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Cabinet Secy shoots down mediocre proposals to boost public sector

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Cabinet Secretary disappointed with suggestions and proposals made so far, wants radical ideas for adapting public sector enterprises to ‘New India’.

New Delhi: Prime Minister Narendra Modi has often indicated that a strong public sector is a key component of his idea of a ‘New India’. But even before the overhaul could begin, Cabinet Secretary P.K. Sinha has sent the whole exercise back to the drawing board, for not being up to the mark.

Sinha, government sources told ThePrint, has rejected turnaround proposals made by over 250 Central Public Sector Enterprises (CPSEs), terming them mediocre.

He chaired a high-level meeting on 6 November on ‘redefining the role and functioning of CPSEs’, and is learnt to have expressed his strong disappointment with the recommendations made by CPSEs.

Sinha felt these proposals were inadequate and mere incremental changes. The need is to bring in radical ideas for restructuring the CPSEs, to meet the goals of a New India by 2022, he added.

Top officials from CPSEs and ministries have been working on these proposals for months, but the Cabinet Secretary’s tough stance brought everything to a screeching halt.

Modi govt’s public sector push

The Modi government has focused strongly on bringing in structural reforms in PSUs. While working on a plan to have major PSUs listed, the government has also set the ball rolling for consolidation of PSUs via strategic sale of sick and ailing units, and mergers of some others. The Centre is expected to launch its ambitious plan for the strategic sale of 16 PSUs in the next few months.

Apart from these, there are about 250 CPSEs operating in India currently, with a net worth of Rs 10.2 lakh crore. These include the likes of the Indian Space Research Organisation, Indian Railway Catering and Tourism Corporation, Food Corporation of India, Bharat Heavy Electricals, Maruti, Hindustan Aeronautics Ltd, among others.

The government had set up several groups to draw up a ‘transformational growth path’ for CPSEs to contribute to a ‘New India’ in 2022, and emerge as ‘global players’. The goals outlined also include an increase in productivity, so that the per-employee turnover increases from Rs 1.5 crore (2016) to Rs 7.5 crore by 2022, bring in technological innovations, and new governance mechanisms.

Suggestions and proposals made

Over 100 suggestions were made as part of the exercise, which involved close consultations among all CPSEs, related government departments and external experts. The themes around which proposals were made earlier this month were:

–          Reviewing the governance mechanisms of CPSEs.

–          Reviewing their human resource management strategies.

–          Restructuring their financial architecture.

–          Promoting innovation, R&D, and technology.

Some of the suggestions made to the Cabinet Secretary included:

–          CPSEs not dependent on government funding be listed, and government holding in these be reduced to 49-50 per cent, to bring them to a level playing field with the private sector.

–          ‘Over-governance’ by administrative ministries, the Comptroller and Auditor General and the Central Vigilance Commission be red-flagged.

–          Loss-making or sick PSUs not be merged with profit-making ones as they bring pressure on the viability of the merged entity.

–          CPSEs be merged and consolidated in sectors such as consultancy, power generation, coal and mining, petroleum, defence, security printing, shipyards, fertilisers, finance, trading, paper and textiles.

–          A sovereign wealth fund be set up to optimise capital allocation.

–          Tender processes be simplified.

–          A panel of independent experts be engaged to assist with dispute redressal.

–          20-30 per cent of investment be set aside in breakthrough futuristic projects.

–          Digitisation should be increased.

–          Next-generation procurement reforms be brought in.

–          A ‘Tech-Up India’ mission be started.

–          An autonomous body for collaborative R&D be created.

–          Policy-backed mandatory transfer of identified key technologies.

–          Extending ‘buy Indian’ policy to non-defence sectors.

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1 COMMENT

  1. The simplest, most effective proposal would be to slowly, systematically dismantle the public sector. For units that are profitable, no rushed privatisation, the government should get fair value. Units that are chronically loss making, like Air India acquire a sense of urgency, for the passage of time bleeds the fisc. A courageous push as far as the public sector banks are concerned. The public sector was created at a time when – although some would debate this proposition – private enterprise was not strong enough to meet the development needs of a young nation. Telecom is just one instance where PSUs will not be missed. To be perfectly honest, the public sector serves many constituencies beyond the national interest, and no government has proved to be immune to those charms.

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