PSUs to increase capex to 200% of present level next fiscal: Javadekar

New Delhi: The economic slowdown unleashed by the Coronavirus pandemic has caused India to reckon the need to accelerate a shift towards self-reliance. And therefore, the government has spelt out an ambitious vision to make India Aatmanirbar across sectors and has announced a new public sector policy. In tandem with the government's vision, public sector undertakings (PSUs) have set ambitious performance targets for cutting down India's dependence on imports and have braced themselves for more competition as the government readies to open up various sectors to private players. Lauding the crucial role played by PSUs during the COVID-19 lockdown and in its aftermath, Minister for Heavy Industries and Public Enterprises Prakash Javadekar, in an exclusive interview to PSU Watch, said that PSUs have always been the drivers of growth in the economy and by next financial year, they are set to increase capex spending to 200 percent of present level and contribute towards self-reliance. Here are excerpts:

Prime Minister Modi has given a clarion call for a self-reliant India. What role of PSUs do you see in the pursuit of this initiative? And how important are PSUs in this drive? 

Presently, there are about 249 operating CPSEs in almost all important sectors of the economy, such as Petroleum and Gas, Power, Coal, Steel, Logistics and Infrastructure etc, with an annual turnover of about Rs 25 lakh crore and profit of Rs 1.75 lakh crore. Besides contributing about Rs 3.60 lakh crore annually to the Central exchequer in the form of dividend, interest, corporate taxes and GST etc, CPSEs also undertake CSR of about Rs 3,500 crore every year. Not only they have a crucial role in promoting a self-reliant India in their respective areas of operation by producing goods and services with their approximately 15-lakh-strong workforce, but they are also drivers of growth for the MSME ecosystem in the country. Their procurement of goods and services from the MSME sector is approximately Rs 32,000 crore annually, which is about 30 percent of their total annual procurement.

Since inception, PSUs have been the cornerstone for the Indian Economy. Now that the economy is in slowdown mode, what role do you think PSUs can play in restarting the economy?

It is true that CPSEs have always played a crucial role in executing the socio-economic development agenda of the government as an extension of the government apparatus. Even during the recent lockdown imposed in the wake of the COVID-19 outbreak, the spirit of CPSEs towards nation-building was quite visible. During this period, CPSEs ensured that essential services such as power, fuel and foodgrain supply remain uninterrupted. Power supply to households and industries was almost 99 percent, the supply of LPG and other fuel to homes and transport sector remained uninterrupted round the clock. About 71 crore LPG cylinders were supplied to people by oil marketing companies during the lockdown period. More than 33 million tonnes of food grain was transported to different parts of the country and about 240 medical facilities of CPSEs having 11,400 beds were made available in coordination with district authorities for quarantine and other medical services. 

After the lockdown period, CPSEs have already assumed the responsibility of boosting economic growth. Most of them are operating at about 90 percent operational level. They are carrying out capital expenditure works, infrastructure development activities of approximately Rs 2 lakh crore in Petroleum, Power, Defence, Logistics, Mining sectors, which would not only act as a catalyst for other economic activities but would also provide informal employment during the construction phase. For the next FY2021-22, CPSEs would be enhancing their capital expenditure activities to 200 percent of the present level, i.e. approximately Rs 4 lakh crore.  

What is the vision plan of the Department of Public Enterprises (DPE) for PSUs?

The present government is laying significant emphasis on increasing turnover, efficiency and productivity of CPSEs. The overall vision about the public sector is to have effective, profitable and globally competitive Central Public Sector Enterprises in India.

There seems to be a general feeling of fear concerning disinvestment among PSU employees. What is your take on it?

CPSEs face certain constraints such as lack of capital infusion and modern technology, operational inefficiencies due to legacy issues and slow commercial decision-making. Disengagement of the public sector, especially in the areas where the private sector has already come of age, or partnership with the private sector for equity and modern technology can result in unlocking the true potential of CPSEs. It would also have an overall positive effect on the economy of the country. Moreover, the disinvestment of only the minority share in a CPSE can bring greater transparency and efficiency in functioning due to the need for compliance of corporate governance norms for listed entities.

Which are the sectors where PSUs are going to be disinvested?

As per the proposed new policy, it seeks disengagement of the government from commercial enterprises in both strategic and non-strategic sectors, particularly where the competitive markets have come of age. A list of strategic sectors will be notified by the government where the presence of CPSEs will be impactfully felt. Further, one-to-four public sector entities will continue to operate in the strategic sectors. Accordingly, the existing ecosystem of CPSEs in the country would be aligned with the proposed new policy. An effective and impactful public sector will be able to fulfil the government's interest and expectations in a more effective manner than a diffused and inflated entity.

In a recent statement, you said that PSUs are the pride of the nation. What are the factors that prevent PSUs from performing at par with the private sector?

CPSEs do face certain constraints such as lack of capital infusion and modern technology, operational inefficiencies due to legacy issues, multiple oversight mechanisms and slow commercial decision making.

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What is your message to PSU employees who are living under the fear of loss of job, privatisation, disinvestment, etc?

CPSEs are the pride of the nation and the welfare of its employees has always been paramount to the government.

This interview was first published in the special issue of PSU Watch on Aatmanirbhar Bharat, which was released on October 30.

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