A comprehensive April 2026 report by the OECD, "Good Practices for Strengthening State Ownership," provides a strategic roadmap for governments to modernise the governance of State-Owned Enterprises (SOEs).
The report argues that for SOEs to contribute to economic resilience and long-term value, states must move away from "passive" ownership toward professional, informed, and active oversight. A finding of the report identifies India as a jurisdiction with implicit ownership rationales; while India has clear objectives for its Public Sector Undertakings (PSUs), these justifications remain scattered across sectoral laws, budget documents, and national plans rather than being unified in a single, high-level Ownership Policy.
Core Frameworks and Strategic Processes
The Six-Step Policy Cycle: The OECD outlines a rigorous process for policy development, beginning with defining clear rationales, followed by stakeholder consultation, drafting, high-level political endorsement, public disclosure, and iterative monitoring.
Structural Decoupling: A critical best practice involves the clear separation of the state’s policymaking, regulatory, and ownership functions to minimize conflicts of interest and political interference in commercial operations.
Diverse Ownership Models: The report evaluates five structural models—ranging from centralized agencies to dispersed ownership—highlighting that the choice of model must align with a country’s specific institutional maturity.
Transparency through Aggregate Reporting: To ensure public accountability, the OECD recommends the publication of Annual Aggregate Reports, providing a consolidated view of the entire SOE portfolio’s financial and non-financial performance.
Integrity and Sustainability: Integration of anti-corruption measures and responsible business conduct is now categorized as a baseline requirement for modern state ownership.
What is an "Implicit Ownership Rationale"? An implicit ownership rationale exists when a government’s reasons for owning a company are understood and documented across various laws and budgets, but are not consolidated into one official "Ownership Policy" document. It acts as a catalyst for administrative ambiguity because different ministries may interpret the goals of an SOE, such as profit-making versus social service, in conflicting ways. This mechanism manifests as a transition from "fragmented oversight" to "unified strategy" when a country finally adopts a formal policy. For India, moving from implicit to explicit rationales is a primary lever to benchmark a trajectory of global competitiveness for its Maharatna and Navratna companies.
Policy Relevance: Professionalizing the Indian PSU Ecosystem
Rationalisation of PSUs: The OECD’s six-step process provides a technical framework for the Department of Public Enterprises to consolidate its scattered mandates into a single, cohesive State Ownership Policy, transposing "implicit goals" into "explicit performance targets."
Separation of Regulator and Owner: Implementing the recommended governance arrangements would help India transpose its administrative structure to ensure that ministries do not act as both the "referee" (regulator) and the "player" (owner) in sectors like energy and telecommunications.
Validating NITI Aayog’s Privatisation and Asset Monetisation Benchmarks: The report’s emphasis on "justification for ownership" transposes the debate from ideology to efficiency, effectively providing a global standard for deciding which sectors require state presence and which do not.
Global Investor Confidence: Adopting OECD-standard Aggregate Reporting transposes India’s PSU data into a format that international ESG investors can easily analyze, potentially lowering the cost of capital for state-led infrastructure projects.
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