Good governance can add 1.5-2% to GDP on a par with GST: Piyush Goyal
17 August 2015
Improvements in corporate governance standards and ethical practices followed by companies can boost the country's gross domestic product (GDP) by 1.5-2 per cent, says union minister for power Piyush Goyal.
Good governance has potential spinoff benefits on a par with that of the goods and services tax (GST), Goyal told an Assocham event in New Delhi on Sunday.
''If we are going to run our organisations with defined processes and a degree of serious and ethical guidelines, which will always have an element of integrity at the core, to my mind getting a 1.5-2 per cent bump in the GDP, good additional growth in the GDP is certainly not impossible, very much achievable and possibly one could do even better than that,'' said Goyal while inaugurating 'Corporate Governance Summit-cum-Excellence Awards,' organised by the Associated Chambers of Commerce and Industry of India (Assocham).
''To my mind, ethical practices and good governance can possibly add as much to the Indian economy as GST could,'' said Goyal.
''The impact of good governance, corporate governance can be felt when one looks at the top sensex stocks and you find that good, reputed companies are given a premium for good practices,'' he added.
Talking about the state power distribution companies' (discoms) financial stress, the minister said, the government is working on a holistic approach to ease their financial stress through improvements in governance.
''We are in active dialogue with discoms, we have a broad framework under which I am very confident, three or four discoms which are really under stress will have a roadmap and in the next three years you will see a sea change in discom story of India.''
On extending financial restructuring plan (FRP) to discoms, Goyal said, ''FRP which was introduced originally in April 2012 and implemented in October 2013 had not really changed the situation on the ground, it failed to bring about any significant improvement in AT&C (aggregate technical and commercial losses, in the financial losses of the companies.''
''We are working on a more holistic approach where the companies, the discoms themselves will be encouraged to bring about the change, the turnaround through good corporate governance practices and we will hand-hold them and ensure that within a defined timeframe we turn these around,'' he added.
The union power minister also said that he is looking at National Thermal Power Corporation (NTPC) Limited, which won the Assocham Corporate Governance Award in the PSU (listed company) category, as the world's most valuable energy company four years from now.
''I am going to hold to NTPC to this when I am continuously telling them you have to be the world's most valuable power company in the next four years.''