Govt says no to PPP model for reviving sick PSUs

Govt says no to PPP model for reviving sick PSUs

There are expectations that potentially profitable CPSEs can register a turnaround within five years.

The government has ruled out taking the support of private companies in reviving sick Central public sector enterprises, effectively burying a proposal of its predecessor that had floated the idea. The government, instead expects stronger PSUs to come to the aid of weaker ones.

In September 2013, the UPA government explored options for revival of these PSUs through a tie-up with private companies in the public-private partnership model.

That proposal never took off due to the lack of synergy between the PSUs and the private companies. “There is no proposal on the table to rope in private companies to revive the sick central PSUs through public private partnership,” a senior official of the department of public enterprises (DPE) said.

One reason for ruling out equity participation from private companies relates to the surplus lands with the PSUs. The government felt that there could be a conflict on ownership and utilisation if joint ventures were to take place.


The government has an alternate solution within the PSU sphere. There are expectations that potentially profitable CPSEs can register a turnaround within the next five years. These could then bail out the weaker units by exploring greater synergy. As of 2014, there are 50 CPSEs, which are making losses over the past three consecutive years.

While the Board for Reconstruction of Public Sector Enterprises has recommended closure of six CPSEs, it has recommended revival of 58 state-run companies envisaging total assistance of Rs 40,396 crore (cash assistance of Rs 10,768 crore in the form of infusion of funds, and non-cash assistance of Rs 29,628 crore in the form of waivers and write-offs of loans etc).

The official added that no budgetary support is being provided to CPSEs. Instead their managements have been tasked with improving performance of the units so as to mobilise collectively Rs 16,22,898 crore as internal and external budgetary resources for investment over the remaining period of the 12th Five Year Plan. The cash and balances of all CPSEs was Rs 2,66,600 crore as on March 31, 2013.

“This is actually a misplaced perception that all CPSEs are struggling due to paucity of funds,” the official said, adding that reserves and surplus of all CPSEs rose to to Rs 6,81,409 crore in 2012-13 from Rs 6,23,671 crore in 2011-12 , an increase by almost 10 per cent. The net worth of all CPSEs too, have grown by around 10 per cent to Rs 8,66,691 crore in 2012-13.

However, as per official data, the financial losses of loss incurring CPSEs stood at Rs 28,260 crore in 2012-13 compared to Rs 27, 683 crore in 2011-12. The market capitalisation of 46 listed CPSEs fell by 11.21 per cent  to Rs.1,40,975.00 crore as on March 31, 2013.