|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.”