The government plans to take up revival cases of a dozen more sick central public sector enterprises (CPSEs) this fiscal even as it has set an ambitious disinvestment target. With the business environment changing fast, many independent analysts remain skeptical about the government’s plan. They feel the government is throwing good money after bad. But in an interview with FE?s Noor Mohammad, department of public enterprises (DPE) secretary OP Rawat strongly defends the revival proposal. Excerpts:
The government has said it would examine the possibility of reviving another 10-11 sick CPSEs this fiscal. Is this just a political decision or there is some economic rationale behind it?
There is no politics behind the revival plan. Industry is a risky venture and 100% success is not possible in all cases. Anyway, there is a mechanism for reviving even sick private units. There is the BIFR (Bureau of Industrial and Financial Reconstruction), which examines the causes of sickness in public companies and recommends revival, depending on merit. It should be noted that not all sick PSUs are revived with government money. There are other options like privatisation and joint venture route as well. A shutdown is recommended only when the business model is found non-viable.
PSEs operating in the services sector like telecom, aviation and hospitality are struggling for survival. Do you think the services sector does not suit PSEs?
PSEs have performed extremely well across all sectors. There is no generic cause for the failure of PSEs in the services sector. There are services companies like Engineers? India Ltd which are doing well and remain internationally competitive. In India, EIL gets all contracts through the global competitive bidding route. The PSE is also competitive in overseas markets. Similarly, MMTC has done very well as a trading company. There are specific reasons for the problems facing BSNL and MTNL. Central public sector contributed 14-15% to GDP until 15 years ago. Its share is lower now because the overall economy has grown at a faster pace than the public sector. It is not that the public sector has done badly. Just as we have different religions in India, we also have different economic models?public sector, private and joint sectors. Our model celebrates plurality.
The government has proved right about its decision to have the public sector. Now others like the US and the European Union are also examining if they can use the public sector model to avert recession.
Is there anything new in the annual performance MoUs signed by administrative ministries with the CPSEs this year?
We have incorporated a new provision on imparting training to executives in risk management. Now CPSEs will have to train their officials in handling business risks. This decision has been taken in view of the growing business risks across the world. Besides, sustainability and corporate social responsibility have been merged.
How is the response to the revised guidelines on corporate governance and CSR?
We held seminars and conferences at different places to have stakeholders? feedback on these guidelines. The new guidelines have been welcomed by various stakeholders, including CPSEs.