Government considering proposal to liquidate some loss-making PSUs

NEW DELHI: As it looks to contain public expenditure, the government is considering a proposal to liquidate some loss-making PSUs while protecting the interest of their employees who may be offered "lucrative" payouts.
In line with recommendations of Expenditure Management Commission, a proposal for liquidating some loss-making PSUs is being examined, sources said.

Liquidation should be done in a manner that it does not hurt interest of employees and is a win-win for both government and the staff, sources added.

The government, sources said, may provide for lucrative one-off sum toward pension payments for the staff of those loss identified loss making companies.

As per the latest government report, there are 77 loss- making PSUs at the end of March last year with a total aggregate loss of Rs 27,360 crore.

Some of the companies include, Bharat Gold Mines, Tannery and Footwear Corporation of India, Cycle Corporation of India, Mining and Allied Machinery Corporation, National Bicycle Corporation of India, Bharat Process and Mechanical Engineers, Weighbird India and Bharat Brakes & Valves.

It is understood that Expenditure Management Commission, formed in September 2014, recommended liquidating loss-making PSU by selling of assets such entities wherever possible.

The commission was given the task to review all matters related to central government spending, including suggesting space for increased developmental spending and reviewing the budgeting process and norms under the Fiscal Responsibility and Budget Management Act and suggesting ways to meet a reasonable proportion of spending on services through user charges.

Finance Minister Arun Jaitley in his Budget 2016-17 speech had said NITI Aayog will identify Public Sector Units for strategic sale.

"A new policy for management of government investment in Public Sector Enterprises, including disinvestment and strategic sale, has been approved. We have to leverage the assets of CPSEs for generation of resources for investment in new projects," Jaitley said.

The Department of Disinvestment has been renamed DIPAM.

The government aims to collect Rs 56,500 crore through disinvestment in PSUs this fiscal, as per Budget 2016-17.

Of the total budgeted proceeds, Rs 36,000 crore is estimated to come from minority stake sale in PSUs and the remaining Rs 20,500 crore from strategic sale in both profitable and loss-making companies.