PSU closure: Govt sets in motion new move after years wasted in stop-start process

The Centre has turned up the pressure on ministries to accelerate the shutdown of loss-making public sector enterprises, as progress on winding up unviable state-owned firms remains limited despite policy approval nearly eight years ago, The Times of India reported on May 25.

Government officials said only one public sector company -- Rajasthan Drugs and Pharmaceuticals -- has effectively ceased operations after the Rajasthan government agreed to take it over. The development comes even though the Union government had earlier cleared the shutdown of more than 40 financially weak public sector undertakings, ToI's report (by Sidhartha) said.

The issue was reviewed recently amid concerns over delays in both strategic disinvestment and closure processes. The reassessment followed the collapse of the proposed sale of IDBI Bank, after the government decided to discontinue the process nearly five years after it began because the two bids received were below the reserve price.


Also read | How an insect jibe united India’s disgruntled jobless youth

Officials familiar with the discussions said ministries concerned, along with the Department of Public Enterprises, have now been directed to expedite action on closure proposals instead of allowing them to remain pending for years.

The Union Cabinet had approved a detailed framework for shutting down unviable central public sector enterprises in June 2018. The policy had outlined procedures for disposal of assets, settlement of employee dues and utilisation of surplus land.

Under the framework, land belonging to closed CPSEs was to be prioritised for affordable housing projects in line with guidelines issued by the Ministry of Housing and Urban Affairs.

The policy also sought to minimise hardship for employees affected by closures. Workers in such enterprises were to be offered voluntary retirement benefits calculated on the basis of the 2007 notional pay scale, irrespective of the pay scale applicable to them at the time.

However, implementation has remained sluggish. Officials indicated that in several cases, transfer of land assets and settlement of employee liabilities have been delayed for years despite Cabinet approval and an established closure mechanism.

Also read | RBI greenlights record surplus transfer of Rs 2.86 lakh crore

According to the latest Public Enterprises Survey released by the Department of Public Enterprises, 75 of the 475 central public sector enterprises at the end of 2024-25 were either marked for closure, under liquidation, or non-operational.

The number stood at 72 in the previous year and 26 in 2020-21. The survey also noted that the government has approved closure of around two dozen enterprises.