Par panel wants Niti Aayog to formulate policy on PSUs' financial health

Expressing concern over losses suffered by PSUs, a Parliamentary panel has recommended the Niti Aayog to formulate a policy to regulate and monitor the financial health of the country's public sector undertakings.

The Committee on Public Undertakings in its report on review of loss making central PSUs tabled in the Lok Sabha Thursday observed that while CPSUs in a few sectors like mining, power, steel and petroleum & natural gas continue to hold a dominant market position, most of their counterparts in other sectors have been continuously making losses over the years. It called for optimum utilisation of their assets to generate better earnings.

The committee observed that Air India functioned under a large debt burden, which became unmanageable and increased to gigantic proportions year after year.

"With regard to the slow pace of disinvestment of Air India, the Committee have expressed the hope for completion of the disinvestment process early and also have desired to know the fate of debts and liabilities on the disinvestment of Air India," it said in the report.

The panel also cautioned the government to analyse all the factors before taking any decision on the merger of two CPSUs, particularly in the context of merger of BSNL and MTNL, which was under consideration, in the backdrop of the fact that the decision to merge two heavy loss-making PSUs Indian Airlines and Air India did not work very well.

Highlighting the need for autonomy for efficient functioning of CPSUs, the committee observed that they will not be able to compete in the market unless they are given the desired level of independence enjoyed by their counterparts in the private sector.

"It has further been recommended that the CPSUs' Board must be sufficiently empowered to take all strategic decisions such as formation or dissolution of partnerships/joint ventures, mergers/acquisitions, appointment of CEO, creation of below Board-level positions, etc and such a Board should be given a fixed term to make them more accountable," the panel said in the report.

Moreover, in the event of lapses, the committee said accountability must be fixed for the Board or concerned ministry or department in their respective areas.

On strategic disinvestment, it recommended that the government should work out a uniform definition or parameters of "strategic" for their classification.

After examining the performance of 12 loss-making PSUs, the committee recommended that the performance of the subsidiaries of loss making state-owned firms should be thoroughly analysed, which would facilitate the government to take a sound decision on their disinvestment or closure of specific units.