Begin preparing to close ailing PSUs, as recommended by the cabinet, the Modi administration advises ministries

In New Delhi: According to information obtained by ThePrint, the Narendra Modi administration has instructed its ministries and agencies to develop an action plan to hasten the closing of public sector enterprises (PSUs) that have already received cabinet permission.

During a review meeting on August 12th, which was presided over by Cabinet Secretary Rajiv Gauba, the closure of loss-making and ill PSUs was considered. According to meeting minutes obtained by ThePrint, he instructed representatives from other ministries to explain why there was a delay in putting the closure of these PSUs into effect.

On condition of anonymity, a senior government official told ThePrint, “We need to make sure that the government’s resources are not wasted, and in cases where the cabinet has approved the closure of CPSEs (central public sector enterprises), autonomous bodies, and other entities, it must be implemented immediately.

Gauba convened the conference primarily to talk about the national government’s preparations for “Vision India@2047,” a strategy to make sure that India is one of the world’s top three economies and is gradually moving toward the position of a developed country.

PSUs are businesses where the central government or other PSUs directly own at least 51% of the company. There are a total of 607 PSUs in which the government has an indirect or direct stake, according to the Comptroller and Auditor General (CAG) of India. At the time the report was being written, the CAG had not received the financial accounts from almost 90 companies. Six of the 697 are statutory corporations, and 203 are government-controlled other companies and around 488 are government-owned businesses.

According to the CAG’s report dated December 2021, 181 state-run businesses suffered a net loss of Rs 68,434 crore in 2019–20, up from Rs 40,835 crore in 2018–19. 64 of these have experienced losses constantly for five years, compared to 115 who had lost money for three to five years in the previous five years. The combined losses of these 181 businesses during the course of the two years ending March 31, 2020 equal Rs 1,55,060 crore.

According to the CAG report, BSNL and Air India were two of the 14 businesses that had losses of more over Rs 1,000 crore in 2019–20. However, Talace Private Limited of the Tata Group has recently privatised and acquired Air India.

Regarding disinvestment, the Centre has been successful in selling its ownership in three businesses this fiscal year: Oil and Natural Gas Corporation (ONGC), Life Insurance Corporation (LIC), and Paradeep Phosphates Limited (PPL), raising a total of roughly Rs 24,544 crore. Over 90% of this total was obtained from listing LIC.

According to estimates, the government will raise Rs 65,000 crore in 2022–2023 from the disinvestment and privatisation of state-run businesses.

Nirmala Sitharaman, the Union Finance Minister, stated in June that the goal of the government’s disinvestment policy is to increase efficiency and professionalism rather than to close any units or businesses. She emphasised that the privatisation of PSUs was done in order to improve the efficiency of the businesses.

GeM for all government purchases
Gauba had decreed that all purchases by ministries and departments would be made through the government e-marketplace (GeM) portal and that one would only go elsewhere if a good or service was not offered on the site in order to stimulate government procurement through it.

According to the minutes of the review meeting, which was presided over by Gauba, “it was also resolved that reviews and monitoring of GeM purchase would be done on a monthly basis.”

GeM, an online platform for public procurement in India that was established with the goal of creating an open and transparent platform for government purchasers, was launched in 2016.

GeM has around 41.44 lakh products and 1.9 lakh service offerings posted on the site, together with about 61,440 government-affiliated buying organisations, 47.99 lakh vendors, and 1.9 lakh service providers.

A total of 239 state-run businesses are registered on GeM and conduct sizable procurement through the website.

GeM portal users bought goods of Rs 1,06,760 crore during the fiscal year 2021–2022 “Aggregation of demand due to procurement, happening through a single portal, will help in decreasing the cost of procurement, including for government buyers,” Commerce and Industry Minister Piyush Goyal had stated in July.

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