15 sick PSUs to be shut -Governance Now

15 sick PSUs to be shut

While the steps taken by the government suggests that it was serious about shutting down chronically loss-making PSUs, the plan is facing resistance from some of the administrative ministries.

GN Bureau | September 27, 2016

#Loss making PSUs #Niti Aayog #Nripendra Misra #HPCL Biofuels #British India Corporation #Elgin Mills

The government has decided to shut down 15 loss-making public sector units (PSUs), of which at least five have been cleared by the cabinet. By taking this step, it is opting to go against internal advice of reviving three of them. NITI Aayog has identified another half-a-dozen sick PSUs for closure but their fate remained uncertain amid hectic lobbying by ministries, which want to keep them running, according to a news report published in Times of India.

The report added that the petroleum ministry has opposed shutting down of HPCL Biofuels, while the textiles ministry has managed to scale up the issue of closure of ailing British India Corporation and Elgin Mills to the level of PMO. At least three pharma PSUs were referred to a panel of ministers, which has so far opted not to close down Hindustan Antibiotics. After the successful shutting down of some HMT arms and the closure of Central Inland Water Transport Corporation, the government had sought to suggest that it was serious about shutting down chronically loss-making PSUs. However, the plan is facing resistance from some of the administrative ministries.

After NITI Aayog submitted its recommendations, principal secretary to PM Nripendra Misra, who has been involved with the exercise, indicated that the government's keenness to move ahead on a path may not be politically popular. What is, however, strengthening the government's case is that these companies have not seen significant addition to manpower in recent years and existing employees are being given a liberal severance package. The NITI Aayog, tasked with preparing a roadmap for ailing PSUs, had submitted two separate lists of sick and loss-making PSUs — one comprising those that can be closed down and the other of those where government can divest its stake.

Out of 74, the Aayog had suggested status quo in case of two PSUs, strategic disinvestment of 10, plan for revival with option for strategic disinvestment for 22, transfer of ownership of six, merger of three, long term lease of five and closure of 26.

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