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Start planning to shut down sick PSUs approved by cabinet, Modi govt tells ministries

Centre expected to raise Rs 65,000-cr through disinvestment & privatisation of state-run firms this financial year. Govt official says move aimed at ensuring resources aren't wasted.

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New Delhi: 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, ThePrint has learnt.

The closure of loss-making and sick PSUs was discussed in a review meeting chaired by Cabinet Secretary Rajiv Gauba on 12 August. From the minutes of the meeting accessed by ThePrint, 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,” a senior government official told ThePrint on condition of anonymity.

The meeting called by Gauba was essentially 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 per cent 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 privatised 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 per cent of the amount was collected by listing LIC.

In 2022-23, the government is estimated to raise Rs 65,000 crore through disinvestment and privatisation of state-run firms.

Union Finance Minister Nirmala Sitharaman in June had said the principle of the government’s disinvestment programme is not to shut down any unit or company, but to make them more efficient and professionally-driven. She stressed that the privatisation of PSUs was aimed at making the companies run more efficiently.

Also Read: Why Modi govt’s modest Rs 65,000 crore disinvestment target for FY23 seems to be a tall order

All government procurement through GeM

To encourage government procurement through the government e-marketplace (GeM) portal, Gauba had declared that all procurements by ministries and departments would be done through GeM and only if a product or service is not available on the portal would one look outside.

“It was also decided that reviews and monitoring of GeM procurement would be done on a monthly basis,” said the minutes of the review meeting chaired by Gauba.

Launched in 2016, GeM is an online platform for public procurement in India, set up with the objective to create an open and transparent procurement platform for government buyers.

According to a PIB release, GeM has about 61,440 government-linked buyer organisations listed on the platform, 47.99 lakh sellers and service providers, a listing of over 41.44 lakh products and 1.9 lakh services offerings.

Around 239 state-run firms are also registered on GeM and are making significant procurement through the portal.

In the financial year 2021-22, merchandise worth Rs 1,06,760 crore was purchased through the GeM portal. Commerce and Industry Minister Piyush Goyal in July had said, “Aggregation of demand because of procurement, happening through a single portal, will help in reducing the cost of procurement also for government buyers.”

(Edited by Siddarth Muralidharan)

Also Read: LIC isn’t alone, shares of half the PSUs that went public since 2010 trading below IPO price


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