Calling upon the central public sector enterprises (CPSEs) to double their contribution to the gross domestic product (GDP) and be the “third major source” of revenue for the Centre after direct and indirect taxes, Prime Minister Narendra Modi on Monday gave five challenges to the firms including ways to reduce the country’s imports bill and expanding India’s global strategic reach by 2022.
In his maiden interaction with top executive of the CPSEs, Modi also tasked the companies to prepare measurable targets to integrate innovation and research of all CPSEs for better outcome, a road map by PSUs to optimally utilise their CSR funds and prepare a new development model for the country. He would again meet these executives in 100 days to review their action plans.
The share of CPSEs in net value addition as a ratio to the GDP stood at 4.63% in 2016-17, against 4.12% in 2015-16. CPSEs contributed more than Rs 3.85 lakh crore to the central exchequer in FY17 by way of taxes, interest, dividend, etc, up 40% year-on-year.
“Some countries are using their PSUs to increase influence in the other countries (read China). With government to government contact increasing, India’s CPSEs should prepare a comprehensive strategy for overseas investments, which will increase the country’s geo-strategic reach,” Modi said.
In recent years, the competition between PSUs of China and India have intensified overseas for commodities such as crude and minerals.
With India’s merchandise trade in deficit, Modi asked CPSEs to prepare an action plan to reduce their import bills by 10-15% annually. These firms’ foreign exchange outgo on imports rose 19.2% year-on-year to Rs 3.61 lakh crore in 2016-17.
Modi asked the executives to deliberate on the ways to improve the CPSEs’ return on equity (RoE) from the present level of around 11%, which was much lower than their private sector peers. He also asked the CPSEs to increase the share of MSMEs in their procurement from the current level of 19% and timely release payments to these smaller units, which play an important role in job creation. He also asked the CPSEs to gear up to meet challenges posed by disruptive technologies.
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 attended the “CPSE Conclave–Vision 2022”.
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 over the previous year.