Memorandum of Understanding in India

After many decades of existence for the public sector in India, there are still many questions unanswered. Though the Government has delegated financial and administrative powers to PEs (public enterprises) to a great extent to provide considerable financial leverage for taking prudent decisions, the results are not satisfactory. It has been several decades since the MoU system has been introduced in India in the hope of incentivising performance, yet there are considerable numbers of PEs which are languishing in the fair and good category in terms of performance. Performance challenges still exist in public sector enterprises which are mainly due to inadequate systems, processes, and latest technology. The focus now is on making the PEs more efficient and competitive so that they can face the stiff market competition. There is a clear direction that has been set with the Performance Management Division taking lead and rolling out the overarching PMS and implementing RFD. The RFD system provides a comprehensive framework of performance measurement and management for all the government departments/ministries, to develop performance plans in sync with the national priorities and prog-rammes. With the RFD system in place, it will give greater stability to the MoU system and make it sustainable.