Modi govt to speed up PSU privatization

New Delhi, Sept 7: The Narendra Modi government has directed its ministries and departments to draw up an action plan to speed up the winding up and disinvestment of those public sector undertakings (PSUs) that have already received the cabinet’s approval for closure.

 

 

 

The closure of loss-making and sick PSUs was discussed in a review meeting chaired by Cabinet Secretary Rajiv Gauba on 12 August. He directed officials from different ministries to also give reasons if there was a delay in implementing the closure of such PSUs.

 

 

“We need to ensure that the government’s resources are not wasted, and in cases where there is approval by the cabinet for closure of CPSEs (central public sector enterprises), autonomous bodies, and other entities, it must be implemented immediately.” The meeting called by Gauba was essential to discuss the roadmap for the central government to prepare for ‘Vision India@2047’, a plan to ensure that India is ranked among the top-three economies globally and is inching closer to the status of a developed nation. PSUs are those companies in which the direct holding of the central government or other PSUs is 51 percent or more. According to the Comptroller and Auditor General (CAG) of India, there are a total of 607 PSUs in which the government either directly or indirectly holds a stake. About 90 companies did not give their financial statements to the CAG at the time of preparing the report. Of the 697, around 488 are government companies, six are statutory corporations, and 203 are government-controlled other companies. In its December 2021 report, the CAG said that around 181 state-run companies had a net loss of Rs 68,434 crore in 2019-20, up from Rs 40,835 crore in 2018-19. Of these, 115 have incurred losses for three to five years in the past five years, whereas 64 have incurred losses continuously for five years. The accumulated losses of these 181 companies for two years, ending 31 March 2020, comes to a total of Rs 1,55,060 crore. BSNL and Air India were among the 14 companies that inflicted losses of over Rs 1,000 crore in 2019-20, according to the CAG report. Air India, however, has now been privatized and taken over by the Tata Group’s Talace Private Limited. On the disinvestment side, the Centre has managed to sell its stake in three companies — Oil and Natural Gas Corporation (ONGC), Life Insurance Corporation (LIC), and Paradeep Phosphates Limited (PPL) — raising about Rs 24,544 crore in the current financial year so far. Of this, over 90 percent of the amount was collected by listing LIC.

 

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In 2022-23, the government is estimated to raise Rs 65,000 crore through disinvestment and privatization of state-run firms. Union Finance Minister Nirmala Sitharaman had said in June that the principle of the government’s disinvestment program is not to shut down any unit or company, but to make them more efficient and professionally driven. She stressed that the privatization of PSUs was aimed at making the companies run more efficiently.