Loss making and sick PSUs

loss-making-and-sick-psus-indian-bureaucracy
loss-making-and-sick-psus-indian-bureaucracy
As the government looks to raise Rs 20,500 crore from strategic sales of public sector units (PSUs), NITI Aayog has identified 22 undertakings.It is also in the process of examining another set of 30-35 PSUs, which can be considered for strategic disinvestment, but nothing has been finalised as yet.
Officials said in the case of outright closure of sick PSUs – estimated to be around 26 in number – the final guidelines for disposal of liabilities – including land and employees – would be done by the department of public enterprises (DPE).
“These lands (of sick PSUs being considered for closure) are either on lease or freehold with central public sector enterprises (CPSEs). If the land is on lease, the lessee will decide its fate. But if it is freehold, the CPSE would have to first approach the respective state government for using it for public purpose, before taking a decision on any other use,” said a senior official, privy to the development.
NITI Aayog’s recommendation of strategic sale of these PSUs is part of the task entrusted to it by the government to suggest ways to divest Centre’s stake in profit-making as well as loss-making and sick units.
“NITI Aayog has already recommended a list of companies for strategic sale. Dipam (department of investment and public asset management) is taking it forward. For us, it’s an ongoing process. We are looking at the second lot, the third lot and we will come out with recommendations,” NITI Aayog chief executive officer Amitabh Kant had earlier told reporters on the sidelines of a seminar.
Kant said the recommendations are based on “a very detailed analysis and inputs that it took”.
There are 74 loss-making and sick PSUs identified by the NITI Aayog. Of these, 26 need to be closed, five are on lease – which can be either given to the private sector or state governments. These five mostly include hotels.

Of the remaining, three PSUs need to be merged with their parent companies, while status quo has to be maintained for two more.
Ten PSUs have been identified for strategic sale and disinvestment, while for another 22, the Aayog has said any decision on their stake sale can be taken only after the current revival package is fully implemented.
Public sector undertakings like Air India form a part of this list.  The list also has six PSUs, which are to transferred outright to state governments.
These apart, the premier policy think tank has also given a list of 22 PSUs, wherein strategic sales can be considered both profit- and loss-making. This list includes the 10 from the loss-making PSU list.
The government aims to collect ~56,500 crore through disinvestment in PSUs in FY17, according to the Union Budget 2016-17.
Of the total budgeted proceeds, ~36,000 crore is estimated to come from minority stake sale in PSUs, the remaining Rs 20,500 crore from strategic sale in both profit- and loss-making companies.
In 2015-16, the government was able to meet less than half of the disinvestment estimates at Rs 25,312 crore, against the target of Rs 69,500 crore. It had targeted Rs 28,500 crore from strategic sales, but nothing came.

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