Reform Public Sector Enterprises
S K Roongta panel’s proposals still valid
It is rather unfortunate that reform of public sector enterprises (PSEs) remains on the policy back-burner for the Modi government. Note that the latest available figures reveal that of the 235 operating central PSEs, as many as 77 are loss-making, with the losses adding up to over 27,000 crore for 2014-15. Profit-making PSEs are being asked to mentor and turnaround loss-making ones. We surely need more viable, concrete plans. Meanwhile, the report of the expert committee on PSE reforms, headed by former SAIL chairman S K Roongta, has been gathering dust since November 2011. Note also that early last year, the minister for heavy industries and public enterprises Anant Geete was quoted as saying that the government is actively considering the recommendations of the Roongta panel, submitted in November 2011.
The committee did make a number of sensible suggestions, on board-led management of PSEs, the appointment of independent directors and the need for higher compensation linked to profit before tax. On loss-making PSEs, the Roongta report specifically recommended the auction route (limited to PSEs), so that profit-making PSEs could bid and take them over. The panel, rightly, was of the view that the better-run PSEs would be in a position to create new businesses by leveraging ‘excellent infrastructure’ that many of the loss-making PSEs do possess.
The Roongta committee also suggested that the surplus land available with loss-making PSEs be used to setup a land bank and called for setting up a Public Sector Land Development Authority. The government needs to better strategise PSE rationale. In many emerging areas of technology, which have lumpy capital requirements, such as the next-generation telecom networks or highend silicon chip design, and where the Indian private sector remains chary of investing, we clearly need the right vision, entrepreneurship and scalability in PSEs. A technology policy for PSEs is what the Roongta report envisaged, and the Modi government now has the opportunity to give it concrete shape.