Kerala CM drops privatisation spurs to polish LDFs PSU silver

Written by M Sarita Varma | Thiruvananthapuram | Updated: Dec 2 2011, 04:14am hrs
The UDF government in Kerala plans to continue with the public sector-oriented policy of the Left Front government. With most of the 36 state public sector companies making a profit in the first quarter of this financial year, the Oommen Chandy government claims it will not even disinvest in any of these units.

There is no question of privatising any public sector unit, said Kerala chief minister Chandy, contrary to the disinvestment policy of his party in New Delhi. The Chandy government is even ready to nurture the additional 10 public sector units that his Left predecessor had started.

The state, saddled with largest number of PSUs in the country, is instead planning to create an accountability drill for them. The Public Sector Restructuring and Internal Audit Board (RIAB), which is the state board for PSU reconstruction, has been told to come out with an accountability prescriptions like the SASAC of China.

The previous LDF minister for industries & commerce Elamaram Karim had turned around 12 loss-making PSUs. Under the Left leadership in 2010-11, 30 of the state PSUs had clocked a total profit of R294.45 crore and a turnover of R2,496 crore. In turn, the fledgling UDF government claims that its PSU books are a tad cleaner. In the April-September period, state PSUs profits surged 60% compared with the corresponding six-month period in the previous year, said state industry minister PK Kunhalikutty.

In a month or two, Kerala is readying to be one of the first states to introduce performance MoUs between the states PSU board and the public sector enterprises, as modelled by the Centre. This will be a negotiated document focused on squeezing out management efficiencies, said RIAB secretary K Padma Kumar.

Apparently, the job market too has started watching state public sector muster-rolls with more respect than ever. When RIAB advertised its vacancies for a dozen and a half CEOs for its its PSUs, its website saw 662 hits in the first couple of hours. With the CEOs commanding about R20-22 lakh per year as take-home salary, the remuneration is almost on par with that of the top brass of central PSUs.

Interestingly enough, it is the first time that UDF minister Kunhalikutty is wearing the mantle of a public-sector messiah. In his previous tenure, in 2001-2006, he had appointed an Enterprises Reforms Committee (ERC) to come out with a plan for PSUs. Based on the ERC report, he had argued that PSUs were a huge liability on the state exchequer and had sought that they either be closed or privatised. While some workers were let go under a voluntary retirement scheme, the then UDF government had ordered the closure or disinvestment of 25 companies. Later, following protests, the government had to reverse the disinvestment move. The loss-making units were mostly lying in limbo for the lack of effort to put together vibrant management threads. They were posting losses of about R70 crore per year.

We applied our minds on giving capital inputs, where working capital was lagging. We applied management ideas on synergising the state units with central PSUs, says former minister Karim, who engineered the revival of state PSUs. The CPI(M) leader does not mind giving credit to Union defence minister and Congress leader AK Antony for initiating the joint ventures with central PSUs.

Thus, joint ventures were forged between Bharat Heavy Electricals and Kerala Electrical and Allied Engineering, NTPC and Transformers and Electricals Kerala, Steel Authority of India and Steel Industries Kerala and Brahmos Aerospace and Kerala Hitech Industries. The LDF also roped in HAL, BEML and BEL to set up units in Kerala. It is expected that the Congress rule in Kerala can now forge more Centre-state JVs.

Although Kunhalikutty is now vehement about no PSU privatisation assurances, the industrial policy is yet to be announced. As Chandy faces charges of going for an allegedly overpriced R256-crore effluent system for a state PSU during his previous tenure, the UDF is likely to be game to allowing more autonomy spurs to its PSUs.