Thursday, November 6, 2014

FinMin set to privatise sick PSUs?

Finance minister Jaitley
AMID reports that Narendra Modi-led NDA government will shut some of the sick PSUs that are no longer sustainable, Finance Minister Arun Jaitley on Nocember 5 expressed readiness to look at privatisation of some loss-making public sector companies.
Asserting that the country needed to doggedly pursue the reforms agenda despite challenges, he maintained that reform is the art of possible but it cannot be just "one sensational idea".
There could be hundred things which could be done but the focus would be on what can be done immediately as part of the reform process, he said kicking off the two-day India Economic Summit here organised by Geneva-based World Economic Forum.
On privatisation and opening up more sectors such as insurance to foreign investors, Jaitley said the last time Bharatiya Janata Party-led NDA was in power, it followed a liberal model.
On disinvestment, Jaitley said, "This time, there will be divestment as some important public undertakings are on the verge of closure. But on foreign investment, decisions will be made sector-wise, keeping in mind the requirements of Indian economy and the appetite of the political system for reform."
Earlier, a committee headed by NTPC chairman Arup Roy Choudhury has supported the Government’s view on revival of sick public sector undertakings with the help of cash-rich PSUs.
The committee that submitted its report to the ministry of heavy industries and public enterprises was tasked to examine the feasibility of cash-rich Maharatnas, Navratnas and other Central public sector enterprises (CPSEs) seeding a a joint venture (JV) company that would revive sick PSUs.
According a rough estimate, profitable PSUs have over Rs 2 lakh crore of cash lying with them, mainly in banks which will go a long way to bring many a sick PSUs back on the path of profit.
According to an answer given by the heavy industries ministry in Parliament, there were 61 sick CPSEs as on March 31, 2013, with over 1.53 lakh employees.
Once the company is revived, there will be disinvestment and the proceeds will go to the JV, so that the investee gets back its capital.
Currently, sick PSUs are referred to the Board for Reconstruction of Public Sector Enterprises for revival, restructuring, sale or closure. According to a Government resolution, a company will be considered sick if it has accumulated losses in any financial year equal to 50 per cent or more of its average net worth during the four preceding years.
Recently, the ministry announced a plan to close six PSUs: HMT Watches, HMT Bearings, HMT Chinar Watch, Hindustan Photo Films, Hindustan Cables and Tungabhadra Steel.
Heavy industries and public enterprises minister Anant Geete had earlier said: “The new company formed will review and decide which sick PSUs can be revived. We want to give it entire responsibility to take over (revival of sick PSUs). There will be complete transparency in the process and the surplus money lying idle will certainly be used to revive sick PSUs.”


  1. Our FM says sick psu ecutives are inefficient,they have no talent how to turn around the sick psu.but the private players know how to make profit from sick psu.then why govt spend lakhs and lakhs salary for this inefficient executives and what is the use of this executives.but they know how to help private players.(MNC's).Our Pm also strongly believe this executives.why not handed over to this sick psu's to profit making psu's.why private.The reason no body knows,but we says MAKE IN INDIA.End of NDA govt period they will privatise all psu's,because of its LAND BANK.

  2. 09-11-2014
    To the Editor,
    Kindly note that some of the
    public Sectors like HMT have not paid the Earned leave
    Encashment Money to the retiring Employees under the
    pretext that it would be paid when Funds are
    available, but earned leave en-cashment money to
    existing employees is being Paid without a stop every
    year. Why is Pay revision that of 1997 scale ( not
    2010) , implemented only to the existing employees
    on rolls as on 28th February 2014 and the retirees are
    not even being considered Why? are the retired
    employees not a party of the society. People retired
    about 5-6 years back have not received
    El.encashment also till date. Is the Social security act not
    applicable to the retired employees?
    Where is social security, Kindly also bear in mind
    that the prices of commodities and medical expenses is
    not different to employees and retired employees of
    loss making PSU's. The Industrial Pension is also very
    meager and does not have any DA component added to
    take care of inflation. I feel that Depriving the
    benefits of pay commission recommendation to loss
    making Psu employees is not Justified, also depriving
    the retired employees whenever the pay revision is
    implemented is not correct. It looks that the
    Government is Punishing the employees/Retirees for no
    mistake of theirs. Kindly note that Retired employees
    Come under the Senior Citizen category.
    When will the government give social security to
    these retirees who are helpless.
    These people cannot fight a legal battle also as they
    cannot afford.
    Letters to the General Manager/Managing
    Director/Joint General Manager( Finance) have given no
    Hope this letter to you may open the eyes of the
    Government and this new Government may do some
    Retd.Dy.General Manager
    ( Retired in 2010)
    HMT. Machiine Tools Ltd,
    Mobile -91 09480219756

  3. Yes, all PSU irrespective of its economic health should be privatise without any further delay. Presently crores of rupees of hard earn taxpayers have been invested in these PSU and the so called executives are making money through currupt way. Everywhere the decision is putting off giving reason of some nonsense procedure and policy and whenever their interest are fulfilled they find some way of proceeding the matter further. This is the reason of failure of PSU. There are hundreds of PSU enjoying with govt provided land, infrastructure, benefits and even though got sick, not providing jobs to our youth eagerly looking towards the govt for job. If the PSUs (specially sick) are sold out, they can be restarted with new investment by private players. Therefore I strongly advocate to go for privatisation of PSUs.
    Virendra Singh,
    Ultratech Cement