Industry is a major contributor to the fast growing Indian economy.  Heavy Industry and Public Sector Enterprises play a pivotal role in almost all the sectors of the economy, including those of infrastructure, such as power, rail and road transport. They cater to the requirements of equipment for basic industries like steel, non-ferrous metals, fertilizers, refineries, petrochemicals, shipping, textiles and a host of industrial machineries, including paper, cement, sugar, etc. They are also responsible for development of a wide range of intermediate engineering products, like castings, forgings, diesel engines, industrial gears and gearboxes.

Performance of CPSEs

As per the policy on Public Sector contained in the National Common Minimum Programme (NCMP) of the UPA Government, various steps have been initiated, during the last two years, in terms of restructuring and revival of sick Public Sector Enterprises, as also to provide autonomy to the profit making Public Sector Enterprises.   Public Enterprises Survey 2004-05 laid in Parliament in  March, 2006, indicated a remarkable improvement in the overall performance of 217  operating enterprises, who had furnished information for 2004-05.

 

Automotive Sector

 One of the major industrial sectors in India is the automotive sector.  Automotive industry has been showing a substantial growth during the last few years since the opening up of this sector in 1993. In the recent past, the focus has ostensibly been on capital goods and engineering industries including auto industry. The high growth in automobile production continued in the last two years.  The industry had an investment to the tune of Rs.50,000 crore in 2002-03.  It is slated to go up to Rs.80,000 crore by 2007.  The industry provides direct employment to about 4.5 lakh persons and generates indirect employment to 1 crore persons.    The contribution of the automotive industry to GDP has risen from 2.77 per cent in 1992-93 to 5.7 per cent in 2003-04.

Disinvestment in MUL

            The Government sold 8 per cent  equity of  Maruti Udyog Limited (MUL) to private sector financial institutions and Public Sector Banks.  After this disinvestment, the share holding of Government in MUL came down to 10.27 per cent.

NATRIP

  The Government is striving to introduce superior safety, emission and performance standards in automotive sector.  To achieve this objective, a  Comprehensive Consultancy Agreement was signed between the National Automotive Testing and R & D Infrastructure Project (NATRIP) and  IDIADA of Spain  on  January 27, 2006, for creating a state-of-the-art Testing  and R&D infrastructure across seven locations in the country  This will encourage consolidation and confluence of generic R&D initiatives, deepening of manufacturing and all round sectoral growth leading to optimum  realisation of its potential in the national economy.   An amount of Rs.1,718 crore,  spanning over a period of six years, would be spent for these projects.

BRPSE

            With a view to implementing the mandate as per NCMP, the Government has established a Board for Reconstruction of Public Sector Enterprises (BRPSE) on December 6, 2004. The Board addresses the entire gamut of issues pertaining to revival/restructuring of public sector undertakings.  The Board is also supposed to advise the Government on measures to strengthen the public sector undertakings in general, and making them more autonomous and professional.  The Board is also expected to monitor incipient sickness in Central Public Sector Enterprises (CPSEs) and suggest ways and means, and sources for funding the revival/restructuring  packages.

            The recommendations of the Board are advisory in nature.  The administrative Ministries concerned with the relevant Public Sector Enterprises reflect the recommendations of the Board in their proposals, which are submitted for consideration and approval of the Government.

            All privatisation are being considered by the Board on a transparent and  case-to-case basis. Privatisation revenues are to be used for designated social sector schemes. 

Strengthening CPSEs

            The Government has recently taken a number of steps to improve the performance of Public Sector Enterprises.  These include increased payment of ex-gratia amount under Voluntary Retirement Scheme (VRS) to employees in CPSEs, following the Central Dearness Allowance (CDA) pattern of pay scales; providing delegation for mergers and acquisitions as also for re-establishment of joint ventures/subsidiaries; strengthening the system of Memorandum of Understanding (MoU) by incorporating additional parameters, such as measurable Productivity, International Benchmarking, Human Resource Management, etc.  The MoU guidelines for the year 2005-06 have been modified.  Common parameters have been set in the MoU guidelines for all PSEs other than Social, Financial, Trading and Consultancy PSEs.

 

Financial Autonomy to CPSEs

            The Government is in the process of  implementing a number of measures to strengthen the profit-making CPSEs, which include providing greater financial autonomy, professionalisation of Boards, delegation of enhanced financial powers, adopting corporate governance practices, review of Nava Ratna and Mini Ratna Schemes, and extension of Purchase Preference Policy.

 

Navratna And Miniratna Schemes

            In July 1997, the Government had identified nine Public Sector Enterprises that had comparative advantages and potential to emerge as global giants as Navratnas.  The PSEs were given enhanced autonomy and delegation of powers  to incur capital expenditure, entering into joint ventures, effecting organisational restructuring etc.  Recently, some more PSEs have been proposed to be included in the  Navratna List.  Similarly, more and more PSEs are  being included in the Miniratna List over the years on the basis of their excellent performances and  turnover.

 

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