Examining the Committee on Public Undertakings: Composition and Key Functions

Public sector undertakings form the backbone of many strategic industries – from oil and steel to defence and infrastructure. But with thousands of crores in public money flowing through these enterprises, one question becomes crucial: who holds them accountable? This is where the Committee on Public Undertakings (COPU) steps in. As one of the three financial standing committees of Parliament, it acts as a watchdog over PSUs, ensuring they are run efficiently and in line with sound business practices.

The origin and evolution of the committee 🔗

The story of COPU begins in the early years after independence, when the public sector was rapidly expanding under the planned economy model. Parliament soon realised that the existing Public Accounts Committee (PAC) and Estimates Committee (EC) were stretched too thin to scrutinise the growing universe of state-owned enterprises.

The first proposal for a dedicated committee came from MP Lanka Sundaram in December 1953, who pointed out the gaps in oversight left by the PAC and EC. A few years later, in 1958, the Congress set up the V. K. Krishna Menon Committee, which recommended a separate mechanism that could balance the twin goals of parliamentary accountability and operational autonomy of PSUs. Acting on this recommendation, and following a motion moved by the then Minister of Commerce and Industry Nityanand Kanungo in September 1963, the Committee on Public Undertakings came into effect from 1 May 1964.

A committee that grew with the public sector 🔗

When COPU was first constituted, it had only 15 members – 10 from the Lok Sabha and 5 from the Rajya Sabha. As the number of PSUs multiplied and their operations grew more complex, Parliament felt the need for a larger, more representative committee. In 1974, the strength was raised to 22 members, with 15 drawn from the Lok Sabha and 7 from the Rajya Sabha. This structure has remained unchanged since.

Composition of the committee 🔗

The composition of COPU is carefully designed to ensure both bicameral representation and political balance. The committee consists of a maximum of 22 members – 15 elected by the Lok Sabha and not more than 7 elected by the Rajya Sabha, as specified in the Rules of Procedure and Conduct of Business in Lok Sabha.

How members are elected 🔗

Members are elected annually by their respective Houses from among their own members. The election uses the principle of Proportional Representation by means of the Single Transferable Vote (STV). This system ensures that every political party gets representation roughly in proportion to its strength in the Houses, allowing even smaller parties to have a voice on the committee. Recent compositions have included members from a wide range of parties – BJP, INC, DMK, TDP, SP, AITC, JDU, Shiv Sena, AAP, BJD, and others – reflecting this diversity.

Term of office and restrictions on membership 🔗

The term of office of COPU members is limited to one year, after which fresh elections are held. This short tenure ensures that the committee is regularly refreshed and reflects the current composition of Parliament. However, it also means that members often have little time to build deep expertise in the complex world of PSUs before their term ends.

There are also two important restrictions. First, a Minister cannot be elected as a member of the committee. If a sitting member later becomes a Minister, they automatically cease to be a member from the date of their appointment. This rule prevents members of the executive from sitting in judgment on bodies that fall under their own administrative control. Second, the chairperson of COPU is appointed by the Speaker of the Lok Sabha from among the Lok Sabha members only. A member from the Rajya Sabha, therefore, can never chair this committee – a feature it shares with the Public Accounts Committee.

Key functions of the committee 🔗

The formal mandate of COPU is laid down in the Fourth Schedule of the Rules of Procedure and Conduct of Business in Lok Sabha. Broadly, its functions can be grouped into four categories.

Examining reports and accounts of PSUs 🔗

The primary function of the committee is to scrutinise the annual reports and financial statements of public undertakings listed in the Fourth Schedule. This includes statutory corporations like the Damodar Valley Corporation and Life Insurance Corporation of India, national authorities like the Airports Authority of India and NHAI, the Food Corporation of India, and major defence PSUs such as Hindustan Aeronautics Ltd and Bharat Electronics Ltd. It also covers every government company whose annual report is tabled in Parliament under the provisions of the Companies Act.

Scrutinising CAG reports on public undertakings 🔗

COPU acts as a parliamentary follow-up to the work of the Comptroller and Auditor General of India. When the CAG tables a performance audit or report highlighting inefficiencies, irregularities, or losses in a PSU, the committee studies it in depth. A famous example is the committee’s finding – based on a CAG performance audit of ONGC Videsh Limited – that the PSU suffered losses exceeding ₹1,182 crore during 2008-09 and 2009-10 due to unrealistic estimation of reserves and production.

Ensuring sound business principles 🔗

One of the most distinctive functions of COPU is to examine, in the context of the autonomy and efficiency of PSUs, whether their affairs are being managed in accordance with sound business principles and prudent commercial practices. This is a delicate balancing act. On one hand, PSUs are expected to pursue social and strategic objectives; on the other, they must remain commercially viable. For instance, the committee once flagged that staff costs at BSNL in 2011-12 were nearly half its revenue, an abnormally high proportion compared to private telecom companies where such costs ranged between 5% and 10%.

Performing other functions assigned by the Speaker 🔗

Beyond these core duties, COPU can also exercise such other functions vested in the PAC and the Estimates Committee in relation to public undertakings as the Speaker may assign from time to time. This gives the committee flexibility to take up emerging issues as and when needed.

How the committee works in practice 🔗

The theory of COPU’s mandate comes alive through its working methods. The committee does not simply rubber-stamp reports; it follows a structured examination process.

Selecting subjects and forming study groups 🔗

COPU typically selects PSUs for examination on the basis of CAG reports and audit reports tabled in Parliament. Once a subject is selected, the concerned undertaking is asked to furnish detailed information and background material. The committee may then appoint one or more study groups for a detailed examination of specific aspects – a useful device for breaking down complex technical or financial questions among smaller sub-groups of members.

Tours, evidence, and reports 🔗

To understand ground realities, COPU also undertakes study tours and on-site visits to plants, offices, and project sites of PSUs. These visits are accompanied only by informal discussions – no formal evidence is recorded during tours, and proceedings are kept confidential. Formal evidence is taken in Delhi, where officials, experts, and management of the concerned PSU are called before the committee. Notably, ministers are not called to appear before the committee, though the chairperson may hold informal discussions with them after deliberations.

Once examination is complete, the committee prepares its report with observations and recommendations, and presents it to both Houses of Parliament. The concerned ministry is expected to respond through an Action Taken Report (ATR), which is itself scrutinised by the committee in the following cycle. Since its inception, COPU has presented a substantial body of work – over 600 reports, comprising original reports, action taken reports, and horizontal studies that cut across multiple PSUs.

Limitations of the committee 🔗

Despite its crucial role, COPU operates under several well-known limitations that affect its effectiveness.

First, given its annual cycle and limited meeting time, the committee can typically examine reports of only about 10 to 12 PSUs in a year, which is a small fraction of the hundreds of central public sector enterprises in the country. Second, its work is essentially a post-mortem exercise – it only examines reports and past performance, and has no role in deciding the day-to-day functioning or policy direction of PSUs. Third, the committee cannot take up matters of major government policy unrelated to the commercial or business functions of undertakings, nor can it examine issues for which a separate statutory machinery already exists.

Fourth, the committee has no technical experts among its members, which can be a handicap when scrutinising highly specialised sectors such as nuclear energy, aerospace, or telecom technology. And finally, all its recommendations are advisory in nature – ministers are not bound to accept them, though the practice of tabling Action Taken Reports does create some pressure for compliance.

Why the committee still matters 🔗

For all its limitations, COPU remains one of the most important instruments through which Parliament enforces executive accountability over public money. By flagging inefficiencies, questioning management decisions, and pushing for reforms, the committee has repeatedly influenced improvements in PSU governance – from correcting tariff practices to accelerating delayed capital projects.

In an era where the role of the public sector is being actively debated – with disinvestment on one side and strategic PSUs on the other – the committee’s work acquires fresh relevance. It serves as a reminder that public enterprises, whatever their future shape, must ultimately answer to Parliament and, through it, to the citizens whose money they use.

What do you think? Should COPU’s one-year tenure be extended so that members can develop deeper expertise in PSU oversight? And given that its recommendations are only advisory, what reforms could make the committee’s findings more binding on the government?

References

1. https://en.wikipedia.org/wiki/Committee_on_Public_Undertakings
2. https://www.gktoday.in/committee-on-public-undertakings/
3. https://byjus.com/free-ias-prep/committee-on-public-undertakings/
4. https://cag.gov.in/uploads/media/Annexure-II-064df3a69e57ff7-88261705.pdf
5. https://vajiramandravi.com/current-affairs/committee-on-public-undertakings/
6. https://testbook.com/ias-preparation/committee-on-public-undertakings
7. https://mlsu.ac.in/econtents/228_Committe%20on%20Public%20Undertakings.pdf