Home >Companies >News >Govt may revise norms on closing loss-making PSUs
Between Aug 2013 and Mar 2020, govt approved closure of 21 CPSEs including Indian Drugs and Pharmaceuticals.
Between Aug 2013 and Mar 2020, govt approved closure of 21 CPSEs including Indian Drugs and Pharmaceuticals.

Govt may revise norms on closing loss-making PSUs

  • The norms will prioritize shutting down firms where privatization efforts have failed

The government is preparing revised guidelines for timebound closure of loss-making central public sector units (CPSEs) and disposal of their assets. An announcement on it is likely to come in the FY22 budget scheduled to be presented on 1 February.

The department of public enterprises (DPE) has prepared a final cabinet note with the proposed guidelines.

“A draft cabinet note on the revised guidelines for inter-ministerial consultation was prepared on the recommendations of a committee of secretaries in July last year. Based on comments and suggestions from the Prime Minister’s Office, a revised draft cabinet note was circulated in October. After compiling comments from various ministries and departments, a final cabinet note has been prepared," a government official said under condition of anonymity.

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The revised guidelines are likely to prioritize shutting down sick units where all efforts including privatization through strategic disinvestment have failed, the official said. The Department of Public Asset Management (DIPAM) has failed to find strategic investors for Scooters India Ltd. and Bharat Pumps and Compressors Ltd even after inviting expressions of interest.

As per current guidelines, for all cases of closure, an oversight committee in NITI Aayog monitors the implementation of the decision along with prescribed timelines. The administrative ministry approaches NITI Aayog for resolution of problem arising out of the sale of immovable assets of CPSEs approved for closure.

According to data submitted by minister of heavy industries and public enterprises Prakash Javadekar in Lok Sabha on 17 March, 70 loss-making CPSEs in FY19 generated 31,635 crore of loss to the exchequer. Between August 2013 and March 2020, the government approved the closure of 21 loss-making CPSEs including HMT Watches Ltd, Indian Drugs and Pharmaceuticals Ltd and Hindustan Fluorocarbons Ltd.

“CPSEs function under the administrative control of respective ministries/departments. The Board of CPSEs/administrative ministries continuously monitor the performance of CPSEs including identification of reasons of losses of loss-incurring CPSEs. However, some common problems faced by loss-making CPSEs include obsolete plants and machinery, heavy interest burden, resource crunch, low capacity utilization, low productivity, surplus manpower, high input cost, non-remunerative prices etc," Javadekar said.

The government has also approved revival of eight CPSEs including Brahmaputra Valley Fertilizer Corp. Ltd, Hindustan Steelwork Construction Ltd, Konkan Railway Corp. Ltd, Mahanagar Telecom Nigam Ltd and Bharat Sanchar Nigam Ltd. Further, the department of fertilizers has decided to revive four closed fertilizer plants of Fertilizer Corporation of India Ltd (FCIL)—Talcher, Ramagundam, Sindri and Gorakhpur. Similarly, the Barauni plant of Hindustan Fertilizer Corp. Ltd (HFCL) will be revived by setting up new ammonia urea plants.

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