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Going Strength to Strength

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Public Sector Enterprises (PSEs) need to be free from the shackles of multi-agency control mechanisms and stringent procedures that impinge on their smooth decision-making and commercial operations. We have always been concerned about revival and strengthening of lossmaking PSEs, says Dr U D Choubey, Director General, Standing Conference of Public Enterprises (SCOPE), in conversation with Nabin Sinha of Elets News Network (ENN)

How do you perceive the role of Public Sector Enterprises (PSEs) in India under the changing scenario?

Dr-U-D-Choubey

Dr U D Choubey,
Director General, Standing Conference of Public Enterprises (SCOPE)

PSEs have been a major source of strength to the Indian economy and will continue to play a significant role even in the changing scenario. Their role was greatly appreciated during the troubled times of global recession and disturbing tribulation when they demonstrated tremendous resilience and provided the muchneeded stability to the country. Today, their presence has become even more relevant and significance grown manifold. With significant dominance in the major sectors of economy, they have shown excellent performance in the post-liberalisation era.

During the year 2013-14, the contribution of the Central Public Sector Enterprises (CPSEs) to the central exchequer increased by about 35 per cent, it went from `163,212 crore in 2012-13 to `220,166 crore in 2013-14. The overall profit of the 234 CPSEs during the year stood at `129,109 crore, showing an increase of 12.29 per cent. Also, the number of profit-making PSEs has increased to 163 from 151 in the previous year.

What role do you find of PSEs when the Government is laying emphasis on private sector’s growth?

In the Budget 2015-16, the Government has put greater responsibility on the public sector for increasing investment in infrastructure, power, construction and manufacturing sectors, in which a large number of PSEs are involved. PSEs are expected to accelerate capital expenditure to support economic growth. Further, with the emphasis of the government on Make in India, Skill Development, Swachh Bharat and Digital India programmes, the public sector enterprises have an enormous role to play in these initiatives. Public sector is well placed to direct its latent energies and gained expertise to double its efforts in meeting the objectives of nation’s goal of infrastructure and the overall development of the country. Apart from this, the sector is also fulfilling its social responsibility in the areas of health, drinking water, sanitation, education, etc.

Can PSEs compete with MNCs or private sector entities like steel, power, telecom and other sectors?

Since the liberalisation of the Indian economy, PSEs have been successfully competing with MNCs and corporates. In fact, liberalisation has strengthened the public sector further. It was widely anticipated that once private sector investment materialises, the public sector will fade away. On the contrary, the public sector has consolidated its position of being a catalyst for planned development and a harbinger of growth, particularly during the recent economic crises. PSEs continue to be dominant players in the steel and power sectors, and the government has indicated to grant telecom sector PSEs their due position in the economic development process.

Disinvestment in most of the companies, including Coal India and the ones in the power sectors, has thrown up positive results. Do you think it is a good trend?

Going-Strength-to-StrengthSCOPE is not against listing of PSEs. However, we feel that views of the Boards of PSEs may be taken into account for deciding the strategy and time frame in order to get maximum value of equity. Moreover, many PSEs have been contributing substantially to the exchequer by way of dividends, taxes, etc. With disinvestment of the government holding in PSEs, there will be proportionate reduction in the quantum of contribution to the central exchequer.

Some of the PSEs have been making huge losses and the government has recently planned to shut down many of these. Is there a way to revive?

PSEs have made a net profit of `1.29 lakh crore during 2013-14, which is after the deduction of loss-making PSEs. There is a need of coherent policy to revive and strengthen loss-making PSEs by making available funds for investment, expansion and technological upgradation. A speedy decision on revival package within a definite time frame is required. Making the tenure of CEOs/Directors reasonably long and commercially developing the land bank available with sick PSEs may help such enterprises in their business development.

There is a need of coherent policy to revive and strengthen loss-making PSEs by making available funds for investment, expansion and technological upgradation

Do you think SCOPE can play a role in reviving the stressed and loss-making PSEs?

SCOPE is an apex professional organisation representing the Central Public Sector Enterprises, and came into existence in 1973. It has always been concerned about the revival and strengthening of loss-making PSEs. From time to-time, it has been taking up the issues affecting profitability of PSEs, also including financially stressed PSEs with the government. It is because of these efforts that the number of loss-making PSEs has come down. Recently, SCOPE organised a conclave with the objective to consolidate the issues affecting the optimal performance of MiniRatnas, Non-Ratnas and financially-stressed PSEs. A set of recommendations emerged during the conclave have been forwarded to the government for consideration.

What role do you see for PSUs in the next three decades, especially when the concept of MoU system and other devaluation system seem to be failing? Do the PSUs still lack autonomy?

PSUs seem to be prospering and attaining the pinnacle of financial stability, and MoU system is not failing. From four MoUs being signed in the year 1987-88, it increased to 197 in the year 2013-14. According to MoU rating system, 75 PSEs were graded Excellent, 39 Very Good and only two fell in the Poor category. These include parameters such as gross margin (profits), turnover, project implementation, quality of products and services, and many others. However, PSEs need a conducive policy for professional board management and level-playing field. They need to be free from the shackles of multi-agency control mechanisms and stringent procedures that impinge on their smooth decision-making and commercial operations.

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