Improving public services: A case study of two not-for-profit companies in Punjab

Policy brief Firms

  • Over the past decade, the Government of Punjab set up a number of government-owned public companies under Section 42 of the Companies Act 2017 to deliver specific public services such as waste management, public transport, infrastructure development, and skills training with the legal and financial autonomy necessary for efficiency and transparency.
  • The experience with these companies has been mixed at best. Judicial and media scrutiny into allegations of corruption and waste have raised questions about the performance and accountability of the companies and their future.
  • Our analysis shows that the public sector can gain significantly from the type of statutory and operational flexibility afforded by the Section 42 status. One of the most significant advantages of the Section 42 model is the ability to separate policy formulation, implementation, and monitoring, allowing the companies to achieve operational efficiency that would otherwise have been difficult in the traditional departmental setup.
  • Sustaining the Section 42 model can be beneficial for improving public services in Punjab, albeit with requisite reforms and strategic guidance put into place. The key reforms include governmental commitment to company board autonomy and effectiveness; clear regulations for administrative management; and, lastly, exploring the possibility of creating an apex monitoring body that can ensure transparency of work and adherence to corporate best practices.