IS it a smart move on the part of the
Narendra Modi-led NDA government to bring the ailing PSUs back on
track or is it just a cosmetic change. Soon, the Board for Reconstruction
of Public Sector Enterprises (BRPSE) may be on its way out and a new
panel might be tasked to revive the sick PSUs. The BRPSE...
has not been
successful in its job assigned by the government.
The new panel will act on such cases at
a faster pace, says a national daily. The panel is likely to outline
guidelines to determine whether such entities should be revived, shut
or sold.
The Prime Minister's Office has given
its in-principle approval to the proposal of winding up the panel, a senior government
official said, as quoted by the national daily.
The ministry of heavy industry and
public enterprises will soon move a Cabinet note to shut down the
BRPSE.
BRPSE was set up in 2004 to sketch
revival plans for sick state-owned companies. The move is expected to
clear way for the government to sell stakes in most of the 65 sick
central public sector companies or close down non-viable ones.
The heavy industry ministry has already
floated a Cabinet note on the closure of six companies — Hindustan
Photo Films, Tungabhadra Steel Products Ltd, Hindustan Cables Ltd,
HMT Bearings Ltd, HMT Chinar Watches Ltd and HMT Watches Ltd.
The new panel is likely to be smaller
in size to expedite decisions in respect of companies that have
become a burden on tax-payers.
The new panel may be headed by the
cabinet secretary with representation from the administrative
ministry under which the respective PSU falls.
BRPSE has not been able to deliver the
desired results because of various external factors, which include
political pressures. A new mechanism is required for faster disposal
of such cases.
Once the panel comes into being, a
loss-making PSU will be considered for revival only if it is
operational in a strategic area or if banks are willing to lend it
money without a government guarantee.
In case a PSU has a market share of at
least 10%, then the government may continue its efforts to revive it.
If a company's return on capital
employed is lower than the rate it pays lenders, it may be considered
as a case for strategic sale.
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