Thursday, August 14, 2014

Why is FM Jaitley taking a tough stance vis-a-vis PSUs?

Talking tough: FM Jaitley
BEFORE May 26, when the BJP led NDA government took charge of a new government at Raisina Hills, expectations were high among the ailing PSUs that “Good days will come soon”. But gradually those good days seem to be more and more eluding as the new NDA government's disinvestment policy is becoming clearer. Finance Minister Arun Jaitley, Modi's Mr Dependable in Parliament, at no...
point of time seems to be “friendly” with the ailing PSUs in particular.
Jaitley is often seen taking tough stance in so far as the CPSEs go.
Thus, making it clear that PSUs should comply with the minimum public holding norm as mandated by SEBI, Finance Minister Arun Jaitley has recently said listed PSUs which cannot follow the norm should get themselves delisted.
"If it (PSU) is listed company, then whatever are the guidelines issued from time to time by the listing authority, which is SEBI, they will have to follow," he told the Rajya Sabha on August 12.
Currently PSUs need to maintain public shareholding of 10 per cent.
"...If they (Sebi) say 25 percent (minimum public holding) that will be a different set of guideline. If any PSU wants to avoid that it has to get itself delisted... If a PSU decides to get listed, then it is bound by the listing law," Jaitley said.
In June Sebi board had decided that all listed PSUs should achieve a minimum public shareholding of 25 percent within three years.
The decision, aimed at ensuring uniformity among listed entities irrespective of their promoters, would also help the government raise close to Rs 60,000 crore from the sale of shares in around 36 listed PSUs where the public shareholding is less than 25 percent.
Under current norms, government undertakings should have at least 10 per cent public shareholding whereas for non-PSU firms the minimum level is 25 percent.
"The public sector undertakings (PSUs) must learn how to function like any other business organisation in a competitive environment and should not be run like a government department," he said, replying to a question in the Rajya Sabha. The minister informed the house that 79 central public sector enterprises have incurred losses, of which 49 are sick. "A total investment of Rs. 1,57,211 crore has been made in these enterprises," the minister informed the house. “The PSUs must learn the art of surviving in a competitive environment and should not be run like a government department," Jaitley said.
Sending a stern signal to the ailing public sector enterprises, the finance minister categorically told them to either shape up or shut down. Jaitley has asked them learn the trade secrets to deal with free competition in an era when state-run firms had lost monopoly rights and preference, which marked a clear-cut shift in the Centre's policy.

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