Stress on timely closure of sick and loss making CPSEs: Economic Survey

Shubhadeep Choudhury
Tribune News Service
New Delhi, January 30

The Economic Survey tabled in the Lok Sabha on Friday by Finance Minister Nirmala Sitharaman stressed on the need for timely closure of sick and loss making the central public sector enterprises (CPSEs) and disposal of their assets.

According to the pre-budget document, as of January 15, 2021, 110 CPSEs in the country are in a defunct state.

In addition, there are 77 CPSEs that have been identified as loss-making.

Two hundred fifty-six (256) CPSEs out of total 366 in the country are operational, the Economic Survey reported. One hundred seventy-one (171) CPSEs booked profit during FY20. The total profit was Rs 1.38 lakh crores.

On the other hand, the consolidated loss of loss-making enterprises was Rs 44,816 crores.

The overall net profit of the CPSEs thus declined by 34.6 per cent to reach Rs 93,295 crore in FY20 from Rs 1.43 lakh crore in FY19.

Even the profit making CPSEs may be up for sale as the Economic Survey pointed out that under the “Atmanirvar Bharat Mission”, it had been decided to have CPSEs only in the ‘strategic sectors’ and the number of CPSEs in the strategic sector should ideally be limited to four.

CPSEs in the non-strategic sectors would be privatized as to enable the government to focus on strategic sectors.

To strengthen the CPSEs that would be retained by the government, steps are underway to completely revamp the boards of these to reorganize their structure, enhance the operational autonomy and introduce strong corporate governance norms including listing on stock exchanges for greater transparency.

Department of Public Enterprises has also separately initiated revamping of Performance Monitoring System of the CPSEs to make it more objective and forward-looking based on sectoral indices.

According to the Economic Survey, the Mahalanobis Plan in 1956 envisaged CPSEs as a mean for import substitution and self-sufficiency. However, the inherent inefficiencies leading to low productivity in the PSEs, high-cost structure and strained public finances led the GoI to go for policy change after 1991 heralding an era of privatisation and disinvestment.

The decision to reduce government’s presence in commercial activities has been a subject of discussion in several economic surveys (more specifically 2000-01, 2001-02, 2002-03), the Economic Survey stated.