy choices
WORLD GOVERNANCE INDICATORS
: 6 DIMENSIONAL FRAMEWORK

• Voice & Accountability

• Political Stability and Lack of Violence
• Government Effectiveness
• Regulatory Quality
• Rule of Law
• Control of Corruption
EIGHT CHARACTERISTICS OF GOOD
GOVERNANCE – UNITED NATIONS

Accountable
Consensus
oriented Transparent

Participatory Responsiv
e

Follow the Equitable

rules of Law Effective
and
and
Inclusive
efficient
CHARACTERISTIC OF GOOD
GOVERNANCE
• Accountability
• Key requirement of Good Governance
• Applicable to government, civil society and private sector
• Types : Political, legal, administrative and social accountability
• Components : Answerability, sanction, redress, and system
• improvement
• Transparency
• Free flow of information
• Accessibility of information to those affected by decisions taken
• in governance process
• Responsiveness
• Citizen orientation, citizen friendliness
• Timely delivery of services
• Redress of citizen grievances
• Effectiveness and efficiency
• Optimum use of resources
• Competency and performance of civil servants
• Result orientation
• Rule of law
• Fair legal framework
• Impartial enforcement machinery
• Independent judiciary
• Participation
• Cornerstone of Good Governance
• Opportunities for citizens to participate in decision making,
implementation and monitoring of government activities.
• Freedom of expression and association, organized civil society
• Equity and inclusiveness
• All groups, particularly the most vulnerable, have opportunities to
improve or maintain their well being
• Equal opportunities for participation in decision making process
• Consensus Orientation
• Mediation of different interests in society to reach a broad consensus
on
• What is in the best interest of the whole community
• How this can be achieved
STRATEGIES FOR GOOD
GOVERNANCE
• Reorienting priorities of the state through appropriate investment in
human needs, and provision of social safety nets for the poor and
marginalized.
• Strengthening state institutions.
• Introducing appropriate reforms in the functioning of Parliament and
increasing its effectiveness.
• Enhancing civil service capacity through appropriate reform measures
that matches performance and accountability.
• Forging new alliances with civil society.
• Evolving a new framework for government-business co-operation
PIONEERS IN GOOD GOVERNANCE PRACTICES

1. Industry Initiatives
A formal effort was initiated by the Confederation of Indian
Industry when it produced in 1998, a document titled
‘Corporate Governance—A Desirable Code’ through a Task
Force headed by Rahul Bajaj.
A similar initiative was mounted by SEBI with the constitution of a
committee under the chairmanship of Kumar Mangalam Birla.
As a service to the corporate sector, the CII is putting together a
roster of independent directors from which companies can
choose their non-executive directors while constituting their
boards.
2. Corporate Initiatives
‘The legal framework for all corporate activities including
governance and administration of companies, disclosures,
shareholders’ rights, dividend announcements has been in place
since the enactment of the Companies Act in 1956 and has been
fairly stable. The listing agreements of stock exchanges have
also been prescribing on-going conditions and continuous
obligations to companies.
India has a well-established regulatory framework for more than
four decades, which forms the foundation of the corporate
governance system in India. Numerous initiatives have been
taken by the Securities and Exchange Board of India (SEBI) to
enhance corporate governance practice
• According to a survey on corporate excellence carried out
by Credit Lyonnais, three Indian companies—Infosys,
Hindustan Lever Limited and Wipro are amongst Asia’s
top ten corporations in terms of good governance
practices. Likewise, ICICI, Cummins India, HDFC,
Ranbaxy, Dr Reddy’s Lab, Orchid Chemicals and several
Tata group companies also share this honour.
• The Birla Group has already adopted corporate governance
provisions. Non-executive directors now dominate the
group’s company boards, and they have also constituted
nomination, remuneration and audit committees.
3. Individual Initiatives
There were some outstanding initiatives in India from individual
personalities even before the concept of corporate governance
gained currency. J. R. D. Tata, from the time he took over the
reins of the group till his death, ran the Tata industrial empire
professionally, unlike other family-run businesses.
Keshub Mahindra is another industrialist who like J. R. D. Tata
runs his empire professionally.
N. R. Narayanamurthy is the new icon and undisputed king of the
new economy.
Kumar Mangalam Birla who inherited a huge industrial empire
challenged the conventional practices within the group
companies when he took over in 1995.
4. Banks And Corporate Governance
The Basel Committee norms relate only to commercial banks
and financial institutions.
Realizing the importance of corporate governance to banks
which are highly leveraged entities whose failures would
pose large risks to the entire economic system, the Reserve
Bank of India formed an advisory group on corporate
governance that submitted its report in 2001 and another
called the consultative group of directors of banks/financial
institutions (known as the Ganguly Committee) which
submitted its report in 2002.
5. Initiatives Of The Department Of Company Affairs
In May 2000, the Department of Company Affairs invited a group of leading industrialists,
professionals and academics to study and recommend measures to enhance corporate
excellence in India. Some of the recommendations of the Task Force include the
following:
 Greater role and influence for non-executive, independent directors.
 Stringent punishment for executive directors for failing to comply with listing and other
requirements.
 Limitation on the nature and number of directorship of managing and full-time directors.
 Proper disclosure to the shareholders and investing community.
 Interested shareholders to abstain from voting on specified matters.
 More meaningful and transparent accounting and reporting.
 Tougher listing and compliance regimen through a centralized national listing authority.
 Highest and toughest standards of corporate governance for listed companies.
 A code of public behavior for public sector units.
6. Setting Up Of Centre For Corporate Excellence
The Government of India has set up the Centre for
Corporate Excellence under the aegis of the Department
of Company Affairs as an independent and autonomous
body as recommended by the study group.
Cumulative effect of the companies achieving levels of
corporate excellence would undoubtedly be visible in the
form of much enhanced competitive strength of our
country in the global market for goods and services.
7. National Award For Excellence In Corporate Governance.
The national award for excellence in corporate governance,
instituted in 1999 by the Ministry of Finance under the
aegis of the Department of Company Affairs is sponsored
by Unit Trust of India.
For the very first year, the award was presented to Infosys.
For the year 2000, a panel chaired by Justice M. N.
Venkatachaliah and comprising eminent persons
unanimously selected The Tata Iron and Steel Limited
(TISCO) for the award.
8. Corporate Restructuring
It provides for initiation of restructuring of a corporate at a much earlier stage of
financial sickness, thereby enhancing the possibility of its revival.
With globalization and opening up of the economy, the need was felt that the
Indian market should be geared to face competition not only from within the
country, but from outside as well. Based on several recommendations, the
Competition Bill was introduced in the Lok Sabha.
The Competition Bill, 2002, is a landmark development in economic legislation.
The government had set up a high-level committee to examine the existing
Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, for shifting
the focus of the law from curbing monopolies to promoting competition and to
suggest a modern competition law in line with international developments to
suit Indian conditions.
9. Best Practices
The law governing corporates has been fine-tuned by amending the
Companies Act to create the right ambience for the corporate
enterprises to function effectively in the era of liberalization.
The DCA has undertaken an ambitious programme to completely
overhaul its services to the corporate sector by undertaking
modernization and placing the services on the Internet. This is
being undertaken with a view to reducing the time and resources
spent by corporates.
As mentioned earlier, Naresh Chandra Committee was set up to look
into issues relating to auditor-company relationship such as
rotation of auditors/auditing partners, restrictions on non-audit
work/fees, procedures for appointment of auditors, determination
of audit fees, the role of independent directors and disciplinary
procedures for accountants.
CONCLUSION

• Good Governance may be a rhetoric, but good

government, responsive administration and a just legal
system are eternal requirements
• External drive to policy change to be replaced local
commitment and ownership of reform
• Ingenuous ideas for improving governance, ownership of
initiative and commitment to reform extremely important