New government, new hopes for revival of PSUs?

Council of Ministers after the swearing-in at Rashtrapati Bhavan on May 26.

INDIA gets its 15th Prime Minister, Narendra Modi. The kind of strategy the then state chief minister was pursuing in Gujarat vis-à-vis the state public sector undertakings makes many hopeful about a resurgent Central public sector entities (CPSEs). Modi gives a free hand to babus and let them function with least political interference, which is why the BJP leader...
is accorded a grand welcome by the PSU leaders.
NTPC chairman Arup Roy Choudhury is optimistic about the new government. Known for his caliber to turn loss-making PSUs into profitable entities, the chairman and managing director of the Rs 73,904-crore public sector undertaking (PSU) NTPC spends a fair bit of his time scrapping with bankrupt state electricity boards (SEBs) that owe a staggering Rs 2 lakh crore to their lenders.
If not the SEBs, he is taking on Coal India (CIL), another PSU, over quality and quantity of coal supplies. And if not CIL, he is battling with state governments — from Bihar to Delhi — over electricity supply.
"We operate under constant fear and pressures," he says. These days, though, as the new government prepares to take charge: "We are hoping that a lot will change around PSUs. And I hope they [the new government] do it within the first month of taking charge else it will be difficult to do," he says.
PSU stocks across key sectors — from infra to energy to banks — are showing impressive rise. The BSE's PSU index has soared by over a third since the beginning of the year to a little over 8100.
The stocks are doing well because the expectation is that "things will be better" under the new government.
Global investment bank CLSA in its report titled "Drawing from Gujarat PSUs", threw light on what to expect from the Modi government on PSUs. More recently another bank Credit Suisse released a similar note on state-owned companies.
A top KPMG official says: We expect the CPSEs to become more efficient and empowered as political interference is expected to come down."
The BJP government will definitely explore possibilities of breaking up CIL — the world's largest coal producer — into independent entities with state governments being made equity holders to improve production. This is against the backdrop of rampant scams in the allocation of coal blocks. Modi may also think about opening up the sector to foreign investment to improve coal production and curb imports. Let’s see if good times are here for the PSUs. Only time will tell.