Tuesday, April 26, 2016

Government may liquidate some loss-making PSUs: Report

THE NDA government is mulling to liquidate some loss-making PSUs while protecting the interest of their employees who may be offered "lucrative" payouts.
Following recommendations of Expenditure Management Commission, a proposal for liquidating some loss-making PSUs is being examined, an agency report quoting...
official sources said.
Liquidation should be done in a manner that it does not hurt interest of employees and is a win-win for both government and the staff.
The government may provide for lucrative one-off sum toward pension payments for the staff of those loss identified loss making PSUs.
As per the latest government report, there are 77 loss- making PSUs at the end of March last year with a total aggregate loss of Rs 27,360 crore.
A CPSE is declared sick after it has accumulated losses in any financial year equal to 50 per cent or more of its average net worth during four preceding years. There are 65 units in the list of sick public sector units as of March 31, 2014.
The CPSEs which are part of this list include MTNL, Air India, Bengal Chemicals, Konkan Railway Corporation, Hindustan Shipyard, HMT, Bharat Coking Coal, ITI, Bharat Wagon and Engineering, Tungabhadra Steel, Scooters India, Heavy Engineering Corporation, National Jute Manufacturers, Burn Standard, Fertilizer Corporation of India, British India Corp among several others. The government is contemplating a slew of measures for revival of sick or loss-making CPSEs. Setting up a separate entity funded by financially strong CPSEs to look at management and revival of sick companies is one such measure. Cash-rich profitable PSUs can also be roped in to support and revive the loss-making/sick CPSEs as part of their mandatory corporate social responsibility (CSR) practice.
Expenditure Management Commission, formed in September 2014, recommended liquidating loss-making PSU by selling of assets such entities wherever possible.
The commission was given the task to review all matters related to central government spending, including suggesting space for increased developmental spending and reviewing the budgeting process and norms under the Fiscal Responsibility and Budget Management Act and suggesting ways to meet a reasonable proportion of spending on services through user charges.
Finance Minister Arun Jaitley in his Budget 2016-17 speech had said NITI Aayog will identify PSUs for strategic sale. "A new policy for management of government investment in Public Sector Enterprises, including disinvestment and strategic sale, has been approved. We have to leverage the assets of CPSEs for generation of resources for investment in new projects," Jaitley said.
The Department of Disinvestment has been renamed DIPAM.
The government aims to collect Rs 56,500 crore through disinvestment in PSUs this fiscal, as per Budget 2016-17.
Of the total budgeted proceeds, Rs 36,000 crore is estimated to come from minority stake sale in PSUs and the remaining Rs 20,500 crore from strategic sale in both profitable and loss-making companies. 

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