Speaking at the Ficci seminar on "Restructuring PSUs", Basu said "a company with dominant overseas shareholding but incorporated and operating here and subject to the laws of sovereign India can hardly be a threat to our national interest".

He stressed that this can only lead to a greater share of world markets for Indian companies, companies operating in India and employing Indian personnel, no matter where their controlling owners reside.

Government should sell its majority stake in PSUs if it wants to reform the enterprises and make them more competitive, said Basu.

"Any approach to bring about a long term improvement in the functioning of PSUs with government retaining majority holding isunlikely to be effective and these enterprises will head towards decay, some limping and some hurtling towards that end", he said.

"We only have to think of some of the glamourous public sector names of yester years like SAIL, Air India, ITI, HEC, HMT and Hindustan Photo Films to recognise this inevitability", said Basu.

Retaining a business enterprise under government control more often than not impedes its growth. Again, government's controlling ownership in a PSU is no longer justified on the grounds of public purpose except in the case of strategic sectors, he said. Basu said the government should consider unlocking the financial value of its shareholding in PSUs when private capital is ready to move in.

The mere fact that a PSU was making profit and was not causing a draft on the budget was not sufficient reason for being retained under government ownership, Basu said.

In fact, privatisation of such a unit could often lead to higher profits and therefore higher tax revenues without requiringgovernment funding on new investments, he said. "Effective restructuring and revamping of public sector enterprises under continued majority ownership of government had virtually proved to be a hopeless task, said Basu. This was due to many factors like non-availability of timely government funding for investment, lack of autonomy, excessive accountability and absence of market-related remuneration structure for managerial staff among others. "While a lot has been said and written on these issues and there are well pronounced intentions on the part of successive governments to deal with these matters, particularly with grant of autonomy, precious little has actually been achieved so far," said Basu.