Buddha shifts gears in PSU drive

But today, flushed with the initial effort’s success—it generated budgetary savings of Rs 31 crore last year—the CM is ready to shift gears. On April 20, he will release a white paper on the project that was largely funded by a grant from UK’s Department For International Development (DFID).

His government, meanwhile, is gearing up for Phase II of the mega rehabilitation programme, involving 29 companies and 77,000 employees. Even if it means going back to DFID, or approaching the World Bank and Asian Development Bank, to raise the required Rs 1,700 crore. And despite the Centre’s line that states should refrain from using funds from grants for such restructuring.

All that stands before Phase II now is the Centre’s nod for the state government’s proposal. In fact, Sunil Mitra, Principal Secretary, Department of Public Enterprises (PE) and Industrial Reconstruction, is slated to take part in a meeting between the officials of the Department of Economic Affairs (DEA) and DFID representatives in New Delhi tomorrow.

Then, there are some loose ends to be tied up, too—non-acceptance of Early Retirement Scheme (ERS) by workers of the Great Eastern Hotel and delay in executing some closures and implementing the disinvestment process.

But the facts show the state has a good thing going. Consider these:

• The Rs 210.6-crore pilot project sought to restructure 26 companies, employing 10,000 people, incurring an annual loss of Rs 186 crore and needing annual budgetary support of Rs 60-65 crore

• Of the 26 companies picked up, four have been taken up by the state government for restructuring and 12 are on the path to “joint venture transformation” (read disinvestment) of up to 74 per cent—Great Eastern would involve a strategic sale of 90 per cent of equity holding

• 10 companies have either been closed down or are on the verge—3,000 employees have already opted for ERS

• All this has happened with professional consultants being roped in and the state’s Public Enterprises (PE) Department capacity being enhanced

Even the ERS, officials stress, has been crafted with a ‘‘human face’’. Either the retiree or a nominee is offered the option of undergoing a ‘‘re-skilling’’ process.

But if the pilot project was tough, Phase II looks to be formidable challenge:

• The 29 companies on Phase-II incur annual losses of Rs 700 crore. Between them, they require a budgetary support of about Rs 1,300 crore every year. But the biggest challenge is these 29 come under 10 different departments, entailing capacity enhancement in each.

• Then again, of these 29, five are state transport undertakings and two power utilities—West Bengal State Electricity Board and Durgapur Projects Ltd

But this time, the government would be facing the challenge, knowing that they have done it once before.

• In 2000-01, as the pilot project was taking off, the government found itself committing around Rs 4,500 crore and doling out another Rs 1,300-1,400 crore as equity and loan every year to the 89 PSUs under 15 departments

• 53 of these units were into manufacturing—a result of the Left Front’s enthusiasm to randomly take over sick companies in the 70s and 80s to protect employment

But what set the wheels rolling were collective reviews that built peer pressure on other companies. Soon, five of the 22 companies under the scanner emerged from the red, while others started cutting losses.