Shape up or shut down, Arun Jaitley tells PSUs

NEW DELHI: The government on Tuesday said that four public sector companies, which cannot be revived will be shut down and finance minister Arun Jaitley asked others to shape up to deal with free competition in an era when state-run firms had lost monopoly rights and preference, marking a clear shift in the Centre's policy.

In case of seven others, Jaitley told Parliament, the government is trying to revive seven ailing PSUs via disinvestment and the joint venture route. The FM's stern statement means the government is ready to bite the bullet on controversial reforms to repair public finances and put the economy on a higher growth trajectory.

The minister said that 79 central public sector enterprises have incurred losses, of which 49 are sick. At the same time he said that there are 19 that have turned around, indicating that there will be an effort to revive the viable ones that remain competitive.

Coming days after the finance minister said that being pro-business does not amount to being anti-poor, Tuesday's statement is being seen as a signal that it won't be business-as-usual in matters of economic policy. For a decade, the UPA government had dragged its feet on shutting down even the terminally sick PSUs, despite it clearly stating it as a policy goal. As a result, the government kept on pumping money to pay salaries and keep these money guzzling entities alive, all for the sake of political expediency.

Jaitley said that over Rs 1.57 lakh crore has been pumped into these enterprises over the past few years. While there had been interest from the private sector in some of the units of Cement Corporation, among others, the UPA government failed to decide on the issue.

On Tuesday, Jaitley urged PSUs to learn to function like private business houses in a competitive environment. "The PSUs must learn how to function like any other business organization in a competitive environment and should not be run like a government department," he said while replying to supplementaries in the Rajya Sabha.

Management of loss making PSUs have to be part of market economy, the minister said. The government has also lined up an ambitious asset sale programme and aims to raise over Rs 63,000 crore by selling stakes in state-run firms. It has also outlined the need to provide managerial autonomy to blue chip PSUs to compete globally.