Prime Minister Narendra Modi will on Monday deliberate with top executives of central public sector enterprises (CPSEs) on the ways to improve performance of these firms. The government is drawing up a plan for the CPSEs, in what could signal its intent to revamp these units so that they can more efficiently contribute to the economy and nation building. Besides CMDs and senior officials from the Department of Public Enterprises, officials from other departments and board-level directors of all CPSEs have been invited to attend the “CPSE Conclave–Vision 2022”. CPSEs in recent years have enhanced their profile with a larger share in public investments without compromising on their contribution to the government coffers by way of dividends and taxes. In the first conference with the CPSE top brass after he assumed office, Modi will ascertain from them the ways to make these companies capable of playing transformative roles to boost the economic growth. At the same time, the government is also working on its plan to complete strategic sales of a clutch of CPSEs, including Air India, this fiscal, in what marks revisiting the policy after 14 years. On their part, the CPSE chiefs are likely to list out key issues faced by them such as autonomy, disinvestment plans, and the need to improve the memorandum of understanding system with the government where financial targets are set.
Making the boards of these firms more professional and flexible to market realities is also on the agenda. Given the easing of exclusivity enjoyed by state-owned companies in government procurement, these firms are in greater need to grapple with market realities. At the same time, certain obligations cast on them by the government are constraining their efforts to compete with private firms. With private investment hard to come by, the central PSUs came to the rescue of the economy in the last couple of years. With persistent government prodding, the CPSEs are investing about Rs 4 lakh crore in various projects in the current fiscal, Rs 1 lakh crore more than the government capex of Rs 3 lakh crore. The central PSUs had invested Rs 3.2 lakh crore and Rs 3.38 lakh crore in FY16 and FY17, respectively, compared with Rs 2.53 lakh crore and Rs 2.9 lakh crore in FY16 and FY17, respectively, by the Centre via the Budgets. Among other issues, the role of independent directors in CPSEs may be raised as many of them are not able to function independently due to conflicting government guidelines, sources said. The Companies Act requires independent directors to act independently, but there are government guidelines that require them to first deliberate issues with relevant ministries before taking a position on the board. This practically undermines the role of these directors. Similarly, issues related to quality of capital expenditure are also likely to be raised in the meeting with the Prime Minister. The overall net profit of 257 operating CPSEs went up by 11.7% to Rs 1.27 lakh crore in FY17. They recorded a turnover of more than Rs 19.5 lakh crore, 6.5% higher than that of the previous year. CPSEs contributed more than Rs 3.85 lakh crore to the central exchequer in FY17 by way of duties, taxes, interest, dividend, etc, up 40% year-on-year.