Kotak panel report 'completely off the mark', says railway minister Piyush Goyal

Railway Minister Piyush Goyal has torn into the Uday Kotak-led panel's report on corporate governance. Speaking exclusively to Shereen Bhan at the World Economic Forum's India Economic Summit, Goyal said the report has gone "completely off the mark."

The minister slammed the move to include educational qualification for members on a company's board saying "education alone cannot make one a domain expert." Goyal also questioned the move to allow company boards to choose the independent directors, he said this would lead to companies appointing more "yes men."

Below is the transcript of the discussion.

Q: Yesterday we had the Uday Kotak Committee on corporate governance bring out its report saying that people who are qualified to be on corporate boards, have the domain expertise of that particular industry etc. should be the ones who represent corporate boards. This mindset that it has to be the lowest bidder irrespective of whether they have the expertise, they have the competency, they have the skill, is it not time that we look for reimagining this template, reinventing this template for better India?

Goyal: Since you alluded to Uday Kotak's report, let me also tell you that I think he has gone completely off the mark here.

Q: Why?

Goyal: I became the power minister of this country, I did not know the "P" of power or the "C" of coal and renewable energy was the farthest thing from my mind when I became a minister. IAS officers all over the country, many of them have done illustrious jobs, I don't think they have some domain expertise, E Sreedharan did not know what a Metro looks like when he became the Metroman of India.

Very often I tell people when they come to me and they say that, this company doesn't have experience in manufacturing pipes for example, we can't buy from them. I said there is a process to determine if the pipes that they manufacturer are good or bad. You do tensile testing, there are all sorts of testing available. However if everybody takes that mindset he will never be able to get into business. So, Make in India or entrepreneurship and Startup India can be history from tomorrow.

To my mind you have to encourage diversity of opinion, diversity of experience. If I am running a steel unit and I have run a steel unit - forgings, I didn't know anything about that, I am a chartered accountant. Businessmen are supposed to keep their accounts honest and correct. Dhirubhai Ambani probably never went beyond a certain basic level of education. So, I think this is a completely wrong thinking. Just education doesn't make a man any great or any expert in the field. The most educated people run some of the biggest frauds that have happened in this country.

Q: Is that the only reason you believe he has gone off the mark or you think other recommendations as well?

Goyal: I have not gone into all the details. There are many things good, there are many things which I think are inappropriate. There is a good idea that a woman director should be compulsory.

Q: And an independent director.

Goyal: Yes, that is also a good idea. However he also spoke about, the board themselves should decide the independent directors. Now this is what is already happening, there is nothing new in that, but that is where the problem is. When I run my board, I choose people who are going to be yes men or who are going to listen to me or going to go by what I say and that is going to be my board. But the base problem is that only. So, what he is recommending is that I get to choose who will be on my board, who are convenient for me to be on the board. Uday Kotak is like a mentor for me for 25-30 years and therefore I can take the liberty and he takes the same liberty with me. When I go wrong I know that Uday Kotak is there to tell me you are doing something wrong here.