Identify saviours before reviving sick PSUs: Centre

In an attempt to induct strategic partners in tottering government firms,the Centre has introduced two more riders for funding revival packages of sick public sector enterprises.

In an attempt to induct strategic partners in tottering government firms,the Centre has introduced two more riders for funding revival packages of sick public sector enterprises. One,the administrative ministry would have to identify the reasons for the PSEs sickness. Two,it would have to identify the saviors who would be held responsible for the revival.

In the absence of the two qualifiers,the controlling ministries were seeking revival doles without getting involved in the cause of their sickness and the corrective management infusion. They merely indicated the statutory dues and the manner to liquidate them,leaving it to the Board for Reconstruction of PSEs (BRPSE) to prepare a bankable package and source funding.

Last month,the Ministry of Heavy Industry and Public Enterprises told all ministries to take the onus of revival for which they should identify the reasons of sickness and persons accountable in revival of the CPSEs. This would prompt ministries to opt for management support making it attractive for private equity through joint ventures.

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The guidelines come in the wake of the Consultative Committees observation that mere infusion of funds in sick CPSEs may not revive them unless the reasons for their sickness are clearly identified and persons involved in their revival are made accountable.

The parliamentary panel also directed that financial assistance from the government be minimised by taking remedial steps at the time of incipient sickness that is,when a CPSE incurs losses for two consecutive years.

Of the 36 CPSEs that were identified as sick in 2004,around 19 have started making profits,some of them for the last three years running.

They include Bharat Pumps Compressors,Cement Corporation of India,Heavy Engineering Corporation and MECON most of which got management or order support,besides government funding.